The Case for Stocks
The case for using an aggressive investment portfolio with a high stock allocation to fund retirement expenses rests on the idea that it will probably work. Stocks are expected to outperform bonds, and if and when that happens, a retiree will be able to spend more from their asset base in retirement. For example, in […]
Modern Portfolio Theory – Part Two
This article is part of a series; click here to read Part One. Efficient frontier diagrams do not actually show the asset allocations of portfolios on the efficient frontier, but this information is also available. Exhibit 1.3 provides an example of ten portfolios on the efficient frontier shown in Exhibit 1.2. These range from the […]
What is Modern Portfolio Theory? And Why Does it Matter?
Investing is fundamental to retirement planning. For many of us the long term growth from our investments is one of the primary sources of our income in retirement. So deciding how to invest is crucial. Since the financial markets are reasonably efficient, we can’t systematically beat the market. Deciding how we will structure our portfolio […]
Historical Market Returns – Part One
The primary subject of my book is comparing the risk premium with risk pooling as a source of funding for retirement goals. An important step is to first make clear what the risk premium is and how it relates to an investment portfolio. Fundamentally, investors prefer certainty to uncertainty. A bond provides a known yield […]
Overview of Stocks and the Stock Market
Stocks provide an ownership stake in a company. They provide access to company earnings based on its future performance. Companies can pay dividends to their stockholders to return profits to the owners, or they could reinvest profits into the firm to lay the foundation for better performance and even larger dividends to owners in the […]
The Coronavirus and Its Effects on the Market and Your Retirement
Just like many other areas of life, the novel Coronavirus is having a significant impact on the financial markets.
Two Philosophies for Retirement Income Planning Part One: Probability-Based
Within the world of retirement income planning, the siloed nature of financial services between investments and insurance leads to two opposing philosophies about how to build a retirement plan. There is an old saying that if the only tool you have is a hammer, then everything starts to look like a nail. This tendency is […]
The Yield Curve is Inverted. Don’t Panic.
It’s pretty easy to make finance stuff sounds scary. What happens in the financial markets has a direct effect on our retirement – but those same financial markets are basically a black box for most people (and a very dark gray box for a lot more). So it’s very easy for the financial media to […]
What Does it Mean to Call China a Currency Manipulator?
Monday (August 5th, 2019) was a chaotic day for both the world economy and markets. We want to break down what’s happened, and how that will likely impact your investments.
Should You Add Real Estate to Your Portfolio?
We talk a lot about stocks and bonds, but we spend less time on hard assets like commodities or real estate. Investing in real estate is very similar to investing in stocks, so it requires many of the same principles as any other asset class, just with a little twist.
