How do you decide your asset allocation? How do you decide what funds to use? How do you implement this strategy? What custodians do you use? Do you use index funds, ETFs or both? There are many individual decisions to make. Discipline: You have a philosophy for creating your unique portfolio strategy, now you have to implement and stay invested. How does your client maintain discipline? Discipline is the key to long-term success.
The power of compounding. I can talk to a whole room full of index fund investors who enthusiastically embrace a passive philosophy, but when I ask how many in the room have the exact same portfolio as another person in the room, no one will raise their hand. Philosophy is universal: Strategy is personal: Discipline is mandatory. They all work together for investment success. Rick Ferri.
David Grabiner. Intermediate investors have a hard time staying the course at market highs. Advanced investors stay the course. May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. John C. The point of diversification is that some parts will zig while others are zagging.
He attributed the quote to an ancient Tamil poet who lived sometime around 5th century CE. Who knows? This is an introduction and index to ten short explanatory videos about how to take control of your finances to achieve financial independence and enable your life dreams.
Your investment planning begins with some ballpark estimates of what kind of money you might need to accomplish your dreams. For many this seems formidable, so this video includes some popular guidelines that have helped many succeed in saving for these goals. This short video illustrates the miracle of compound interest and the importance of starting to save early with a simple example of two young college graduates.
The ratio of stocks and bonds you own is your key lever that controls the overall risk variability of your investments. It's not enough to own stocks of hundreds of companies although easy with a mutual fund. Learn about the "magic" benefits of poorly correlated investments--most notably, owning both stocks and bonds. The vast majority of investors earn less than the market due to two common timing mistakes: buying yesterday's top performers, and letting your emotions cause you to attempt to predict the direction of the stock market.
Learn how to tell a good mutual fund from a bad one. What is an index fund? And why do they outperform in the long run? Take full advantage of tax-advantaged accounts, then keep your bonds there. Learn why, and more. All things being equal, choose the simple path. You'll increase your chance of success, and have more time to enjoy your life.
See how to bring all these points together into a simple written plan. Let there be no mistake: you are only human and you will face great temptation to change your plan.
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Live below your means. Develop a workable plan. Never bear too much or too little risk.