We’re all still adjusting to the Tax Cuts and Jobs Act of 2017, the new tax plan that overhauled tax brackets for individuals as well as many standard deductions and exemptions.
When investors construct their portfolio, it is vital they also develop a suitable rebalancing strategy. Rebalancing refers to adjusting the current allocations of the investments in a portfolio.
Investing inherently involves some risk; that’s just the way life works. Our job as investors is to figure out ways in which to minimize this risk. One common method that investors use to minimize risk is dollar cost averaging.
The world of online portfolio management has seen a lot of turbulence lately. From the Equifax breach to Google Finance’s recent announcement that it will no longer house your portfolio, many investors have been left scrambling to find better ways to protect and manage their financial information. Continue reading Come Down from the Cloud with IAM
Craig L. Israelsen, Ph.D.
The well-known Callan chart (Periodic Table of Investment Returns by Callan Associates) visually depicts the year-to-year performance of various asset classes and has been an incredibly value contribution to the literature of finance.
Based on the results of a quiz sent out by FINRA, Millennials are significantly less financially literate than preceding generations. When asked five questions about economics and finance, only 24% could answer four or five questions correctly, compared to 38% of Generation Xers (see graph). Continue reading Millennials and Financial Literacy
As 2015 begins, now may be an ideal time for investors to review their portfolio investments, making necessary rebalancing changes.
Rebalancing is the process of reallocating assets within a portfolio. It is a method to help you get your investments back in line with your target allocation of stocks, bonds and short-term reserves. Rebalancing helps investors by shifting money from those investments that have performed well into portfolio underachievers. Continue reading Portfolio Rebalancing Made Simple
Slow and steady wins the race. Or at least the investing race. Investing inherently involves some risk; that’s just the way life works. Our job as investors is to figure out ways in which to minimize this risk. One common method that investors use to minimize risk is dollar cost averaging.
Dollar cost averaging involves investing a fixed amount over a predetermined period of time rather than all at once. The rationale behind dollar cost averaging comes from the idea that markets don’t move in a straight line. By investing the same amount, you end up buying fewer shares when the price is high and more when the price is low. Not only that, but it minimizes risk from big market shifts during the entire investment period. If something should go terribly awry with the company you’re investing in, you can always simply stop purchasing shares and less of your investing capital will be affected.
Another benefit to dollar cost averaging is that is helps overcome decision paralysis. It’s natural to be hesitant before investing a large amount of your hard earned money, even in the bluest of blue-chip stocks. However (and especially for new and inexperienced investors), gradually easing in to the market makes it easier to invest.
While dollar cost averaging may be the best idea for novice investors, it by no mean guarantees a return on investment. In addition, new research suggests that lump sum investing may pay off in the long run. However, dollar cost averaging is far less nerve-racking and helps many investors sleep more soundly at night.