DIY Personal & Retirement Financial Planning
Do-It-Yourself financial and investment planning Excel spreadsheet software
Before estimating the investment value that you might add or take away from your portfolio, you first need to determine whether your strategies are or are not likely to lead to optimal risk-adjusted investment returns. This value estimation is separate from any hourly opportunity cost related to spending time on your investments versus an alternative […]
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 […]
“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, […]
A well-diversified portfolio contains a very large number of individual stocks and/or bonds that are selected without bias toward particular economic segments. A fully diversified portfolio will approximate the global publicly traded securities markets. The question about diversification most frequently asked by individual investors is “how many stocks or bonds do I need to be […]
From the perspective of holding a well-diversified investment portfolio according to scientific investment principles, the objective of diversification is to minimize or eliminate ‘unsystematic risk’ or those risks that are not related to the price volatility of the overall securities markets. When people speak of investment diversification, they may mean different things. Therefore, clear definitions […]
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 […]
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. Personal Financial Planning Software Current investment values vary in the eyes of the many […]
< <– Go to Part 4 The Biggest Personal Finance Story of the Past 30 Years – Conclusion Discover Family Financial Planning Software 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 […]
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 […]
No financial planning software and no investment growth calculator can predict the future The future is simply not predictable, even with automated financial planning software. A previous financial article, “The Solution – ONLY follow financial strategies that are scientific, passive, diversified, savings focused, risk controlled, low cost, and tax efficient,†suggested that investors are much […]
Build Investment Asset Buffers to Protect Yourself from Market Volatility You may be just as nervous as the next person is about investment risk. However, the coverage of your future expenses by your accumulated assets will determine whether you can actually manage, when risk really happens. Family Financial Planning Software for Home Use A previous […]
For Individual Investors Risk-Free Investment Money Is Fantasy Money Securities with low investment risk and high investment returns are just fantasies. No “risk-free” investment money is consistently and reliably available to individuals. Luck dominates skill in the securities markets. Clever investment selection is vastly over-hyped, and only the promoters tend to benefit. On average over […]
Scientific mutual fund and ETF screening criteria: a summary Scientifically based selection criteria are rational methods to screen mutual funds and ETFs. Recently, The Skilled Investor Blog published a series of articles on scientifically based selection criteria for mutual funds and exchange traded funds (ETFs). These screening rules help you to winnow down the thousands […]
Avoid investment funds with higher investment portfolio turnover The problem with high turnover is that higher fund trading adds substantial hidden expenses that drag down returns. Because short-term trading is a zero sum game (before costs) played against other well informed traders, greater turnover is far more likely on average to result in lower fund […]