photos courtesy of Gary Morrison

Now What?

by Steve on August 25, 2015

We’re getting this question from clients and other people often these days. They’re referring to the investment markets that have taken a sharp swoon recently. The short answer we always give is, “I don’t know and neither does anyone else.” This is the nature of investing: the future is un-knowable. Any attempt to predict future events based on past action is futile. It’s like throwing chicken bones in a wooden bowl and trying to predict the future.

So what should you do as an investor? It depends. Everyone’s situation is different so a universal answer is not possible. But here’s a clue: if you are worried about the future direction of the investment markets (note, “worried” is the key word here), then your portfolio is probably too risky for you at this time of your life. An investment market correction like the one we’re experiencing now is a predictable event. Not “predictable” in the sense that we knew it was going to happen in mid-August 2015, but predictable in that investment market corrections are regular events that occur at irregular times. Your portfolio should be set up with this fact in mind.

Since markets go up and down at irregular times, your portfolio needs to be set up for you so that you are not worried about something you don’t control.  It’s a fact of investing life. Get used to it and set up your investment portfolio that plans for both growth and correction to the degree that fits you. It might be too late to make changes to your investment portfolio for this correction, but when the markets come back, and they probably will this time since they always have, it’s your opportunity to create the portfolio that is right for you.

Yale Beats Harvard

by Steve on August 18, 2015

No, I’m not talking about the latest installment of the 100-year old football rivalry between these two universities; I’m talking about which investment approach used by their endowments performed better over the last year. Yale’s approach, applied by the renowned David Swensen, returned 3.6% according to Motif Investing. This is the best return among the endowment portfolios in the eight Ivy League schools.

I make this point about the Yale endowment because well-diversified portfolios, like the one that Yale uses, are struggling in the last year. Weighed down by poor performing asset classes like commodities and non U.S. stocks, it’s not been a banner year for diversified portfolios. If the Yale endowment portfolio return is 3.6%, with all the assets and resources at their command, you might want to check your expectations about your portfolio returns.

So, how is your portfolio performing over the last year?

What is Money?

July 28, 2015

Have you ever thought about this question? The dictionary definition of “money” would be something like this: money: (muhn ee), noun: a circulating medium of exchange. But what is money really? Wars have been fought over it, lives have been ruined over it, industries have been started and failed over it. So what is money? […]

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How To Live a Life Without Regret

July 21, 2015

This is not a typical “money matters” blog post; rather, this blog title was suggested by an article I saw about living a life without regret. Bronnie Ware is a palliative care nurse and recorded the thoughts of her dying patients. From their thoughts she wrote a book titled, “The Top Five Regrets of the […]

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Why Can’t Investing Be Simple?

July 16, 2015

I had a client ask me that recently. After all, he reasoned, there are multiple features on his cell phone and the manufacturers have made all cell phones easy to use with just a few buttons and menus. I’m not sure I agree with him about the cell phone, but I get his point. So […]

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Fighting the Urge for Instant Gratification

July 14, 2015

A client recently confessed that she had spent $10,000 on a home improvement project for which she had not saved. She took the money out of her emergency fund and intended to replenish the account with anticipated extra money she thought she would earn from working overtime over the next year. Six months into the […]

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What We Can Learn From the Greeks

July 7, 2015

On Sunday, the Greek citizens voted in a national referendum against accepting further austerity measures imposed on their country by outside lending agencies. I know the situation is complicated by macro and micro economic conditions, politics and geo-political factors, but to me, it comes down to this: the Greek people, including their leadership past and […]

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One Day At A Time

June 23, 2015

“Your life is the sum total of all the little actions you take, your daily habit pattern. Successful people are those whose daily habits add up to something great.” Chellie Campbell, “Wealthy Spirit: Daily Affirmations for Financial Stress Reduction” This is how you become financially free. You won’t become financially free all at one time. […]

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Talk About Money With Your Partner

June 16, 2015

“There are two kinds of people in life — spenders and savers. Usually, they are married to each other.” –Anonymous

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“When Can I Retire?”

June 9, 2015

This is a question we frequently receive. The short answer is, “Whenever you want.” Retirement, like many things in life, is a choice. True, there are probably tradeoffs that you might not like if you want to retire today, however, what most people mean when they ask this question is, “When can I retire in […]

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