How to Turn Your Investment Lemons Into Lemonade in the Next Two Days

December 29, 2011

We usually wait until April 15th to worry about taxes, but the time to do something about them is mostly well before that. Some examples include contributing to your employer’s retirement plan and flexible spending accounts. But there is also one thing that you can do right now if you have investment losses outside of your retirement plan.(I know I do and if you have any taxable investments, you probably do too). Here’s how you can turn losses into extra cash on April 15th: Continue reading “How to Turn Your Investment Lemons Into Lemonade in the Next Two Days”

The Truth About Target Date Funds

November 11, 2011

I read this article on Bankrate.com about investors’ belief that target date funds come with a guarantee of a sufficient retirement income. The statistics are a little bit startling (51 percent — of people investing their retirement savings in target-date funds see them as a retirement planning panacea and think that putting their money in them guarantees their retirement income needs will be met), frightening even, from the perspective of a financial planner. The conclusion of the article is: Continue reading “The Truth About Target Date Funds”

A Bear Market is Your Friend

November 07, 2011

A friend of mine posted this comment on Facebook last week “Yeah!  The market is up 345 points! Finally it is going in the right direction.”  Well, I was NOT happy at all to hear this news.  You see, that day (Thursday October 27th) was the day our company made its annual contribution for all of our employees – the employer matching contributions to everyone’s 401(k). I was certainly happy to receive a company contribution but not so happy about the timing. Because mutual funds pick up the end of day pricing, that means everyone in our company received a contribution to their 401(k) AFTER the market went up that day.  If the contribution had been made a day earlier, all of us who invest in stock funds would have been over three percent richer. Continue reading “A Bear Market is Your Friend”

Investing: Two Paths, One Goal

December 16, 2010

My wife and I recently took our last vacation for the year (boy did we need it). Because of the environment that we were in, it was easy to do some writing. This place – Cabo Pulmo — is off the beaten path, meaning no phones, no internet and no TV, so my wife and I got to spend some quality time bantering with my Dad and step-mom. When we were done with that we also took in some great hiking.

As we were hiking on one of the trails, I came across the inevitable “fork in the road.”  Now in hiking, invariably one trail is easier to take, less elevation gain, fewer obstacles, easier on the body, etc.  But it takes a longer time to reach the end of the hike. The other trail, more often than not, results in reaching the end quicker but you will climb higher faster and probably run into several obstacles that could also be more dangerous.

As I was hiking, I thought how this trail closely resembles the path(s) of the conservative and aggressive risk tolerance profiles.

The Conservative Investor: They will often have the bulk of their investable assets in cash or cash equivalents.  In order to reach a retirement goal, they may have to save a lot more which could take a bit longer, but they won’t have to deal with market fluctuations.

The Aggressive Investor: They may be able to reach their retirement goal sooner due to the potential higher return their investments could earn, BUT they will also have to deal with obstacles such as 2008.

The point here is that much like hiking, there isn’t one right way to reach your goal, just know which path is the right one for you.

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Can Injuries Help Us Assess Risk?

July 29, 2010

I’m usually a good sleeper, but the other day I lost a battle with the sleep thief Insomnia. The reason for my blissful lack of sleep was that I found out that I need to have surgery to reattach my bicep tendon. (I’ll save that story for another blog and another time.) Anyway, one of my random thoughts was about the similarity between playing various sports and investing.

For starters they both require a fundamental knowledge to understand what are the right and wrong ways to succeed. Continue reading “Can Injuries Help Us Assess Risk?”