There are many claims about the benefits of asset allocation. Not all of these claims can be supported by evidence. Here are some common myths about asset allocaton.
Asset allocation protects you from bear markets
Asset allocation is all about identifying fundamentally different asset classes (stocks, bonds, real estate investment trusts), deciding how much of each you want
Continue reading Asset Allocation Myths
Investors’ attitudes today are characterized by ambiguity. Investors don’t know even what the possible outcomes may be, let alone the probability that they might occur. Without a familiar context for financial decision making, it’s easy to become emotionally paralyzed.
The difference between uncertainty and ambiguity may sound like little more than semantics. But neuroimaging studies have found that
Continue reading Investing Inertia – Overcoming Fear to Reach Your Financial Goals
Having an allocation of stocks, bonds, and short-term investments appropriate for your goals and tolerance for risk is important, especially when the market is volatile and you may be tempted to make short-term moves.
Although unnerving at the time, history has shown that some of the worst short-term losses in the stock market were often followed
Continue reading Rebalance to Reduce Your Portfolio Risk
For most individual investors it pays to have a long-term perspective and not worry about volatility. You can focus on long-term goals and the current environment by using a ”risk budgeting” approach to investing. It isn’t the same as market timing and it keeps the long term in mind. It shares its philosophy with Warren Buffett, who advised us to
Continue reading Investing in Riskier Asset Classes Using the “Risk Budgeting” Approach
Investors in money market funds who hope to diversify their holdings without giving up yield have several options.
When choosing cash investments the most important consideration should be to at least beat inflation. If you aren’t beating inflation you are losing buying power. That’s just as damaging as a loss of principal.
That said, if a financial institution
Continue reading Cash Investments: Money Market and Savings Options
Every portfolio should contain exposure to international equities to take advantage of growth and currency opportunities.
As investors go international, they should look beyond the usual emerging markets.
Here, Forbes contributor Alexandra Zendrian advises us on how we should approach the use of emerging market equities within your international equities asset class:
“Emerging markets” has become an unfortunate
Continue reading Emerging Market Equities – BRICs and Other Considerations
Is gold the best investment for protection against inflation.
Here’s an excerpt from an insightful post by Bloomberg columnist Matthew Lynn.
Dec. 8 (Bloomberg) — Economic chaos? The dollar crumbling? Central banks printing money like crazy?
Gold ingots
In reality, while investors are right to be nervous about inflation, maybe they are catching on that it’s wrong to
Continue reading Gold As An Inflation Hedge