-
AGG vs TLT
The S&P 500 is a reasonable choice for the stock portion of your asset allocation, but where to invest the bond portion of your portfolio. Below is a table with 20 year performance and volatility for 2 bond ETFs and the S&P 500 ETF. There are significant differences between the 2 bond funds, one is…
//
-
Bonds vs Cash
Investing in the broad based US investment grade bond market is easily done with ETFs. Here are the performance figures for the 2 largest index based bond ETFs, AGG and BND, with a money market fund for comparison. ETF ExpenseRatio CurrentYield 1-yearreturn 3-yearreturn 5-yearreturn 10-yearreturn AGG – iShares Core US Bond 0.03% 3.41% -1.45% -3.53%…
//
-
Asset Allocation vs Stock Selection
Assets are stocks, bonds, and cash. According to the 1986 landmark study “Determinants of Portfolio Performance” (Brinson, Hood, Beebower), 93.6% of a portfolios return variability was due to asset allocation, not stock selection or market timing. There is still debate on whether asset allocation should be fixed over time (static asset allocation) or should change…
//
-
Net Worth
The Federal Reserve collects information about family finances every three years, the last survey was completed in 2022. Median (midpoint, not average) net worth surged 37% to $192,900 and mean (average) net worth increased 23% to $1,063,700. Retirement accounts were held by 54.3% of families with a median value of $86,900 and a mean value…
//
-
Great Bond Bull Market
In September 1981, the 10-year US Treasury Bond yield peaked at over 15%. Over the next 39 years, from 1981 to 2020, yields declined leading to an increase in prices, the likes of which has never been seen before. Since the first half of 2020, yields have risen to a level not seen in15 years.…
//
-
Diversification
Diversifying into multiple asset classes reduces risk/volatility, but may also limit overall performance. Some argue that 2 asset classes, stocks and bonds, is enough diversification, while others believe more is better and recommend diversifying into other subclasses such as gold, commodities, real estate, and international markets. These other subclasses generally have higher expense ratios, which…
//
-
History of Investing
The New York Stock Exchange was formed in 1792 with the Buttonwood Agreement. There were only 30 stocks and bonds traded on a daily basis. By the end of the Civil War the number was up to 300. The stock ticker was introduced in 1867 allowing market information to be transmitted across the US. 1878…
//
-
Index ETF vs Mutual Fund vs SMA
There are many ways to invest in any individual asset category. They all have different expenses, returns, complexities, risks, and tax consequences. In the stock asset category, investing in individual company stocks, chosen by you and your financial advisor, is uncommon due to complexity, increased risk, and time required. Most advisors recommend investing in a…
//
-
Wealth Management vs Financial Advisor
A wealth management team generally includes attorneys, CPAs, CFPs, and CFAs. The team provides legal services (trust and estate planning), accounting services (tax preparation and planning), and investment management, while financial advisors limit themselves to investment management services. Wealth management fees are typically higher than financial advisor fees because of the included legal and accounting…
//
-
Risk Management
If your account is invested in a single company stock and the company goes out of business, you lose 100% of your investment. This is company risk and can be mostly eliminated by diversifying into many different company stocks. How many different companies do you need to invest in to create a diversified portfolio and…
//
Search
Categories
- Estate Planning (2)
- Insurance and Risk Management (3)
- Investing (17)
- Retirement (2)
- Wealth Management (2)
