money Financial expert on divesting from Russia: 'Keep your long-term goals in mind'
With the Russia-Ukraine war still raging, many investors want to help Ukraine in any way they can, like divesting from Russian stocks. However, a financial expert cautions against dropping Russian-affiliated stocks from their portfolios too soon.
“Keep your long-term goals in mind," Family Wealth Strategies Financial Advisor Aaron Ulrich told Yahoo Finance Live (video above). "Don't make decisions based on emotion. Make it based on the facts."
Ulrich also noted that investors shouldn’t let the Russia-Ukraine conflict affect their long-term investments, because the U.S. stock market is still strong while the Russian market is declining under international sanctions.
“You've got to trust the process on this one. The markets are working correctly. The Russian stock market is basically — I don't know. They're shut down. I don't know if anybody's heard from them in a while," Ulrich said. "But the stock markets and the bond markets in the United States, everything's working properly. And so if you did have exposure to those kinds of things, I'm not going to worry about it too much."
Ulrich also said investors should wait to drop stocks with Russian ties because the profits from those stocks don’t directly benefit Russia.
“What I would tell a client if they came to me and said, hey, if I'm holding Russia, I want to get out, I would caution them about a couple of things. One is, remember when you buy a stock on the secondary market, that money is not going directly to the company. The company's already issued the IPO. And it's trading hands on the secondary market,” Ulrich said.
Ulrich also noted that investors may want to keep emerging bond funds that have Russian exposure because they hold debt from European nations. He noted that investors with emerging bond fund investments get to say that Russia owes them.
“If you've got money in maybe an emerging bond fund, and it's tied up in a Russian sovereign debt issue, how cool is it to think that Vladimir Putin owes me money, right? Do you really want to divest from that? I mean, I don't know if you're going to get paid or not right now on that. I don't know if Vlad's making the payments on stuff. But I don't know. I think it'd be pretty cool to say Vladimir Putin owes me money,” Ulrich said.
With revelations that the Kentucky Teachers Pension Fund had exposure to Russian stocks, Ulrich noted that questions about Russian stock divestment are opportunities for investors to do their own research to know where their stocks and bonds are invested.
“It might be a learning opportunity for you to start digging in and figuring out, really, what is your process? And for that, you start with Yahoo Finance, and you call your financial advisor," Ulrich said. "But, ultimately, it's up to all of us to kind of be a little bit more active and understand what our investments are."
Ella Vincent is the personal finance reporter for Yahoo Money. Follow her on Twitter at @bookgirlchicago.
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