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Passive vs Active
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
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
“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
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
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
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…
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Pay for Performance
I believe everyone is capable of managing their personal finances and don’t believe the majority of financial advisors are providing value for their service. How many advisors/managers are able to bring market returns to their clients AFTER fees? All the people I know who pay a fee based on assets under management(AUM) don’t know if…
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