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When we refer to “equities” we are referring to stock in companies. The first thing to recognize about equities is where their value comes from. Stocks are worth the present value of the future cash flows they will deliver to their owners. Since stocks do not have an expiration date and dividends grow over time, the Continue reading Trek III: Equity Investing There are two reasons for having some of your investment portfolio money in a money market fund. Asset Allocation One reason for having some of your investment funds in a money market fund is to hedge against declines in other asset classes. For example, if you thought there was a high probability of a stock market decline Continue reading Trek III: Money Market Investing Investors are exposed to constant messages labeled “advice”. We are solicited with advertisements from computers, cell phones and supermarkets around the clock. These messages are tough to resist once the salesman has us in their office or free seminar. Knowing what to avoid is half the battle. The first deceptive lure is the free meal Continue reading Trek III: Evaluate Investment Advice To have good investment growth with the potential for reduced volatility and risk you should strongly consider investing globally. By incorporating international stocks into your portfolio you are tapping into a market that contains many great companies. You also get exposure to currency changes which has the potential to protect you from future Continue reading Trek III: Invest Globally The term “risk” refers to the probability that an event will occur. The event can be positive or negative. However, we generally associate risk with the probabilities of negative events. Financially, risk is defined as volatility. Asset classes have varying degrees of volatility. A dollar bill will not fluctuate in value whereas a gold Continue reading Trek III: Know Your Risk Tolerance You may have found some asset classes that are well-aligned with your investment time horizon. However, your portfolio may be overly concentrated in some asset classes that overly-expose you to specific risks. Diversification reduces risk but doesn’t eliminate it. As an investor you should be concerned that you know the risks inherent in an investment, Continue reading Trek III: Risk and Your Portfolio Asset classes have varying degrees of volatility. Generally, the closer you are to your objective the more you should be invested in less volatile asset classes. This argument has merit for objectives such as college education or travel when a definite withdrawal from your investments is expected. It also has merit for a new retiree who Continue reading Trek III: Know Your Time Horizon Goal-based investing is having a focus on goals – rather than portfolio performance – to determine the annual income you’ll need for retirement or other goals. As defined benefit plans fade into history, more American workers are confronting the fact that they will need to be much more active in deciding how to allocate their retirement Continue reading Trek III: Goal-Based Investing Before you begin to design your investment portfolio’s asset allocation you need to get a handle on three things: Your Goals Your Risk Tolerance Your Time Horizon You’ll want to build a portfolio that’s low-cost, easy to maintain and tax-efficient. That means that you’ll want to take a close look at passive index portfolios. You can Continue reading Trek III: Your Asset Allocation
This step on your prosperity trek… Here is Prosperity Concierge’s current asset allocation investment recommendation for your long-term portfolio. Long-Term Investment Allocation (for funds not needed for at least 5 years) 65% Emerging Markets (with a concentration in Brazil) Here is related Continue reading Trek III: Wealth and Prosperity: Asset Accumulation: Long-Term Portfolio Recommendation Rebalancing is the periodic adjustment of a portfolio to restore the original asset allocation mix. A common investment mistake is to not perform a periodic rebalancing of your portfolio. Many investors refuse to sell if they’ve lost money on an investment. Nor do they want to sell and take money off the table if they are Continue reading Trek III: Portfolio Rebalancing Investing in tax-sheltered accounts carries one disadvantage: you may not be able to get to your investment funds when you need them. The rules for tax-sheltered accounts can change with the whims and drifting priorities of Congress. That’s why you should have some money in taxable accounts – accounts that are unsheltered. Earlier steps in the Continue reading Trek III: Invest in Taxable Accounts The activity: Save for retirement by investing in the nonmatch portion of your 401(k). Earlier in the trek we asked you to contribute to your employer’s 401(k) plan to get Continue reading Wealth and Prosperity: Save From Income: Invest in Nonmatch Portion of 401(k) The activity: Have an emergency cash fund to protect your cash flow during difficult financial times. An emergency cash fund is intended to help you through difficult financial times, such Continue reading Wealth and Prosperity: Protect Income and Assets: Have an Emergency Cash Fund The activity: Saving for college with a college savings plan. The cost of a college education continues to rise at a rate that exceeds the overall rate of inflation. It can be a huge expense, for a family, for parents, Continue reading Wealth and Prosperity: Save From Income: College Savings Plan The activity: Plan your estate and take steps to leave a legacy. Estate planning is loaded with wealth-management pitfalls. The best way to care for your family if something happens Continue reading Wealth and Prosperity: Protect: Plan Your Estate The activity: Buy long-term care insurance to protect net worth. It’s not going to do you much good to build up your wealth if you let it slip through your fingers. Any Continue reading Wealth and Prosperity: Protect: Long-Term Care Insurance The activity: Consider purchasing umbrella insurance. An umbrella policy is an extra layer of insurance that can pay for medical, court or other expenses you may need to pay after basic home Continue reading Wealth and Prosperity: Protect Income and Assets: Umbrella Insurance Investors that have high incomes and don’t qualify for a deductible IRA or a Roth IRA are allowed to open a nondeductible IRA instead. The earnings are tax-deferred – not tax-free as they are in a Roth. A nondeductible IRA can make sense if you think you can convert the funds to a Roth IRA in Continue reading Trek III: Invest in Traditional IRA The activity: Use a Health Savings Account (HSA) for medical expenses and retirement. Your employer may offer you the option to fund a Health Savings Account (HSA). Health savings accounts (HSAs) are tax-deductible Continue reading Wealth and Prosperity: Save From Income: Health Savings Account |
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