Is Your Risk Tolerance Static?

How much tolerance for risk do you have when investing?  Does that tolerance vary with the ups-and-downs of the market or the apparent disfunction in Washington?  Can your tolerance be accurately gauged in the first place?

Some advisors believe psychometric-based questionnaires can be utilized to assess an investor's tolerance for risk.  Others dismiss the notion that risk tolerance can be ascertained.  They argue that our emotions cause us to change our willingness to take on risk based upon what's going on in the world.  Investors whose apetite for risk varies with current events makes it difficult to build a stable portfolio based solely upon perceived risk tolerance.  A needs-based approach to investing provides an alternative solution.

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Shocking Survey Results -- Developed Countries vs. Developing Countries

The United States is still the world's economic powerhouse, but "developing countries," such as South Korea, have made great strides toward the creation of modern, successful societies. The take-away: When it comes to investments, a whole world exists beyond on our shores that warrants our consideration.

Overall, participants in our recent survey recognized that South Korea compares favorably to the United States in many ways. The correct answers to the survey questions are highlighted below. 

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Why You Shouldn't Focus, on an Income Portfolio

The renowned financial advisor Harold Evensky states that "one of my many soap boxes is my frustration with the concept of an income portfolio."  Find out why this is so and why you should consider looking into building a portfolio that seeks to achieve a "total return."

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Shocking Investment Diversification, Survey Results

It may be hyperbole to call the results of my recent survey on investment diversification "shocking," but I think you'll find them interesting. (See below.)

The most notable finding is that people appear to be influenced by "recency bias" -- we give more weight to what is happening now than to past events. In other words, because U.S. stocks are currently doing well, they must have been the superior investment asset class in previous time periods. We also may be biased because we live in the United States and are less familiar with the larger world.

Admittedly there are reasons to be favorably inclined toward U.S. stocks as a risk asset given their solid historical, long-term returns. Yet diversification, as we can see, has its place in constructing a portfolio.

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Solving the Social Security Claiming Quandary

Making the right decisions on claiming Social Security benefits can increase what you ultimately receive by tens of thousands of dollars. Understanding the ins-and-outs of the rules and the myriad options available is mind-numbing. Trying to read-up on the subject can make your eyes bleed. (You get my point.)

Fortunately, we have invested in our ability to cut through the confusion and provide you with a detailed analysis of the different options for claiming Social Security benefits. Please contact me if you, or anyone you know, is interested.

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