Use Scientifically Based Financial Planning Strategies
VeriPlan is designed to help you pursue scientifically based financial planning strategies
VeriPlan offers you unprecedented direct control to perform your own automated personal financial planning. VeriPlan’s functionality also implements the principles of scientific finance. VeriPlan’s internal documentation and its links to information on the web help you to understand scientifically based personal financial planning and investment strategies.
VeriPlan’s functionality reflects a belief that individuals will follow optimal, scientifically proven financial planning and investment strategies, if they understand them and have appropriate and powerful planning tools. VeriPlan’s simple premise is that people want to get the most out of their money in a manner that addresses their needs across their lifecycle. While this objective is a ‘no-brainer,’ achievement of this objective requires steady and conscientious implementation over a lifetime. VeriPlan helps you to understand and to adopt financial practices that are more likely to achieve your lifetime objectives.
Providing extensive documentation embedded directly into the product where you need to find it, VeriPlan explains why various features have been implemented and how to use them. In addition, by providing links to scientific finance articles on The Skilled Investor website and elsewhere on the web, VeriPlan helps you to understand scientifically based personal financial strategies.
Whether you are well off or you intend to become so, VeriPlan is capable of generating lifecycle projections about your financial affairs. Explicitly or implicitly, every financial tool is designed with certain points-of-view. If you use a financial planning tool like VeriPlan, you should understand its viewpoints. On a separate, internal “Viewpoints” worksheet, VeriPlan explains many of the viewpoints that have influenced its design. As a sampling, some of these viewpoints include:
* Your personal earnings, expenditures, and savings are the most important and most reliable determinants of your family’s long-term financial wealth. Pay the most attention to them.
* There is no such thing as risk-free money from investing for individuals. You need to allocate your financial assets in a manner that reflects your relative tolerance for investment risk. You need to stay in the securities markets to earn market risk premiums. You need to build asset buffers to protect yourself from unpredictable market volatility and unplanned personal financial setbacks.
* 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. You should always completely diversify your portfolio. Own investment funds rather than individual securities. VeriPlan can easily model and project the value of your individual securities holdings, but low cost, fully diversified funds are more likely to achieve your lifetime objectives.
* Excessive visible and hidden investment costs tend to reduce the potential growth and value of your portfolio unnecessarily and dramatically. Cut your investment costs aggressively and keep cutting them. Pay yourself and not someone else.
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Personal Financial Planning
- 22 Ways to Avoid Financial Advisor and Investment Counselor Frauds and Scams (Avoiding financial advisor and investment counselor frauds and scams - Overview
The best way to avoid being defrauded or scammed by a financial or investment advisor is to investigate carefully several different advisers before hiring one of them.
If you carefully choose a financial adviser or investment counselor, you have a far greater chance of finding one [...])
- Two Examples of the Tax Assets Graphic in VeriPlan (Two examples of the Tax Assets graphic in VeriPlan
TAX ASSETS: Taxable and Tax-Advantaged Financial Assets (real $/yr)
Below are two examples of the blue-tabbed TAX ASSETS graphic, which come from VeriPlan's "Sue and Sam Saver" tutorial. This graphic separates their cash, bond, and stock assets by account taxability throughout their lifetime projections. Assets are separated [...])
- Chance creates the illusion that individual investors can beat the stock market (
"Market efficiency" makes it very difficult for individual investors to "beat the market."
Making their own decisions, individual investors perform so poorly that on average their investment returns lag behind the returns that one would expect from random stock selection.
The average professional trader does somewhat better than amateurs do, and professionals probably do so, in part, [...])
- American Funds – AMCAP Fund – Class A Shares (AMCPX) fetch a +1 Fund Authority Score (The table below in this article presents The Skilled Investor's Fund Authority Score and other information for the American Funds - AMCAP Fund - Class A Shares.
The diversified investment fund strategy of the American Funds - AMCAP Fund - Class A mutual fund shares (AMCPX)
According to its prospectus filing on the U.S. Securities and Exchange [...])
- Choose Lower Mutual Fund and ETF Management Fees (Choose mutual funds and ETFs with MUCH LOWER investment management expenses
Investment fund management fees can only be justified by individual investors, if higher net returns more than compensate for these fees. Sadly, this is most often not the case with actively managed equity and bond mutual funds and exchange-traded funds (ETFs). In addition, you have [...])
- Determine the Savings You Need for Your Lifetime Financial Goals (You cannot invest without savings. How much savings are enough? ... too little? ... too much?
Currently, the U.S. is experiencing a savings crisis. The net personal savings rate is zero or slightly negative, despite a healthy and growing economy. This situation is a prescription for millions upon millions of future personal financial disasters. (See: [...])
- The Never Do List – Avoid Financial Advisor Frauds and Scams (
Part 2 of the The Never-Do List - 22 Good Ways to Avoid Financial Advisor and Investment Counselor Frauds and Scams
This article discusses things that you should “never do” with a financial planner or investment advisor, and it covers fees, payments, and proprietary investments.
You should never do certain things with a financial planning or investment [...])
- The Heavy Burden of Recurring Investment Expenses and Fees (
The heavy burden of recurring investment fees (Part 1 of 2)
Recurring investment costs can significantly impact the long-term value of your retained investment portfolio assets.
Recurring fees, such as asset management fees, 12b-1 marketing fees, and advisory/asset custody fees are charged periodically, as a percent of your investment assets. The relative cost-efficiency of your investment portfolio [...])
- Automated Tool Aligns Your Investment Risk Tolerance and Asset Allocation (Check out this automated tool for aligning your investment risk tolerance and asset allocation - A Tip from The Skilled Investor
Your tolerance for investment risk is a relative thing. Few people like investment risk, but some can handle it better than others can. The more investment risk you are willing to tolerate, the higher your [...])
- Vanguard 500 Index Fund – VFINX – merits the Best +10 Fund Authority Score (The Standard & Poors 500 stock index is the most common equity index fund benchmark in the U.S. The S and P 500 tracks about 75% of publicly traded U.S. equity market asset value. The dominant issue in choosing among passively managed index mutual funds and ETF funds benchmarked against the S & P 500 [...])
- Part 2 of the Biggest Personal Finance Story of the Past 30 Years (< -- Go to Part 1
The Biggest Personal Finance Story of the Past 30 Years - Part 2
To understand what has happened to the market valuation of the financial services sector, particularly over the last 30 years, you should view Figure 4 on page 16 of the financial study by Jeremy Siegel and Jeremy Schwartz [...])
- Monitor and adjust your financial plan in a time-efficient manner – Step 9 of 10 Financial Planning Steps in the Right Direction (CLICK HERE TO READ THE SKILLED INVESTOR's OTHER ARTICLES ABOUT THESE "10 FINANCIAL PLANNING STEPS IN THE RIGHT DIRECTION
Time in life is the most precious and perishable asset that a person has. It should be spent enjoyably and efficiently. Scientific investment strategies that rely on relatively efficient financial markets allow people to minimize their time [...])
- Never Invest Solely Because of Superior Past Investment Fund Performance (
Never invest solely because of superior past mutual fund or ETF performance
Superior past fund performance does NOT predict superior future performance.
Summary: A previous article, “The Solution - ONLY follow financial strategies that are scientific, passive, diversified, savings focused, risk controlled, low cost, and tax efficient,” suggested that individuals are much better off with a [...])
- Summary Table of Traditional IRA and Roth IRA Tax Rules (Summary Table of Traditional IRA and Roth IRA Tax Rules
For your convenience, The Skilled Investor has provided a detailed table that summarizes 2007 rules for traditional IRAs and Roth IRAs.
Because this table has 13 columns and 20 rows, it is too large to be displayed properly in a blog posting. To view this table and [...])
- Nationwide S&P 500 Index Fund – Class A Shares (GRMAX) fetch a +2 Fund Authority Score (Fund Authority Scores rate mutual funds and exchange traded funds (ETFs) on the most important economic factors that influence individual investors' net long term diversified investment fund performance. The Skilled Investor developed the Fund Authority Score system to provide individual investors with concise and objective summaries of mutual funds and ETFs for comparisons within investment [...])
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