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Continue readingHyperbolic Discounting and Your Retirement Plan
Have you noticed how we often make rational choices in our minds when we look ahead, only to ignore that wisdom when we have to make the same choice in the present? Economists call this behavior hyperbolic discounting or present bias.
Continue readingSelecting the Right Bond Funds for Your Portfolio
Most investors are so focused on their stock portfolios that bonds are often just an afterthought. For many of them, a bond portfolio means stable value or money market funds. However, the role of bonds is just as important as the role of stocks for a successful investment experience, and even more important for some goals. The right bonds help you avoid unnecessary risks and make the most out of your portfolio, particularly in a low interest rate environment. A good bond portfolio acts like a reliable brake system on a racecar: good brakes won’t make the car go faster, but it will make it go faster around the track. If you are not the race type, you know that good breaks help you arrive safely at your destination. That’s the role of bonds, and more.
Continue readingThe Many Good Reasons to Save in a 529 Plan
The college goal is one of the top financial priorities of families, right up there with a good retirement. However, many parents don’t have dedicated accounts, like a 529, to save for this important goal. Or if they do, they may underutilize them. 529 plans are savings plans that are specifically designed to help you save for college and offer great tax and other advantages. Given the high-and-rising costs of higher education, most parents would benefit from using 529 accounts. So let’s review some of the benefits of these plans, and get started today!
Continue readingCreate a tax-Efficient Investment Plan With These Tips
High investment costs are the most reliable predictor of poor investment performance, and investment taxes are often the largest component of such costs. Left unchecked, the performance drag due to taxes can compound to substantial amounts.
While you can’t eliminate taxes, there is some good news for investors: the effect of taxes on performance is largely under your control.
A few principles when selecting your investments can go a long way in reducing the tax drag and increase the efficiency of your savings over time.
Continue readingQuantifying the Risk-Return Tradeoffs of Investing
In most cases, we can rely on prices to evaluate the cost of our decisions. Prices make it easy to evaluate tradeoffs. When it’s about investing, however, the costs of our decisions are less apparent. Not having a good grasp of the risk of stocks is one of the key reasons why investment plans go bad.
Continue readingLearn the Basics of Investment Taxation from a Wealth Advisor Near Me, and Start Investing More Efficiently
As you probably know, virtually any monetary earnings or gains in your life are taxable, and investment earnings are no exception. First, if you are getting taxed on your investments, it generally means you have made gains. And, while not as good as gains, investment losses can be used to offset other gains or income, therefore reducing your taxes.
Continue readingUse Your Risk Capacity to Create a Better Asset Allocation
Your asset allocation represents how you divide your wealth across different investments and can be the single most important element of investment success. Arriving at the right asset allocation requires the evaluation of a number of factors that are unique to each investor.
Continue readingThe Biggest Myth About Bond Returns
You may have heard that now is not a good time to invest in bonds. With low interest rates, you don’t get much of a return. Plus, low rates today mean interest rates can only go up in the future, and you can expect bond prices to fall when interest rates rise. Some investors and analysts have declared death to the 60/40, a traditional portfolio allocation with 60 percent in stocks and 40 percent in bonds, and suggest replacing bonds with alternative investments for diversification. What is myth and what is reality?
Continue readingWhat can you do when every investment seems overpriced?
Are all the traditional investments like bonds, stocks, and real estate posed for a fall in value or at least very low returns? And what should investors do with their portfolios?
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