DIY Personal & Retirement Financial Planning
Do-It-Yourself financial and investment planning Excel spreadsheet software
Your financial planning and investing strategies should have a scientific basis 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 well-considered financial viewpoint. A stable set of financial beliefs can help […]
Common stock equity market returns have varied widely in the past. The common stock equity risk premium has averaged about 4.1% from 1872 to 2000. The equity risk premium is the equity market return less the risk free rate of return. The risk free rate of return includes both the inflation rate and the risk […]
If investment mutual fund managers were truly skilled at beating the market, then you would expect mutual fund manager performance prowess to persist over time. Unfortunately, the evidence indicates that superior past professional performance among mutual fund managers tends not to persist. Past superior mutual fund performance is simply not a predictor of future superior […]
You are not likely to beat the stock market, despite all the cheer leading from the securities industry and the financial media. When you try to beat the public securities markets, unfortunately you are more likely to trail the market’s return, because of extra costs, taxes, and investment mistakes. The idea that investors can beat […]
<<– Continued from Part 1 Family Financial Planning Software for Home Use In addition to showing that large numbers of additional stocks are required to achieve measurable improvements in diversification, the Evans and Archer study clarified other requirements for a well-diversified portfolio. The number of stocks selected for a highly diversified portfolio also depends on […]
Actively-managed mutual funds are not created equally. Performance can vary significantly – even when funds pursue similar strategies or “styles.” This article addresses the impact on portfolio diversification of holding more than one actively-managed mutual fund. (For the companion article to this, see: How many mutual funds are needed for a well-diversified portfolio? – a […]
Another kind of investment diversification that individual investors should consider important relates to the failure or corruption of the financial industry intermediaries and fiduciaries that hold individual investors’ securities. This meaning of diversification has nothing to do with scientific investment principles related to optimal portfolio diversification. However, it is still very important. Prudent investment practices […]
Efficient market pricing is the theory that all known information is already reflected in current securities prices. Efficient securities market pricing has become very widely accepted within the investment community. The preponderance of evidence is that securities markets are efficient and tend to reflect available information. Whether you believe markets are efficient is very important […]
Securities markets are usually very quick to adjust prices to reflect new information. However, this price adjustment process may take longer and be more volatile, if the new information is ambiguous. At any point in time, market participants will already have used more or less rigorous valuation methods to judge their expected risk-adjusted value of […]
The securities markets provide an evolving consensus of the risk-adjusted value of particular securities. By understanding how the markets value securities, individual investors can chose more durable investment strategies Judging the potential usefulness of different investment strategies requires some understanding of what the public securities markets really do. This article discusses how the markets price […]
Snapshots in time – How investment securities are valued Every securities market transaction requires a buyer and seller with differing viewpoints. Markets can operate, because there are differences between investors in their assessments of the intrinsic value and risk of securities. Financial Planning Software for Consumers Current investment values vary in the eyes of the […]
< <– Go to Part 4 The Biggest Personal Finance Story of the Past 30 Years – Conclusion Financial Planning Software for Consumers This article concludes our series on the greatest personal finance story of the past thirty years. In this article, we discuss whether the dramatic growth in equity value of the financial services […]
< <– Go to Part 3 The Biggest Personal Finance Story of the Past 30 Years – Part 4 Family Financial Planning Software for Home Use What does it mean to individual investors that the financial services industry is now about 21% of S&P 500 market capitalization? (For a graph of the relative percentage shares […]
< — Go to Part 1 The Biggest Personal Finance Story of the Past 30 Years – Part 2 Discover Home Financial Planning Software 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 […]
10 Lower Cost S&P 500 Index Mutual Funds Regular readers know that The Skilled Investor advocates a very boring, low cost, broad market, passive index investment strategy. Costs less. Gets the broad market return — whatever that will be. Narrows the range of outcomes and therefore the risk to your long-term personal financial plan. Takes […]
The Birth of Yet Another Darn “Asset Class” – “Infrastructure” Recently, The Skilled Investor published two articles: The first article discussed how the financial industry keeps manufacturing new asset classes for brokers and investment advisors to sell to individual investors. The Skilled Investor raised the question of whether these new asset classes are likely to […]
Commodity futures in your investment portfolio – Is there really any future for individual investors? The Skilled Investor’s previous article, “Be wary of the new investment asset classes,” voiced skepticism about many supposedly new asset classes. This article delves into the financial science behind this skepticism, as it relates to one of these supposedly new […]
How expensive is financial advisor compensation paid via sales loads? A sales load might be the method that you prefer to compensate your broker or advisor. If your advisor is truly competent and ethical, he may be able to manage properly the inherent conflicts of interest that are associated with commissioned investment product sales. Even […]
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 […]
Pay lower investment expenses to get higher investment returns While financial services industry sales people tell you that you need to pay more to get more, the correct answer is the opposite. Excessive investment costs are a plague on your personal financial planning. Excessive investment expenses are one of the most significant barriers to lifelong […]