The Skilled Investor

No financial planning software and no investment growth calculator can predict the future

Thu, 05 Apr 2007 16:20:00 -0500

The future is fundamentally unpredictable. The future of personal financial planning and investing is similarly unpredictable. Anyone claiming or implying that they can predict what will happen to investment returns in the securities markets in the future is just blowing smoke. If their predictive smoke claims to benefit you, then you should be suspicious. If you have to pay a lot of money to buy their predictions or financial advisor services, then you should be far more suspicious.

Too often, financial services companies give individuals advice about financial planning and investing that includes some razzle-dazzle about their supposedly superior analytic model, system, or tool. The general theme is usually the same: pay us and we will help you to beat the market using our unique insight developed from our special tool, model, system, etc. Unfortunately, these marvels are just more sophisticated forms of blowing marketing smoke -- this time aided by technological mirrors.

Your investment portfolio and other property assets are simply your evolving estate

Tue, 03 Apr 2007 00:40:00 -0500

Your investment portfolio and other property could become your estate at any time. As you proceed through life and become more successful financially, you need to monitor the size and trajectory of your potential estate assets. In particular, if you have responsibilities to others, you need to prepare appropriately for the day when your valuable assets become your estate. Prepare for your demise in advance. For the sake of your family, find a good estate lawyer sooner rather than when it is too late.

Do not ignore insurable risks that could destroy your best laid financial plans

Thu, 29 Mar 2007 01:20:00 -0500

A personal financial plan is not complete without needed insurance. As you use your favorite personal finance software to develop a workable lifetime financial plan, you should also consider where you might be vulnerable to other risks that would disrupt your planning. Insurance may provide cost-effective risk pooling benefits in some circumstances. However, in other situations, the net present value of insurance premiums may be too high to warrant carrying the insurance, despite the risks.

If personal finance is difficult for you carefully hire a good financial and investment advisor

Mon, 26 Mar 2007 14:00:00 -0500

If you realize that you need help with your personal financial planning, get a good financial advisor. However, be very, very careful with your financial advisor selection process. A good financial advisor could make things much better. A poor one could make things much worse.

Financial advisor costs and the value of their investment strategies determine your return on investment from these investment advisor services

Fri, 23 Mar 2007 13:50:00 -0500

Whether good or bad, financial advisors are expensive. If you need a financial advisor's help and you carefully select a good financial advisor, the value of the personal finance and investment advice that you receive might easily repay the advisor cost. However, bad financial advisors can cost you dearly, though both high financial expenses and poor investment strategies.

Never invest solely because of superior past mutual fund and ETF performance

Sun, 18 Mar 2007 21:10:00 -0500

Superior past mutual fund and ETF performance does NOT predict superior future performance. Only very poor past performance tends to be a slight predictor of more poor performance in the future, and excessive investment costs are the likely culprit.

Searching for superior investment fund managers is a waste of your money and time

Sat, 17 Mar 2007 15:20:00 -0500

This article discusses the reasons why selecting mutual funds and ETFs based on the characteristics of fund managers is a waste of your valuable time and money. You cannot reliably identify beforehand professional investment managers who will deliver superior performance at a reasonable price in the future. You cannot hire them at a price that is lower than their potential value-added.

Passive index investment strategies are superior, because they narrow the range of outcomes

Tue, 13 Mar 2007 00:10:00 -0500

Passive, index-oriented investment strategies tend to be superior, because they narrow the range of outcomes, and thus, they reduce the total investment risk associated with your portfolio. While the relative costs of active and passive strategies are very important, the higher risk and higher uncertainties of active strategies are just as important.

Spending your valuable time on the wrong financial activities is just plain bad for you

Sat, 10 Mar 2007 12:50:00 -0600

Your time is valuable. Do not ignore its value, when you assess how you are doing. If you use poor financial planning and investing strategies, you shot yourself in one foot. When you spend a lot of time on these bad strategies, you shoot yourself in both feet.

Own investment funds and not individual securities

Mon, 26 Feb 2007 13:40:00 -0600

Owning individual securities is just a big waste of your time and money. Individual investors tend to be terrible investment portfolio managers. Almost everyone can hire an index fund manager to do a much better job for far less time, money, risk, and consternation.