Savvy planners focus most of their time and attention on managing things they can know and control, and work hard to filter much of the noise associated with investing. At TWM we've developed the acronym “ADEPPTS” to help you focus on managing:
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How to assess the big portfolio risk factors, including falling short and not diversifying properly.
Experts and pundits are notoriously bad at forecasting, in part because they aren't punished for bad predictions. Also, they tend to be deeply unscientific. Moreover, most of us engage in constant forecasting without even realizing it, and that can have an important impact on the way we think about investments. This podcast from Freakonomics Radio will help you rethink the subconscious ways in which we all take forecasting risk. The psychologist Philip Tetlock is finally turning prediction into a science -- and now even you could become a super forecaster.
Do you understand what diversification does for your portfolio? While people generally know diversification is a good thing, they’re often not sure exactly how or why. Academic research has shown that investors don’t understand diversification's impact on volatility and expected returns.
by economist John Mauldin
An Open Letter to the Next President, Part 4, Where to Find $1 Trillion of Free Money, Making America Competitive Again, New York, Dallas, and Abu Dhabi
When you invest, it’s good to mix things up. Diversity applies to many things in life—our friends, our colleagues, food, and sports—but it is most well known in the context of investing, and it’s commonly referred to as being diversified.
The beauty of a well-diversified portfolio is that you can come out ahead by sticking to the middle.
Commodities and Emerging Markets have performed poorly in the last few years. Should you sell low?
While it would be fun to hold a Portfolio in which all of the asset classes were going up at the same time, it would be a nightmare if they were all moving down at once.
To protect against epic losses, investors seek uncorrelated returns — asset classes that behave dissimilarly so that a portfolio’s ingredients don’t all move in the same direction at the same time.
But diversified portfolios should be built with the knowledge that including uncorrelated assets means always having to endure pain in part of the portfolio. That part will be going down or remaining flat, since it tends to move differently from the uncorrelated part that is going up.
The good news is that 401(k) contributions have increased, according to Fidelity Investments’ most recent quarterly retirement savings analysis based on data from the 401(k) and individual retirement accounts (IRAs) it manages. The bad news is one glaring problem for Baby Boomers; the asset allocation of their 401(k)s is drastically out of balance.
The famous marshmallow test conducted in the 1960's showed that we have a hard time resisting instant gratification, even if we know that delaying gratification would lead to an even bigger reward. This, in short, is what makes investing and managing businesses so hard. Success requires many qualities, but conviction, discipline and thinking long-term must rank near the top....
Be honest: How often do you really think about your retirement savings? Or maybe the better question is: How often do you actually do something to grow that nest egg?
These two basic concepts are key to having a successful financial future.
Asset allocation -- the mix of cash, bonds and stocks in a portfolio -- determines the spectrum of returns you will experience. Here's a great insight from Jack Bogle, founder of Vanguard...
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Our time tested keys to investment success.
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Here's a great article from Sunday’s New York Times about one of the key points we talked about in your plan's educational seminar. Why does the average fund investor underperform market indexes so badly? What can you do to close the performance gap?
Life and work are so busy these days, it’s no wonder that investment planning often falls to the bottom of the list. Your plan’s Target Allocation Portfolios offer a single-choice approach to retirement investing and an easy way to achieve immediate diversification based on your risk profile...
Warren Buffett cites Brutus in his 50th annual Berkshire Hathaway shareholder letter about how so many investors shoot themselves in the foot...
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But how does one go about diversifying a portfolio?
401(k) Sponsors and participants share some common concerns: market risk, not saving enough for retirement and the impact fees may have on hard-earned savings. This brochure explains how index investing can help.
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