Category Archives: financial planning

How Should your Portfolio be Performing now?

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outside boxDear Mr. Market:

How is my portfolio doing this year? Am I on track for retirement? Why is the market up big but I’m not? What would my portfolio look like if the market tanked again like it did in 2008? I’m in cash right now because I feel stocks have moved too high but I don’t trust bonds because we all know where they’re headed.

These are some common and very typical questions many investors are asking themselves this year. If any one of these questions applies to you or feels familiar, don’t think you’re alone! One common thread among all these questions or concerns is benchmarking. What exactly is a benchmark and which one is appropriate for you?

Far too often investors compare themselves to other investors, strategies or benchmarks that are completely unrealistic.  Investors need to take the time to truly understand who they are and what their goals are before they compare themselves to anyone or anything!   Let’s put this in perspective…. Let’s say you decided you wanted to start swimming to get in shape.  Would you expect to get in the pool and swim times comparable to Michael Phelps (winner of 22 Olympic medals) within a couple of weeks?  Of course not… that would be ludicrous and clearly not the right athlete to try and compare yourself to!  As crazy as this sounds many investors have similar expectations with their investment portfolio. Continue reading →

Looking Under the Hood of your Company Retirement Plan

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Dear Mr. Market:

401k under the hoodIf you ask any hard working American what their goal is the answer will usually have something to do with retirement.  While this common goal should be attainable through focus and discipline the market has certainly thrown its fair share of setbacks at investors.  For most Americans their home is their largest asset, and second is their retirement plan (401(k), 403(b), Simple IRA, SEP IRA, etc).  You have a limited amount of control over the value of your home but how can you manage and monitor your retirement plan to help make your retirement goals a reality?  In this article we will take a step back to the basics and look at factors that will have a profound impact on the performance of your retirement accounts and what you can do to control them.

Last fall legislation was passed requiring 401(k) providers to completely disclose their entire fee structure to participants. Investors will now be able to see what fees are associated with the various funds in the plan and what they are paying to participate in their employer’s retirement plan. According to CNN Money, a working couple will see nearly a third of their investment reduced by these fees over their careers– that amounts to nearly $155,000!! Schwab reported that nearly 30% of investors had absolutely no idea that they paid any fees for their retirement plan. Continue reading →

Are you really looking for horrible investment advice?

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Dear Mr. Market,

How great would it be to have a job where you could constantly deliver results short of expectations and never have to worry about being fired?  What if you could always simply blame your lack of performance on random external forces or global events?  Imagine if you had a yearly performance review that went something like this…

 “You missed your target goals by 28% and were wrong more often than you were right!  Nice work, we are going to give you a bonus and a 10% raise!”

pay performance

 This doesn’t happen in the real world…or does it?!  The financial services industry has become notorious for overpaying executives even when the company itself is struggling to survive or is even on the verge of declaring bankruptcy.  For example, Richard Fuld of Lehman Brothers was one of the 25 best-paid CEO’s for eight years straight – right up until his firm collapsed in 2008.  It has been called ‘”the largest bankruptcy in history”;  it triggered a chain reaction that produced the worst financial crisis and economic downturn in 70 years!  What about professionals in the financial industry that consistently underperform but are not at risk of losing their jobs? Continue reading →

Where to find a top advisor?!

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Top advisor - magnifying glassSo…if you’re looking for the best financial advisor there is do you simply run a quick search on Google? Would it look something like ” best financial advisor in Denver” or “best financial advisor in Orange County”?  Would you rely on a list that ranks the best financial advisors?

In nearly every aspect of our lives we rank products or services and take pride if we are associated with or use that brand.  How often have you heard that a product has a “Gold Star Rating” or is recommended by ‘Consumer Reports’?  It should be no surprise that the same applies when it comes to the Financial Services industry.  Investors want to work with the best and often rely on rankings issued by various publications and websites for this information.

The key difference is that there are many more variables that need to be taken into consideration when looking at the financial industry and ranking firms or individuals.  In this article we will take a look at a list that is published annually and is highly respected – ‘Barron’s Top 1,000 Advisors List’.  Through our discussion it will become clear why ranking financial professionals is not as easy as ranking cars or laundry detergent and the results need to be looked at closely. Continue reading →

Should Bonds still be part of your Portfolio?

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Dear Mr. Market –

BondsWe are only a little over half way through this year yet you have already taken investors on a very interesting ride.  From posting impressive results through the first half of the year and then allowing volatility to enter the market through various headlines and worldwide economic news you’ve certainly kept us all on our toes.

As investors look at their portfolios and their performance results we have seen one alarming statistic over the last month and half.  In June alone individual investors took over $80 billion dollars out of their bond positions!  Investors moved out of their fixed income positions quickly due to rising interest rates and to chase the impressive returns that the equity markets have been posting.  Bonds are often treated as the ugly stepchild of investing but we find that they are typically not truly understood by the majority of investors.  Lets take a moment to get a better understanding on the basics of fixed income investing and more importantly how and why they have a place in your portfolio.

 Bonds/Fixed Income 101:

In their most basic form bonds are essentially a promise to repay money, with interest, on a certain date in the future.  Think of them as an IOU where the borrower is obligated to pay the lender (the investor) a specified amount of money at regular intervals and then to repay the principal amount at the bonds maturity date.  There are several different types of bonds available in today’s market, the following bullet points will focus on the most common ones: Continue reading →

Women Investors : Who Controls the Purse Strings?

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Women Investing

Dear Mr. Market:

Did you remember Mother’s Day and get her something special?  As we celebrated Mother’s Day earlier this month we would not be surprised if Mr. Market didn’t do much for his mother or for women in general.  The financial services industry has been notorious for overlooking women investors however, the ‘tides of change’ are quickly approaching and everyone needs to be aware of it.

Women have become major power players and are making a huge impact in today’s financial world.  The statistics speak for themselves; here are some eye opening facts: Continue reading →

ABC’s of Investing in a 529 College Savings Plan

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Unknown-6Dear Mr. Market:

Most of the time that we write to you it’s about your temper or volatile behavior and how that affects the average investor. Sometimes, however, it might be good for us to refresh our memory on “why” we invest and put up with all your ups and downs! Most investors certainly don’t watch you just for chuckles ; ideally we all have a purpose and reason to put up with all of your unpredictability and potential promise. With that being said, we would like to review some basic information as well as the pros and cons of saving for college via 529 College Savings Plans.

First and foremost let’s not waste too much time on stating the obvious: College and all the costs that come with it are more expensive than they ever have been. That trend is not reversing anytime soon so if you’re a parent or a grandparent trying to prepare and plan for the future, you need to consider the enormous price tag most universities are charging. Are you sitting down? The average private college tuition in 18 years from now will cost north of $130,000…per year! OK…how about the more reasonable route of going to a public state school? That price tag is estimated to be about Continue reading →