Year-end investment tips

Just what you need, right? One more time-consuming task to be taken care of between now and the end of the year. But taking a little time to make some strategic saving and investing decisions before December 31 can affect not only your long-term ability to meet your financial goals but also the amount of taxes you’ll owe next April. Look at the forest, not just the trees The first step in your year-end investment planning process should be a review of your overall portfolio. That review can tell you whether you need to rebalance. If one type of investment you own has done well — for example, large-cap stocks — it might now represent a greater percentage of your portfolio than you originally intended. To rebalance, you would sell some of that asset class and use that money to buy other types of investments to bring your overall allocation back to an appropriate balance. Your overall review should also help you decide whether that rebalancing should be done before or after December 31 for tax reasons. Also, make sure your asset allocation is still appropriate for your time horizon and goals. You might consider being a bit more aggressive

November 2, 2018 No Comments

Ask yourself these two questions in volatile markets

This has been the worst ever start to a year for the stock market, and stocks tanked again today. But that’s not all. Investors are seeking the security of government bonds. Oil continues to trade below $30 a barrel. Netflix is raising its prices. A massive snowstorm threatens the Mid-Atlantic. The new Star Wars movie didn’t get an Oscar nomination for best picture. The list of panic and chaos could go on. These recent events (at least the ones related to financial markets) have triggered lots of angst and questions from investors, some of which we responded to last Friday. Our readers have done most of the asking lately, but now it’s our turn to pose a couple of questions to you: 1) Do you have a strategy? How do you deal with market drops like the one we saw today? Instead of repeatedly smashing your head into the laptop, consider a more constructive approach. Rebalancing your portfolio so that your original asset allocation (mix of stocks, fixed income, and cash) is where you intended it to be could be a good move. To bring your asset allocation back to the original percentages you set for each type of investment,

January 20, 2016 No Comments

Markets continue the roller coaster ride

Investors kicked off September by fleeing stocks, extending the losses suffered in August. This market is being driven by emotion, rather than a substantial change in the fundamentals of the economy. Although data have indicated a slowdown in developed markets, we have seen nothing to indicate a recessionary trend here in the United States. And all indications are that an accommodative Federal Reserve will hold off on a rate hike until at least the end of the year. What to expect now September has historically been a challenging month for stocks, and today’s selloff confirmed the stereotype. Although there is no guarantee we’ll continue to see ups and downs like we’ve experienced over the last few weeks, volatility has become more of the norm in markets. That’s due in part to a lot of the uncertainty around Chinese growth and Fed interest rate policy. It’s also healthy. Volatility can be your friend. Without it, you couldn’t make money in the stock market. Remember that when you own stock in a company, you own part of a business. The value of that business does not fluctuate as wildly on a day-to-day basis as its stock price. This means that its market

September 1, 2015 No Comments

Five ways to deal with market volatility

US markets turned in their worst returns in years this August. So, as an investor, what should you do about it, if anything? Research shows that emotional selling, or bailing out of investments because things are scary, is all too common. This is bad because investor behavior and poor decision-making can adversely affect returns. A study released in 2014 showed that the average individual equity investor had a 20-year average annual total return that was 4.20% less than the index, directly related to poorly timed decision-making.* Take the emotion out of your investment strategy by doing these five things when markets get choppy: 1) Know your history Since 1900, there have been 35 declines of 10% or more in the markets. Of those 35 occurrences, or “corrections” as they’re sometimes called, the index fully recovered its value after an average of about 10 months. And a 10% drop doesn’t necessarily lead to a 20% one (which denotes a bear market) — in fact, in just 12 of the 31 corrections in the S&P 500 over the last 50 years did a bear market eventually ensue. If anything, the reason that recent drops seem bigger is that they came after a 47-month

August 31, 2015 No Comments

Comment on recent market volatility

This week, US markets suffered their worst weekly performance of 2015, leaving the S&P 500 Index in negative territory for the year after being up nearly 6% during its mid-July peak. So, as an investor, what should you do about it, if anything? Research shows that emotional selling, or bailing out of investments because things are scary, is all too common. This is bad because investor behavior and poor decision-making can adversely affect returns. A study released in 2014 showed that the average individual equity investor had a 20-year average annual total return that was 4.20% less than the index, directly related to poorly timed decision-making.* Take the emotion out of your investment strategy by doing these five things when markets get choppy: 1) Know your history Since 1900, there have been 35 declines of 10% or more in the S&P 500. Of those 35 occurrences, or “corrections” as they’re sometimes called, the index fully recovered its value after an average of about 10 months. With that perspective, if your investing time frame is years or even decades from now, it may be best to sit tight and stay invested. Of course, recent fluctuations have not put us in correction

August 21, 2015 No Comments