Plans To Prosper® Blog


Why We Need an Investment Philosophy

There are many who would suggest that, in a digitally-wired world in which information travels at light speed to all corners, the investment playing field has been leveled between individual investors and the institutions. In reality, however, the incessant noise and information overload can do more to fuel the irrational behavior of investors than it can to provide any sort of advantage. Absent a principled investment philosophy that guides their decisions and keeps them focused on their own investment objectives, investors are more likely to succumb to the mentality of the herd which can take them over a cliff.

The same can be said for new, tech-driven investment models which can create an over-reliance on lab-generated portfolios that can lull investors into a blinding complacency. The problem with many investment models that hypothesize future returns is that they tend to be based on risk calculations that imply knowledge of future uncertainties, which is impossible. They also assume that people, as a whole, will act rationally, which has been disproven time after time. Investors, who are grounded by a foundational investment philosophy, don’t have to rely on flawed investment models or the rationality of other investors.

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Will You Outlive Your Income? How to be Certain You Won’t

While our extended longevity should be greeted with gratitude for the possibility of enjoying a longer life with our grandchildren, many retirees are approaching it with trepidation, wondering if their hard earned assets will be sufficient to fulfill their vision of a good life for the rest of their life – however long it should last. At the critical point when assets are to be converted to income and a spend-down plan is launched, retirees need the assurance that they won’t outlive their income, which, to some retirees would be a fate worse than death.  

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Why You Should Prioritize Retirement Savings over College Savings

Young families with an eye to the future are faced with a daunting choice – to save earnestly for a secure retirement or to save for their children’s education. Can you do both? Certainly it is possible; however, with the cost of a college education and retirement (thanks to health care costs) rising faster than the rate of inflation, just targeting one of those goals with savings is no sure thing. And, with the increasing number of people reaching the retirement threshold unprepared and underfunded, financial planners today strongly advise their clients to focus on their retirement savings first. After all, a secure retirement rests squarely on your shoulders; while there are other funding sources that can contribute to your child’s education.

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Managing Investment Risks

Everyone would agree that it is impossible to predict future stock market returns. Investment models can produce hypothetical returns but they clearly can’t account for future events. So, investors who manage their investments based on market performance or what they perceive as opportunities for better returns have very little control over the outcome.

On the other hand, risk is a certainty. There will always be market risk, interest rate risk, inflation risk and taxation risk. If your investment portfolio is not vulnerable to market risk it is most likely vulnerable to interest rate or inflation risk. We also know that, over the long term, taxes can impede returns and portfolio performance. If it were possible to control the risks to your portfolio, then you could improve the long term performance of your investments.

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How to Create Order out of Chaos with Your Financial Records

It should not take the filing of a tax return or a death in the family to finally create order out of paper chaos so you are not forced to scramble in those critical circumstances. The chances of making costly errors are too great not to take some very simple, albeit essential, measures to get and stay organized all year long.

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