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Wealth Management vs Financial Advisor
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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 […]
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Risk Management
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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 […]
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Passive vs Active
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The real question is can active stock picking beat the S&P 500 index, after fees? Fidelity has an actively managed US Large Cap Equity strategy that beat the S&P 500 index over the past 5 years ending 4/30/2024. Below is the link. https://digital.fidelity.com/prgw/digital/msw/details/USLargeCapActive?taxManaged=false If they can continue this performance for another 5 years it will […]
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Annuities
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I don’t believe in variable annuities because they have high internal fees that produce returns less than you can get in similar investments outside of an annuity. I don’t believe in fixed annuities because they don’t provide more than long-term bond investments. Annuities have essentially no liquidity. No changing your mind.
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Nobody Knows
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“There is very little “scientific” information about how to invest a portfolio. The few things we know about investing: This lack of information, makes it easier to do your own wealth management.
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Beware of Bonds
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Bond prices typically move in the opposite direction of stock prices. Long-term bonds have more volatile total returns than short-term bonds. Bonds can go down in value, particularly if purchased at a premium. With current money market yields near 5%, their seems little reason to invest in bonds or bond funds that can go down […]
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Asset Allocation
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There are three main asset categories: Stocks, Bonds, and Cash. The proportion of your portfolio in each of these 3 categories is what determines your final total return. Stocks have high risk and high return, bonds have low/medium risk and low return, while cash (money market, CD) has no risk and generally very low return. […]
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Investing Simplified
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No one can time the market. Active stock selection rarely beats passive index investing. Asset allocation, not individual stock selection, determines the majority of portfolio return. Rebalancing a portfolio 1-2 times a year increases overall portfolio return. I believe if you invest in 60% stocks and 40% bonds with once a year rebalancing you will […]
