If you’re like most investors systematically saving for retirement through their employer or with an IRA chances are you’re taking advantage of dollar cost averaging. Dollar cost averaging is a method of investing a specific dollar amount, generally monthly, no matter how the market is reacting. It’s also a way for an investor to fully fund a retirement account without requiring the maximum amount allowed in one shot. For example, let’s assume that an investor under the age of 50 wants to save to an IRA. The maximum contribution to the IRA for 2015 is $5,500. Should the investor want to save monthly and still invest the maximum allowed for the year, he would simply divide by 12 and invest a sum of $458.33 monthly. The beauty of this strategy is that the investor takes advantage of market swings, whether high or low. If the market is considerably high (as […]
passive investing
Chasing Returns
Looking at this morning’s financial section of the paper inevitably had a piece regarding the assets classes and the respective investors (gamblers) that did exceptionally well in 2013. There was mention of a firm that bet heavily on Japanese stocks and did very well, another investor bet against gold and achieved glamorous returns and a hedge fund that bet on US stocks and looked like gods among mortals. But that’s the problem with these scenarios – we are mortal. Pick up any financial magazine that reports on funds or stock returns and you’ll see examples of mutual funds, stocks and bonds that have either beaten or done worse than their counterparts. For example, US stocks did very well in 2013 – so a domestic large cap fund would look amazing based on what it did for 2013. Herein lies the problem; the publication is reporting what the fund did, not […]
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What a Mutual Fund Manager Won’t Tell You
Most people reading this article will have some experience with mutual funds. Whether part of your IRA, 401(k), or other savings vehicle mutual funds play a key role in helping people achieve their savings goals with access to a wide variety of companies and diversification along with professional management. By professional management we mean an individual or team of managers that run the day-to-day activities of the fund such as buying and selling of stocks and bonds as well as running financial analyses of the different companies whose stock they are looking at adding to or selling from the fund. Mutual funds and their managers vary and from the macro level you essentially have two types of managers – active and passive. Active management means that the managers of the fund actively trade securities in hopes of achieving higher than market returns or outperforming their respective benchmark, such as the […]
Sterling Raskie, MSFS, CFP®, ChFC®
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And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.