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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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Why Your Financial Advisor, Should Play More Golf

Yes this is a self-serving statement, but it has its basis in the fact that creativity often requires a clear (not empty!) mind. The ability to freely associate among various ideas is more likely to occur when you're at ease. In this state, imaginative solutions can come forth.

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When Important is Not Important

Sam and Sadie have been happily married for over sixty years. A good friend asked Sam the secret of his successful marriage. "Well," Sam declared, "I was in charge of the big issues and Sadie was in charge of the small ones." The friend seemed confused by the answer.

"You see," Sam explained, "Sadie handled the small things, like what cars we drove, where we lived, and where the kids went to school. I dealt with the big issues—politics, the economy, world peace."

In the world of investments, you can be either like Sam or like Sadie. According to financial planner Carl Richards in a recent article in the AAII Journal, it's better to follow Sadie's approach. Instead of agonizing over the fate of Europe, the U.S. economy, and the daily fluctuations of the stock market, Richards believes it is more fitting to concern ourselves with something we at least have control over.

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