Index Funds vs. Actively Managed Mutual Funds – How to Choose

One of the most common pieces of investment advice goes something like this:  “If you want to be a successful investor, put your money in low cost, passively managed index mutual funds.”  It’s offered freely – in magazines, via social media, TV interviews, books, and blogs  – by writers, professors, even strangers at cocktail parties.  This advice is bestowed upon us with the confidence deserved by only the truest of universal truths.  The idea here is that by investing your money in low-cost index mutual funds, you can’t go wrong, and you will reach your goals.  All things being equal, low costs = successful investing.  But it’s just not that simple. Continue reading

Take Control. Start Here. Do One Thing.

Do you want to take control of your finances, but just don’t know where to begin? Here’s something that you can do today, which will both boost your confidence and empower you to move forward on other personal finance projects.

The first step is to make a list of everything you own (your Assets) and everything you owe (your Debts or Liabilities).  Subtract the Liabilities from the Assets, and you have what we call your Net Worth.  The most basic form of this list, what I call the “Index Card” approach, can simply include the name of the asset’s owner, (account, property, artwork, etc.), where the account is held or located, and its current value.  It’s simply an inventory of everything, and helps ensure that nothing gets lost or overlooked.  Continue reading

What’s Wrong with Your 401(k)?

401(k) plans are always in the news.  And they should be.  This type of retirement plan – synonymous with all retirement plans – is one of the most widely used retirement savings vehicles in the U.S.  In the past several years, there has been significant focus on 401(k) plan fees, and whether plan sponsors (your employer) and vendors (investment, mutual fund, and insurance companies) are disclosing just what fees are being deducted directly from participant accounts. Continue reading

What Should Your Financial Plan Really Look Like?

How should your financial plan be structured?  The graphic below shows an approach that I like to follow when working with clients (whether they are just starting out with very few assets, or quite established with significant assets).  Please note that this is not representative of a comprehensive financial plan, nor is it meant to represent your unique situation.  It’s simply a tool to help clients prioritize where to begin and how to deploy their assets most effectively.  And where exactly do we begin?  At the bottom:

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Does Your Financial Plan Look Like This?

It should. 

Why?  Because if you are saving for retirement, you need every advantage you can get; and every level of protection you can get.  As you work to earn money for your expenses, and invest your savings to reach your ultimate goal – retirement, for example – you, like the tank – could be hit with some bombs along the way.  You need a financial plan that provides protection from just about anything that life throws in front of you.  Continue reading