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Investment Basics Series: Bonds vs. Bond Funds
How do I decide whether to invest in individual bonds, bond funds or both? In our last post, we addressed why we typically advise using stock funds instead of individual stocks to implement your investment strategy. Today, let’s talk about why we usually recommend the same for bonds. For bond and stock investing alike, turning to low-cost, well-managed funds instead of trying to juggle individual securities is a relatively straightforward way...
Article by Dimensional Fund Advisors: The Patience Principle
August 27, 2015 The Patience Principle By Jim Parker Vice President “Global markets are providing investors a rough ride at the moment, as the focus turns to China's economic outlook. But while falling markets can be worrisome, maintaining a longer-term perspective makes the volatility easier to handle. " To read more: OPEN PDF ...
What Sheri’s Reading: Special Edition
We briefly interrupt our regularly scheduled programing (Investment Basics Series) for a special edition of “What Sheri’s Been Reading." How have you been feeling the past few days? Hopefully you've ignored the gyrations of the stock markets and kept your eye on the long view but if you have not, you might be feeling a little agitated, anxious, panicky even? Are you wondering if you should be doing anything? Answer: As long as...
Investment Basics Series: Stocks vs. Stock Funds
How do I decide whether to invest in individual stocks, stock funds or both? So far in our summer series, we’ve been talking conceptually. As we inch toward the end of summer (bummer), let’s discuss a few logistics. To put rational theory into practice, we feel most investors are best served by avoiding attempts to pick individual stocks. Typically, the far more efficient approach is to build the stock portion of...
Investment Basics Series: What Is Rebalancing?
What is rebalancing? Why and when should an investor do it? “Buy low, sell high.” The expression is so familiar that it’s become a cliché. And yet, few investors actually follow this most basic advice. Instead, they panic and sell (low) during market crises, and chase already-hot stocks at premium (high) prices. Deliberate rebalancing is one of the best ways we know of to more consistently buy low and sell...
Investment Basics Series: What Is Diversification?
What is diversification and why does it matter to you as an investor? Risk, Return and Diversification If market risk is the fuel that drives expected returns, diversification is your steering wheel for navigating more assuredly toward your desired destination. As we covered in our last post, if you want to earn a return on your capital, you must put it to work in one or more markets. This also means you...
Investment Basics Series: What Are Market Risks?
What are market risks, and how should you approach them an investor? Nothing Ventured, Nothing Gained We’re all familiar with how risk is a double-edged sword. Those who are willing to take on daring risks improve their odds for reaching the greatest rewards. But they also can fall the hardest by stretching beyond the safety net of the status quo. In investing, this means that market risk can be your strongest...
Investment Basics Series: What Is Asset Location?
What is asset location and why does it matter to you as an investor? Let’s begin by noting that asset location should not be confused with asset allocation, which we addressed in last week’s post. The two are related, but each makes its own contribution to your investment experience. Asset allocation (as described here) is about spreading your money among different asset classes, based on the amount of market risk and...