What they are; why they matter. For many investors, it can be tempting to think of one's portfolio in terms of “gains” or “losses.” True, this is a central concept to understanding market behavior, but to truly maximize your investing knowledge, you also need to know about “unrealized gains,” “unrealized losses,” and how they can work to your advantage. As always, the fol … [Read more...] about Unrealized Loss and Gain
Are your choices based on evidence or emotion? Information vs. instinct. When it comes to investing, many people believe they have a “knack” for choosing good investments. But what exactly is that “knack” based on? The fact is, the choices we make with our assets can be strongly influenced by factors, many of them emotional, that we may not even be aware of. Deal du j … [Read more...] about Making Investment Decisions
What can you do to allay this risk? Knowledgeable investors are aware that investing in the capital markets presents any number of risks – interest-rate risk, company risk, and market risk. Risk is an inseparable companion to the potential for long-term growth. Some of the investment risks we face can be mitigated through diversification.1 As an investor, you f … [Read more...] about The Investment Risk You May Not Know About
The S&P 500 represents a large portion of the value of the U.S. equity market Did you know that nearly $10 trillion in assets are benchmarked to the Standard & Poor’s 500 Composite Index, including about $3.5 trillion in index assets?1 The S&P 500 is ubiquitous. It is constantly referenced in financial and non-financial media, and we may compare the return … [Read more...] about The Anatomy of an Index
Never touch your principal in retirement? Think again. More than a century ago, an American financial archetype emerged – the household that lived on the interest earned by its investments, never touching its principal. Times have changed. While the Vanderbilts, Carnegies, and Rockefellers could do that back in the Gilded Age, you will likely face a tough challenge trying t … [Read more...] about Think Total Return
A look at how variable rates of return do (and do not) impact investors over time. What exactly is the “sequence of returns”? The phrase simply describes the yearly variation in an investment portfolio’s rate of return. Across 20 or 30 years of saving and investing for the future, what kind of impact do these deviations from the average return have on a portfolio’s final … [Read more...] about What is the Sequence of Returns Risk?
How global returns and proper diversification are affecting overall returns. “Why is my portfolio underperforming the market?” This question may be on your mind. It is a question that investors sometimes ask after stocks shatter records or return exceptionally well in a quarter. The short answer is that while the U.S. equities market has realized significant gains in … [Read more...] about Your Diversified Portfolio vs. the S&P 500
That truth must always be recognized. When financial markets have a bad day, week, or month, discomforting headlines and data can swiftly communicate a message to retirees and retirement savers alike: equity investments are risky things, and Wall Street is a risky place. All true. If you want to accumulate significant retirement savings or try and grow your wealth … [Read more...] about Investing Means Tolerating Some Risk