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For the average investor, the keys to investing success, over the long-term, are diversification and portfolio re-balancing, pretty straight forward.

But before you can even diversify and re-balance your investments, you need to choose the type of investments to make up your accounts, and I’ve written a lot about that, as well.

Here’s where you need to listen up!

Before you choose your investments you need to understand what you CAN and CAN NOT control. I think investors for the most part, have this all wrong.

What am I talking about?

A lot of investors are under the notion that it’s their duty to control the performance of their investments. I say forget about doing this, this is completely out of your control, for the most part. Thinking that you can control your investment performance is the first critical mistake the average investor makes. I would suggest ridding your brain of these thoughts and focusing on what you CAN control.

Continue Reading “The Single Most Important Thing You Can Control (when it comes to your investments)”

When I first started writing this blog in no way did I have the word frugal on my brain.

I knew what the word meant, but it wasn’t until I became a part of the PF (personal finance) blogging world that I really started to appreciate and understand the significance of this simple word.

Here’s a part of the definition Wikipedia offers up for Frugality:

“Some of the main strategies of frugality are the reduction of waste, changing costly habits, suppressing instant gratification by means of fiscal self-restraint, seeking efficiency, avoiding traps, defying expensive social norms, embracing free (as in gratis) options…”

A deeper meaning

I think that definition is pretty accurate. I also think it’s kind of ironic how I used to attach a negative connotation to that word (which I think most of the general public still does) and how I now look at it in a completely new light.

Continue Reading “5 Easy Ways To Apply Frugality to Your Investment Decisions”

I’ve been writing alot about passive investing (which anyone can do) and detailing pretty much how I run my business. One may think I’m giving away all the secrets, giving away the shop.

Why would I want to do something like that? If you show clients how its done then clients won’t need you, right? If you’re taking a passive investment approach then what am I paying you to do? to choose investments that I can pick myself?

There certainly is surface risk here but there’s risk in everything. It also bears noting that anyone can piece most of this stuff together, from various media sources, but I hope what will differentiate this site is the fact that you can find a lot of it in one place, one stop shopping:)

Continue Reading “Giving away the shop gladly!”

Well I’m back to the blog after a few days of R&R for the Labor Day weekend. Been relaxing and watching the US Open Tennis, loving the matches and the great coverage on USA and CBS, always one of my favorite times of year in NYC. Tonight on USA is Roger Federer vs Andy Roddick in prime-time, I can’t wait. Hopefully Andy will give him more of a challenge then he did at the Australian Open in January.

This time of year brings back special memories for me, as I grew up playing tennis at the USTA National Tennis Center. I ball-boyed the Open for many years, alongside my tennis friends, many of whom I’ve lost touch with. I ball-boyed the Womens doubles final where Steffi Graf and Gabriella Sabatini won the title that year.

Back in the day

I ball-boyed a Mens quarterfinal between Jimmy Connors and Brad Gilbert, I ball-boyed for Boris Becker on a few occasions and everyone thought I looked just like him; I used to take photos with fans who thought I was him, pretty funny.

Continue Reading “Labor Day memories”

In my last post, I ended by talking about relative performance. I kinda wanted to clarify a few things since I may not have been as clear as I wanted to be.

The investment portfolios I construct for client’s are (almost always) directly related to what the financial plan tells me we need to return, in order to achieve the client’s stated goals. Each situation is customizable and unique.

In the last post, I mentioned 8.9% as the hypothetical return needed. Typically, based on historical returns and plan assumptions, I will construct a portfolio of stocks, bonds, managed futures, etc. that will put us slightly above that 8.9% number.

Continue Reading “Relative performance can be relative”

This next calculator is pretty cool. Very similar, in fact, to alot of the retirement “What If” scenarios that you can model for clients with more in depth planning software. What you are actually seeing, with these calculators, is a stripped down version of the more formal financial planning software.

These calculators are the engines that make all that fancy software go. Without further ado, lets dive into this ‘Nestegg’ …

Retirement Nestegg Calculator

One thing you must be aware of when using this calculator is its hyper sensitivity. With many of these calculators, there are often only one or two input fields that can dramatically impact the results. With this particular calculator, if you change just about any field, you will see big swings in the future results.

Continue Reading “Retirement Nestegg - Calculator Explanation”

Today is the first post, in a series of posts, where I’ll be reviewing the functionality of 6 financial calculators. I will explain, in plain language, how each of these calculators works and how to integrate the results of each, into your personalized ‘down home’ financial plan.

As promised, I will be creating a lot of hypothetical scenarios to use as references, too. I will also be adding more calculators as time goes by.

Roth IRA v Traditional IRA Calculator

The purpose of this Roth IRA calculator is to figure out which type of IRA is best for you. Now, as you may know, I’m a big fan of the Roth IRA and tend to favor it over a traditional IRA. Below is a screen shot where I’ve inputed some data and calculated the results…

Continue Reading “Roth IRA vs Traditional IRA - Calculator Explained”

Ok as promised, I’m going to use the fear card to ’scare you straight’ on the issue of social security… are you shaking yet?

‘Scared Straight’ was an Academy Award winning documentary, filmed in 1978 by Arnold Shapiro, that deals with taking troubled teens to Rahway State Prison and introducing them to prison ‘lifers’. The hardened prisoners scare the hell out of the kids, talking about the harsh realities of what happens on the inside. In the end, the kids realize they don’t want anything to do with life in jail… effectively scaring them straight.

Continue Reading “Scared Straight on Social Security”

Often there’s not much transparency when it comes to letting clients know how advisors are compensated.

Advisors and brokers often dance around the issue and are hoping clients don’t ask them that question.

I know that was the last question I wanted to hear when I worked in the bank. It was one of the reasons I knew I had to get out of there and needed to switch to a planning and fee based business model.

(To be fair, these days, most banks offer fee based programs although I’d say it makes up a minority percentage of their business)

Cut and dry issue

These days, for me, talking compensation (generated from client asset management) is a very cut and dry issue. The overwhelming majority of my clients fall into one of two ‘fee based’ categories:

Continue Reading “How financial advisors get paid”

The reason why the financial planning process works so well is because it aligns you and your clients.

The plan puts you on the same wavelength; you tend to work far more efficiently together. And here’s a real biggie…. there are far fewer trust issues to deal with, than if there is no financial plan in place.

Let me ask you a question: Have you ever had a successful relationship when there were trust issues, financial or otherwise? I’m going to say NO to that.

Here’s another question: What would you say, is a major problem that has plagued the financial services business for as long as I can remember? Trust.

Continue Reading “Fixing the alignment”