return

Investing

Investing for Retirement: Value Averaging

Value averaging is a combination of two things: dollar cost averaging, and portfolio rebalancing. Combining dollar cost averaging and portfolio rebalancing: (1) you buy more assets when prices are low and fewer when prices are high, and (2) you allocate more money to stocks when equity prices are low and less to stocks when equity prices are high. Therefore, value averaging permits higher returns than dollar cost averaging alone. Continue reading Investing for Retirement: Value Averaging

Mike Connelly
Investing

Investing for Retirement: Actively Managed Investing

It is nearly impossible for active managers to beat the market over the long term after taking management expenses, transaction fees, taxes, and risk into account.  Individual investors don’t have the time or resources to compete with institutional investors. The only rational path for individual investors is to invest in passively managed index funds. Continue reading Investing for Retirement: Actively Managed Investing

Mike Connelly
Investing

Investing for Retirement: Time

Time is transformational. The longer the time that you hold your investments, the closer your portfolio’s actual returns will approximate their expected average. If your investment time is short, then higher return investments may be too risky due to variation in your actual returns. But, if your investment time is long-term, then you can consider higher-return, riskier investments because the variation in your actual returns will be closer to the expected average. Continue reading Investing for Retirement: Time

Mike Connelly
Investing

Investing for Retirement: Building Your Net Worth by Budgeting, Saving & Investing

Your first goal is to not spend more than you earn. In particular, do not carry credit card debt month to month. There is no point in trying to figure out how to maximize return for a given level of risk if you are in debt beyond your home mortgage (~4%) and low interest (1-2%) car loans. The reason for this is that you likely are spending more on interest for your loans and, particularly, credit card debt than you ever would recoup by investing an equivalent amount minus fees, taxes, and your high interest debt. Continue reading Investing for Retirement: Building Your Net Worth by Budgeting, Saving & Investing

Mike Connelly
Investing

Investing for Retirement: Table of Contents

Contents Overview Defining Your Investment Objectives Building Your Net Worth by Budgeting, Saving & Investing Compounding, Inflation & Real Returns Controlling the Costs of Your Investing Risk, Return & Time Market Risk Other Types of Risk Longevity & Mortality Risk Health Risk Event Risk Tax & Policy Risk Investment Return Time Recalling the Lessons of History Predicting the Future Financial Market Efficiency The Efficient Market … Continue reading Investing for Retirement: Table of Contents

Mike Connelly