Key Takeaways: Insurance coverage is a way to protect assets from loss. Insurance policies can be long and complicated, but it’s critical to understand in detail. Typical insurance policies to have in your portfolio include life, disability, health, auto, and house insurances. The amount of coverage is a personal choice and depends on the amount…
Month: January 2021
Automate. Automate. Automate.
Automate as much of your finances as possible. One of the main contributors to financial success is having an automated system in place that was engineered specifically for your personal goals. An automated system saves time, reduces human errors, and builds habits. All of these benefits compound over time to accumulate success. Automation is critical…
Prepare for the worse… Hope for the best
“Prepare for the worst, hope for the best” is a common idiom. One of the big picture concepts within that idiom is to balance optimism and pessimism. We believe this concept applies to personal finance too. Prepare for the Worst Bad things happen. These unlucky events occur more often than we like, usually with the…
Volatility is Inevitable
Key Takeaways: Market volatility, or fluctuations as simply defined, is inevitable. Diversification across investments and time is a crucial mitigant against market volatility. Volatility may also create opportunities that investors can capitalize on after thorough research. Fluctuations, or volatility, in investment portfolio prices can be very uncomfortable. Most of us will remember the drastic dips…
Asset Allocation
Key Takeaways: The two inputs to determine suitable asset allocations are time horizon and risk tolerance. Both of these inputs are personal decisions. There are free, readily available resources that anyone can use to determine the starting asset allocation. Asset allocation is the strategic decision to determine what proportion of your money to put into…
Modern Portfolio Theory
Key Takeaways: Modern Portfolio Theory (MPT) is a popular, fundamental investing theory. MPT advocates for a diversified investment portfolio to achieve an efficient risk-return profile. This is a strategy an average investor can use starting now. There are limitations to MPT. There are alternatives and other refined theories. MPT is a starting point. At the…
Understanding Asset Sub-classes
Key Takeaways: Subclasses are buckets of stocks, bonds, and assets underneath the primary asset classes that share further similarities Examples of subclasses include region, market capitalization, industry/sector/themes, and growth vs. value These subclasses are critical factors in developing an investment strategy because of diversification considerations Now that you are familiar with the primary asset classes…