Understanding How Financial Advisors Are Compensated
With the value provided by good financial decision making and the impediments people face to achieve good financial outcomes for themselves, it is worthwhile discussing more about the advisory profession and understanding how advisors are paid, if for no other reason than in the interest of increased transparency.
Does Your Mindset Affect How You Make Retirement Income Decisions?
The fields of behavioral finance and behavioral economics have uncovered various biases humans have which are great for day-to-day survival, but somewhat maladaptive for long-term investing.
Common Investor Behaviors That Hurt Investments
In my post from last week, “behavioral coaching” was suggested to have the biggest impact on real-world investor returns. In Vanguard’s analysis, being able to overcome your own behavioral quirks could add more than 1.5% to your returns, as opposed to falling victim to your own human tendencies.
Does Your Retirement Plan Account For Your Own Cognitive Decline?
When it comes to financial planning, Vanguard’s “Alpha” and Morningstar’s “Gamma” are really just the tip of the iceberg.
The Value of Sound Financial Decisions: From Alpha to Gamma
David Blanchett and Paul Kaplan at Morningstar created a similar study about the value of good decision making. Their results and approach are different from those of Vanguard, but the goal is the same: to quantify the costs of poor and good decision making. Naturally, many assumptions must be made regarding good financial decisions and the impact of poor financial decisions.
A Diversified Portfolio is a Healthy Portfolio
Diversification is one of your most important financial tools. This one strategy can simultaneously limit your exposure to investment risks while also potentially improving expected returns. Best of all, the benefits of diversification are well-documented and supported by over 60 years of academic research. The Benefits of Global Diversification Diversification simply means spreading risks around […]
The Value of Sound Financial Decisions
Good financial planning decisions extend well beyond where and how you invest. Two major research efforts have attempted to quantify how good financial decision making can enhance your lifetime standard of living. It is important to understand what this research means, because this may not always equal a higher portfolio return in the short term.
Consistently Successful Active Managers Are 'Rarer Than Rare'
Want to get better at investing? Are you looking for simple, approachable ways to deepen your knowledge of the keys that create financial success? Using academic research and expert advice, this resource offers 12 principles for building wise, sustainable wealth. Principle 4: If It Seems Too Good To Be True, It Is Now that we’ve […]
What Is a Safety-First Retirement Plan?
The safety-first school of thought was originally derived from academic models of how people allocate their resources over a lifetime to maximize lifetime satisfaction.
How Do Presidential Elections Affect The Markets?
With the presidential election coming up, people are naturally curious about what the elections mean for the stock market – and, more importantly, for their investments (and everything those investments represent).
