Monday, January 25, 2016

Can Someone Actually Predict the Stock Market's Movements?



Are there some folks amongst us who can actually predict precisely what the stock market is going to do? The most honest answer is no, not on this planet. Up until this point in time in the history of mankind no one has been able to accurately predict any such thing. Although so many have tried, according to the evidence on the books they've all been colossal failures.

If you want to become a successful investor, please, do yourself a huge favor: focus on the fundamentals, invest prudently - not based on anyone's predictions or even your own feelings.

Monday, January 11, 2016

Is Your Portfolio Designed to Weather the Storm?

Is Your Portfolio Designed to Weather the Storm?


What a rocky start of the year for equities. To say the stock market has been plummeting over the last week or so is an understatement. Every major index from The Dow to the S&P 500 and NASDAQ spent the entire week in turmoil, ending anywhere between negative 5 and 7 points. Yes, all just this week. 

Obviously, as an individual investor trying to grow your portfolio so you can have a better financial future, this is clearly an unsettling turn of events. Of course, it raises the proverbial elephant-in-the-room question that, in my humble opinion, every serious investor need to reevaluate: Is this the beginning of the end of the stock market as we know it? So should you get your money out now? Or should you just take this activity as normal and move on with your life?

In all honesty, I’d be doing you a great disservice if I told you which way you should move without first examining the actual composition of your portfolio and speaking with you in detail. In the same way, I’d caution you against taking any such suggestions from anyone else unless and until that person has done a thorough examination of your portfolio. That includes all media personalities, your favorite stock-whiz friends, and pretty much everyone, without any exceptions whatsoever. 

Here’s why. Whatever effect the stock market’s movements are having on your portfolio is only a symptom of the actual underlying issue: how your portfolio is arranged, and whether or not you have the most efficient arrangement to achieve your expected outcome. Unfortunately, most investors get confused by the overwhelming media coverage of the day-to-day movements of the market and substitute that for an assessment of their individual portfolios.

The reality is that the stock market will either go up or down at any particular point in time. The real question is what your specific portfolio is expected to be doing. Were you sold a portfolio with a tendency to always go up? If yes, then, you obviously need to be worried when it dips. Alternatively, if your portfolio is expected to occasionally plummet, to what extent? Is the current dip within those expectations?

As I have said on many occasions, it all boils down to doing it right from the get-go with a skilled advisor who will help you set the right expectations for your specific portfolio based on your individual circumstances. Time and time again, we see that cutting corners and/or buying into whatever seems trendy at the moment usually has a way of not ending well. So begin by defining your expectations; then, get a true advisor to help you build a portfolio YOU can live with. Settling for anything besides that is likely to mean you’ll end up getting thrown around with the wind of the media and/or unscrupulous financial advisors who could destroy your hard-earned wealth.

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Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the tough questions to help you make a plan that will get you where you want to go. Youll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If youre ready, were here to help.

Monday, December 28, 2015

Bond Mutual Funds Aren’t Built to Prevent Losses – You Can Still Lose Money

Bond Mutual Funds Aren’t Built to Prevent Losses – You Can Still Lose Money


Many are the myths that surround financial planning, but one of the most unfortunate and, in my opinion, potentially damaging is the notion that bond mutual funds are safe from value dips. As in, bond funds are the “safe place” to be when you don’t want your portfolio to lose any money.

About a week or so ago, I met someone at a social event who was at the least confused and at best disappointed because his bond portfolio has lost close to 15 percent in value within the past two quarters, since about July. His frustration seems to be more related to his understanding, however wrong, that bonds are the place to go to when you are looking to avoid the value dips usually associated with stock mutual funds – which was precisely what he intended and thought he was doing.

Obviously, he’s now learned the hard way that this truism wasn’t true. But he wasn’t the only one who believed this – so do many other weal-meaning, hard-working folks out there. Actually at the event where I met this gentleman, most of the others in our conversation circle believed this myth to be true: that bond funds are safe and won’t lose money.

How is such confusion possible?

I think the confusion seems to stem from the notion that government bonds are safe investments, and so, by implication, bond funds must be, too. While it is true that government bonds have virtually no default risk (meaning, you’ll get back your original investment at maturity), default risk isn’t the only risk associated with bonds. The other type of risk, which is fairly common and does occur frequently, is market risk. This has to do with declines in the price/value of a bond when interest rates rise. It happens when you try to sell a bond before its maturity date at a time when interest rates are higher than when you originally bought it. I must mention, additionally, that other kinds of bonds (e.g., municipal and corporate bonds) do carry default risk.

Without getting too technical, here’s the thing you must understand about mutual funds (including bond funds) in general: your fund manager has the authority to buy and/or sell whenever he or she sees fit. So if your fund sells bonds before their maturity at a time that interest rates have risen, compared to when those bonds were originally purchased, you’ll lose some value. That’s just how things work. And it is also very important to remember that you, as the individual investor in a bond fund, do not get to make the call regarding when the fund buys and/or sells its holdings.

The best way to mitigate some of this risk is to invest in a fund that holds high-quality short-term bonds. High quality to protect against default risk and short-term to combat market value rate swings.

All my best to you and yours in 2016!


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Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the tough questions to help you make a plan that will get you where you want to go. Youll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If youre ready, were here to help. 

Monday, December 14, 2015

Is Your Investment Portfolio Ready for the (Inevitable) Bumpy Ride?

Is Your Investment Portfolio Ready for the (Inevitable) Bumpy Ride?


If any portion of your portfolio is invested in equities, you may have noticed that the past several months have been pretty chaotic, to say the least. Naturally, as an investor, you’re somewhat concerned, worried, or even straight-out scared. Is this the beginning of the end, as has been predicted by some for years? Should you head for the exit? Or maybe you should buy gold or silver.

Like many, you, too, are probably trying to find that proverbial “sweet spot” of investing where none of this back-and-forth will affect you. That absolute portfolio that will not experience any of these drops in value but will only skyrocket quarter after quarter and year after year. The only reason that no one has been able to precisely articulate anything like that is simply because it doesn’t exist. At least not on any stock market in the history of humankind, to date.
                                                                                                                                       
By the way, I’m not trying to be sarcastic or fault you for believing or having such expectations as an investor. Just like you, I would prefer not to see my equity portfolio drop in value for even one day, if that were possible. But the thing is that it’s not realistic, or even possible, based on what history has taught us.

So irrespective of what you hear in the media or from some sales guy or gal who’s just interested in lining his or her pocket, it is a fact of investing life that the stock market goes up and down – and when your portfolio contains equities, it will, by design, follow that pattern.

However, that is not to say that all equity portfolios are equal. Far from it. There is such thing as an efficiently diversified portfolio that is built based on the level of volatility you can stomach. A portfolio that is carefully and specifically crafted to help you cope with movements of the various asset classes, something that is bound to occur, as nothing can prevent it from happening. But when those “ugly” moments happen, an efficient portfolio, by definition, should be rebalanced.

By extension, there are also very poorly diversified portfolios that are just based on what’s “hot” at the moment but without any real planning. Based on my observation in professional practice, it seems that, sadly, this is where the vast majority of folks tend to fall. While in the moment it may sound appealing – exciting, even – that you are somehow going to “beat” the market and avoid its natural down moments, you need to be reminded of the fact that the evidence to date shows that no one has been able to accurately and precisely predict where the stock market will be headed tomorrow. 

So it really comes down to what you believe to be realistic. Investing in a manner that recognizes the unpredictable nature of the stock market or investing like it is possible to predict and beat the market. Your call…
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Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the tough questions to help you make a plan that will get you where you want to go. Youll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If youre ready, were here to help.

Monday, November 30, 2015

How to Protect Your Budget and Skip the Financial Headaches this Holiday Season

Protect your budget and skip the financial headaches this holiday season


Well, it’s official. The holiday season is once again upon us. Among other things, it’s shopping season, as we prepare to give gifts to our loved ones. As tradition goes, this is supposed to be the most wonderful time of the year. However, according to the evidence on the ground, the vast majority of us find ourselves at the end of the most wonderful time of the year up to our eyeballs in financial regret of one form or another. This is typically the result of spending more money on gifts than we expected.

If you are among the millions of folks who keep exceeding your spending targets, year after year, and are looking for a fix, you might want to consider implementing these two suggestions.

First, understand that a gift is supposed to be a token and not the recipient's literal dollar value.

Obviously, this is something you already know. However, I think we need to remind ourselves of this fundamental truth from time to time, especially during the holiday season. It seems that, as a society, we are gradually moving away from this basic gifting tenet toward a view, however subtle, that the more expensive the gift, the more “acceptable” – and, quite frankly, they better you are, as the giver. That belief couldn’t be further from the truth.

Of course, I’m not implying here to avoid giving gifts you consider to be expensive. If you can afford to pay for them without creating an unnecessary burden on yourself after the fact, go ahead and knock yourself out. But that doesn’t change the fact that giving a gift should not place any unwelcome financial burden on you. Based on my experience in counseling folks over the years, I can tell you that this notion is at the very root of many of the financial nightmares that surround the holiday season.


Second, make a “cash list” instead of an “item list.”

More likely than not, you’re like most folks and have some form of shopping list. But it doesn’t seem to help much, in terms of keeping your overall expenditures within your expectations. You are probably going about it this way: you make a list of those to whom you intend to give gifts. You may or may not already have specific items in mind for certain people on your list. Then, of course, you do your absolute best to shop for the lowest possible prices for those gifts.

That is the wrong approach, because although you may be hoping to spend a certain amount, somehow you’ll end up way beyond that. To guarantee you’ll spend what you intend to spend – avoiding the risk of overspending and all the excess baggage it brings – include a “cash column” on your list, where you specifically indicate how much money you intend to spend on each individual. This way, you will select gifts that meet your cash targets, instead of the other way around, choosing gifts first and trying to juggle your budget to match them.

Happy shopping. And all the best this holiday season!
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Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the tough questions to help you make a plan that will get you where you want to go. Youll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If youre ready, were here to help. 

Monday, November 16, 2015

Another Misleading Piece of Financial Advice from Kiplinger's

Another misleading piece of financial advice from Kiplinger's


A little over a week ago, I saw an article titled “6 Ways to Avoid Outliving Your Retirement Nest Egg,” authored by Kiplinger’s Kathy Kristof. This single statement caught my attention – in a rather negative way – because it highlights what I believe is a very serious problem with many in the financial press: making generic statements that do not accurately reflect what’s out there in the real world. This, in turn, leads unsuspecting readers to draw conclusions and make decisions that are equally wrong, with potentially dire financial consequences, to say the least.
 
Under the sub-header “Buy an Annuity,” the author’s concluding paragraph said this, among other things:
“Be aware that generally if you buy an annuity and are run over by a truck a month later, no residual goes to your heirs. …”
Quite frankly, that is simply nowhere near what “generally” happens when folks buy most annuities. Rather, it’s very far from it.

Indeed, there is a specific kind of immediate annuity contract that works that way; it has a life-only payout and no refund option. However, that is only one specific variation in an entire class of immediate annuity contracts. On the other hand, there is also a slew of immediate annuities with life payout AND refund options that pay you for life, in addition to guaranteeing a specific refund payment to your heirs upon your death.

Besides, it is worth noting that there is a whole other class of annuities called deferred annuities, which make up the vast majority of annuities on the market today, in which case – to borrow Ms. Kristof’s analogy – if you were to be run over by a truck a month later, all of your money would be returned to your heirs.

So even if you inserted the word “immediate,” so that the statement read, “Be aware that generally if you buy an [immediate] annuity and are run over by a truck a month later, no residual goes to your heirs,” it will still be inaccurate. 

The only way I can see that statement serving a useful purpose and properly informing Ms. Kristof’s readers to make educated decisions – which I’d like to imagine a publication such as Kiplinger’s to be all about – would be if it said something like this: 
Be aware that generally if you buy an [immediate life-only] annuity [without a refund option] and are run over by a truck a month later, no residual goes to your heirs.
I’d like to state for the record that I’m by no means rooting for or against any particular kind of annuity, or any other product for that matter. Not at all. Here’s what I’ve always rooted for: Putting out the right factual information so that folks can make good decisions. But can you see how easily you can be misinformed by statements like these? So much so that you might take an action that could affect you for an entire lifetime, and even beyond? That’s my whole point!

So, my dear friend, don’t make decisions surrounding your financial future solely based on what you read in the press. Talk with an independent financial advisor with a proven record and a fiduciary obligation to put your best interest ahead of everything else. Then carefully weigh your options so that you can make the best possible choices that specifically work for you.

I wish you the very best.
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Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the tough questions to help you make a plan that will get you where you want to go. Youll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If youre ready, were here to help. 

Monday, November 2, 2015

What Will Your Heirs Do With the Inheritance You Leave Them?

What will your heirs do with the inheritance you leave them?


When it comes to the future and money, the story of life generally goes something like this: you work hard, plan ahead, and make sure to save as much money as you possibly can toward your retirement so that you can have a smooth, financially stress-free life down the road.

Sure. That’s definitely part of the process, but in my humble opinion, it’s only half the story. The other equally important – if not more crucial – aspect of the process involves what will happen to the inheritance you will leave behind. I’m literally referring to the money you will leave behind to your beneficiaries.

So here’s the question: When it’s all said and done and you depart this planet, will your hard-earned money be used in a manner that reflects your values and expectations?

If you expect your inheritance to be used in a more tangible way to further the lifestyle of your loved ones, be sure to articulate those expectations over the course of your life. More importantly, take the time to impart your values, ethics, and core beliefs on your loved ones now, while youre still here, instead of just writing their names on the beneficiary forms.

In my practice over the years, I’ve come to notice that the overwhelming majority of folks have very specific desires, expectations, and visions they hope to impact with the inheritances they will leave behind to their heirs. Unfortunately, however, many haven't made those expectations clear to their beneficiaries. They’re just hoping that the inheritances will be put to good use.

As the evidence and my experience show, when folks don't have clear conversations with their heirs about prospective inheritances, those heirs tend to spend their bequests frivolously, so to speak. But then again, that shouldn’t be too surprising, should it? 

On the one hand, you could argue that its a gift, so your beneficiary should use the inheritance as he/she sees fit. Not to mention that you literally won’t be around to see what happens. If that’s your thought, you’d be absolutely correct. The point I’m trying to get across is just to make sure you’re okay with that – or start talking NOW!
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Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the tough questions to help you make a plan that will get you where you want to go. Youll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If youre ready, were here to help.