Are you being paid for the risk you are taking?
This is a question consistently asked in the investing world. If the underlying companies in a portfolio are not growing earnings, a higher price and return on the investment generally isn’t justified. Facebook’s recent miss and price drop is a prime example. Investors do not “like” it when companies fail produce the results they said they would. Read more
A frequent question of late is what to make of a flattening yield curve and what action should we take?
In short – the yield curve is used as a tool which can illustrate high probability recession risk with considerable lead time of about a year and should not affect drastic portfolio decisions this early on. This is perhaps a topic not worthy of a rapidly moving news cycle but does play into the drama and thus emotions of investors. Read more
A 2015 survey by the American Psychological Association found money was the top source of stress for American adults. (1) Whether it is worrying about debt, paying bills or planning for retirement, financial concerns are at the forefront of our psyche. Read more
First, let’s understand what sequence of returns risk is. In the example below, we invest $100,000 each in two portfolios. In both portfolios, we withdraw $5,000 per year inflated at 3%. Both portfolios earn an average arithmetic return of 6.5% over the next 20 years. In Portfolio A, we see four years of initial negative returns, and in Portfolio B, we see four years of initial positive returns. By year 20, Portfolio A has run out of money, while Portfolio B still has a balance of $87,054.
With that in mind, let’s explore some of the types of risk that can affect your investments.
Many companies offer employees benefits packages that include savings plans, pensions and stock options, but employees are often left to their own devices when implementing decisions on their financial future. Read more