When you make personal finance decisions and retirement finance decisions, individuals should understand the dilemma that, historically, more conservative portfolio investments have yielded reduced financial asset returns than more risky asset portfolios have returned.
With returns adjusted for risk, a person just cannot get less risk and higher returns in the long-term. As you take on greater asset portfolio risk, a person might be allowed to invest more and save less, due to the fact that the RIO on such an investment portfolio historically has been greater than a more conservative set of personal investments. However, you should appreciate that the expected financial outcomes have a lesser probability.
On the other hand, if persons decide to take lower investment portfolio returns risk, individuals must anticipate the need to increase savings and to invest at a higher rate. Yet, the outcome is more likely to have a more sure outcome. The choice about how to select a personally appropriate balance between investing risk and return is part science and part art. There are no easy answers, because the future is fundamentally unknowable, until it arrives.
Investors should prudently choose a investment strategy in line with their personal tolerance for investment risk.
A person may analyze these different investment strategies by experimenting with various settings with a sophisticated financial planning software tool. Using measured historical rates of return, a sophisticated personal finance worksheets program with a future value calculator demonstrates that a conservative asset allocation strategy that emphasizes cash and fixed income investments will usually appreciate with a much slower rate than an asset allocation favoring equities.
Long-term success with such a conservative asset allocation relies much more on methodical higher savings percentages rather than on higher expected investment portfolio ROI. This necessitates greater adherence to a savings program to sustain over the years and over one’s lifespan. From the other perspective, investment strategies that emphasize stocks rely more on hoped for asset appreciation in the future. Neverthess, these stock focused strategies will also require significant savings — just at lower rates than a more conservative asset allocation strategy.
A comprehensive and automated lifetime planner with a personal financial planning tool is a must to produce a high quality family financial strategy
To generate a very high quality plan for financial success requires that you use the best financial calculator with the leading investment calculators and the leading financial planning tools. This is where to get an excellent do-it-yourself personal financial program home computer application with the top financial retirement plan program, the top personal budget software, and the top financial investment software for your do-it-yourself lifelong financial planning activities.
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Millions of baby boomers will reach retirement age this year—many with high hopes for the golden years. But there’s a gap between retirement goals and retirement planning. According to a recent study by Prudential in partnership with the University of Connecticut, the reason may be the Investor’s Retirement Emotion Quotientsm or EQ.
The “Behavioral Risk in the Retirement Red Zone®” research report explores the link between emotions and financial decision-making in investors approaching or in The Retirement Red Zone, what Prudential calls the important investment window five years before and after retirement.
The study identified five dominant emotions that may influence investment decisions. These include fear, regret, inertia, aggressiveness, and susceptibility. Fear and regret are by far the most dominant emotions.
For more on this eye-opening study and other Retirement Red Zone information, go to: www.retirementredzone.com
Duration : 1 min 25 sec
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Is 5% enough to save for retirement? Is 10% better? This Vanguard® Plain Talk on Investing™ video can help you with this key decision.
Duration : 0:3:49
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Should I Buy Into A Fund? — Stock Invest (3)
Mutual or investment funds are very popular nowadays. One basic difference between an individual trader and a fund is that the former plays with his own money, whereas the latter plays with other people’s money. The following are the reasons why I won’t buy into a fund:
No Real Product
The funds only sell you a dream that your investment will multiply for the long term. They package the dream in such a way that you think you own a bunch of good companies too. In this way, they sell you one dream on top of another.
Dreams can evaporate so easily. Anchoring a dream to a good company will perpetuate it. Therefore, the selling points for a fund have to be: huge capital, technical expertise, diversified holdings in good companies, expertise in emerging markets and industries. Impressive indeed! Are they selling all of these to you or merely a dream nonetheless? If you can buy such impressive power, why can you still lose money in a fund?
Lack of Responsibility
Investment funds compete with banks for depositors’ money. The banks have a real product to sell. They sell you a specified interest rate. You are guaranteed the interest payment even if the bank loses money. Thus, the banks are responsible for the products they sell. In many countries, your deposit is even insured by the government should the bank go under.
The funds promise a dream that beat the banks’ interests by many times. However, they are not responsible for the dreams they sell. You may win or lose, even losing all of your initial investment. What a cool business to be in! People give you money and a management fee. You produce nothing but a dream. Best of all, you are not responsible for the outcome. No wonder the banks are selling investment funds to their customers, too.
In a market boom, the funds will report higher portfolio values to the customers. There is no real gain yet until you cash out. This means the dream gets inflated. The customers never question how much money the funds actually made, compared to how much was distributed to them. They have no choice but to accept a periodic report. In a downturn, the funds always blame the stock market or the economy as the scapegoat for the decreasing fortunes of their customers. It’s never their fault to cause the customers to lose money. The strange thing is that the customers also accept what the funds say.
Impressive but Irrelevant Information
The funds are really good at packaging the dream they sell. Customers are given an impressive brochure with graphs and statistics. Most people fall into the trap of studying the materials and becoming convinced. You should think about what they don’t tell you rather than savoring what they tell you.
In addition, the funds are best in creating technicalities to protect themselves and impress customers. When facing technicalities hard to comprehend, customers tend to shy away or accept. Many even admire the complexity. Very few customers refuse to be bullied or conned by sales people using technicalities.
Lack of Transparency
In good times, the funds make tons of money each trading day when billions of dollars change hands at the stock market. The customers never bother to ask how much profit is made and how much is given back to them. Instead, they only receive a periodic report showing what the funds want them to see.
In bad times, the funds still make plenty of money by shorting the shares as they fall. Don’t you ever suspect that they know how to profit in a down market too? Who initiates a downturn in the first place? Is it some big player or the herd? The profits made by their short selling on each trading day are never transparent. Thus they pocket all the profits with your thinking that they lose money like you in bad times. Consequently, besides losing a cut of this short-selling profit, the customers also lose part of their initial investments, which are tied to the falling market indexes, as cleverly designed by the funds.
In conclusion, I won’t let any “experts” to play with my money without some reasonable guarantee of returns during good times. Also, I will not accept any loss if the market comes down. I always remember that I am giving them my cash, and cash is king. I dictate the terms, not they. That’s why I will never invest in a fund.
For further information, please email to stockfessor@comcast.net.
Duration : 0:5:17
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Dr. Marvin Fineman fired his financial advisors and learned all abot the free tools available on the Internet that help him find the best returns on mutual funds.
Duration : 0:5:9
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Taxes, Efficient Markets, & Mutual Funds. NB: current tax law excludes deductibility of investment interest expense against qualified dividends. Also see/hear Borrowing.
Duration : 0:9:15
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