Wait… $5,000 x 40 $200,000. How did you get $1.2 million? The extra $1million is due to compounding.Writing for MarketWatch, Mitch Tuchman explains compound interest. “Shark Tank” star Kevin O’Leary has some simple advice for anyone who finds investing scary: Just do it. Now. “When you’re 21 years old, or 20 or 18 or 19…
Category: investing
Where to put your "safe" money when interest rates are low
Low interest rates are great when you are borrowing money but frustrating for savers, especially retirees who seek to keep up with inflation but want to avoid risk. Of course, the best way to keep up with or beat inflation, at least before taxes, is to invest in stocks. But you don’t want all your…
Understanding Diversification with the Callan Periodic Table of Investment Returns
“The Periodic Table of Investment Returns depicts annual returns for 10 asset classes, ranked from best to worst performance for each calendar year.”https://www.callan.com/periodic-table/Click on: Download the PDF. I like this visual presentation of how asset categories fluctuate from yielding the highest returns one year to the lowest (or much lower) in subsequent years. The table…
Difference Between Socially Responsible Investing (SRI) and Environmental, Social and Governance (ESG) Investing
Samual Adams, writing for Advisor Perspectives (12/17/18), explains the difference between SRI and ESG: “SRI was originally developed to allow investors to avoid companies they disliked for ethical or values-based reasons. This original form of SRI is now called “exclusions” or “negative-screen” investing. Other SRI strategies have been developed, including positive screen or thematic investing,…
Where would the stock market be if Hillary had won?
Trump likes to take credit for the stock market gains during his first year in office but analysts disagree. As James Mackintosh explains in The Wall Street Journal, January 18, 2018“Many of the market-moving changes since the U.S. presidential election would have been just the same. Most important among them: The global economic rebound started before…
How to Protect Your Retirement Savings From a Crash
“Since the market hit rock bottom about eight years ago, it has been steadily improving, and investors have seen skyrocketing stock prices and annual returns. Unfortunately, those spectacular averages won’t last forever, and the investment pros have some pretty pessimistic predictions for the future,” according to Katie Brockman writing for The Motley Fool. “So what…
Understand Key Concepts: Return and Rate of Return
When evaluating investment options or assessing the performance of your current investments, two concepts are key: return and rate of return. In this podcast, we explain both and how to use them to get the most out of your investments. Listen | 4 min. 45 sec. https://www.finra.org/investors/podcasts/key-concepts-return-and-rate-return?utm_source=MM&utm_medium=email&utm_campaign=Investor%5FNews%5F053117%5FFINAL Source: Financial Planning for Women
A visual representation of investment diversification
Check out the Squared Away blog for an effective visualization of investment diversification. I used the Callan Table in teaching diversification to my university students. It’s a great way to understand why no one can predict future investment returns. http://squaredawayblog.bc.edu/squared-away/the-picture-of-investment-diversity/ Source: Financial Planning for Women
Hidden benefit of saving more
Workers who increase their savings will not only have more money in retirement, but when you save more, you also spend less! This means you won’t need as much money to maintain your current level of living when you retire. So ratchet up your retirement investing by 1% today and each subsequent year. Nerd’s Eye…
Investment Return and Rate of Return: What’s the difference?
Every investor wants to earn money on their investments. FINRA explains:“Investment return is the money you make or lose on an investment. Ideally, your return will be positive: your initial investment or principal will remain intact, and you’ll end up with more money than you invested.”“Total return is a measure of your profit or capital…