Question: Recession?
Answer: Ample cash bond test
Question: Cash instead of bond?
Answer:
Tuesday, April 16, 2019
Investing Insights: A Midyear Portfolio Checkup in Five Easy Steps
Here is the link.
49:00/ 1:00:37
Question: Recession?
Answer: Ample cash bond test
Question: Cash instead of bond?
Answer:
Question: Recession?
Answer: Ample cash bond test
Question: Cash instead of bond?
Answer:
Looking to Rebalance? Consider Funds in These Areas
Here is the link.
IHGIX
DODGX
AWSHX
Foreign stocks
IGAAX
VTIAX
FMIJX
Dividend growth fund
PRDGX
VDAIX
IHGIX
IHGIX
DODGX
AWSHX
Foreign stocks
IGAAX
VTIAX
FMIJX
Dividend growth fund
PRDGX
VDAIX
IHGIX
Top 5 Mutual Funds to Buy in 2018
Here is the link.
NPFFX
FXAIX
NPFFX
My pick for the best mutual fund with a 1-year return is the American Funds New Perspective Fund® Class F-1 which boasts a 1-year return of 28.78%. You can find this fund with the ticker symbol NPFFX. Now although future returns are all speculative, that is a phenomenal return for any short-term investor. Hypothetically that means that if you invest $2,500, which is the minimum to invest, today and sell out at the end of the year, you’ll have made $719.50. Now, this fund is of a moderate risk and has 319 holdings, the top 5 of which are Amazon, Facebook Inc. A, Taiwan Semiconductor Manufacturing Co Ltd, Naspers Ltd Class N, and Microsoft Corporation. This fund is technically a world fund which is why you see such a diverse set of holdings. As mentioned earlier this fund is a 5-star fund and has no transaction fees.
FXAIX
Alright, so my pick for the best 5-year fund is the Fidelity® 500 Index Fund — Institutional Premium Class which boasts a 5-year return of 15.78%. You can find this fund with the ticker symbol FXAIX. This fund has no minimum so hypothetically if you invest $2,500 today and sell out in 5 years, you’ll have made roughly $2,703.50 which I found using a custom Excel calculator that accounts for compound interest.
FNCMX
Moving into my third pick which is for the mutual fund with the best 10-year return. The fund I pick for this category is the Fidelity® Nasdaq® Composite Index Fund which boasts a 10-year return of 11.09%. You can find this fund with the ticker symbol FNCMX.
Similar to the first fund, this fund has a minimum of $2,500 so hypothetically if you invest $2,500 today and sell out in 10 years, you’ll have made roughly $7,156.32 which I again found using a custom Excel calculator that accounts for compound interest. This fund is of a moderate risk and consists of 2,196 holdings, the top 5 of which are Apple Inc., Microsoft Corp, Facebook Inc. A, Amazon Inc., and ALPHABET INC CL C. So I think we’re starting to see a trend here between the top holdings of these funds. As our world becomes more tech-driven, leading companies such as apple an Microsoft will continue to grow.
FIENX
Alright, my fourth pick which is for the best foreign mutual fund is the Fidelity® International Enhanced Index Fund which boasts one year return of 27.59%, a five-year return of 9.35%, and a ten-year return of 2.3%. Because of its weak 10 year return, I would consider this a short to mid-year hold which would be around 2 to 5 years. You can find this fund with the ticker symbol FIENX. Like most Fidelity funds, this fund has a minimum of $2,500 so hypothetically if you invest $2,500 today and sell out in 5 years, you’ll have made roughly $1,406.93. This fund is of a moderate risk and consists of 264 holdings, the top 5 of which are, excuse my pronunciation, NOVARTIS AG (REG), NESTLE SA (REG), ROCHE HLDGS AG (GENUSSCHEINE), TOTAL SA (FRAN), and BAYER AG. So it's nice to see some different holdings than the last funds but I’m sure you saw some familiar names there like Bayer and Nestle. Now the benefit to holding a foreign fund is that it’s less correlated with the US stock market. That means that during a recession, your foreign holdings may fair better than your US holdings.
TRSGX
Okay, so my fifth and final pick which is for the best balanced mutual fund is the T. Rowe Price Personal Strategy Growth Fund which has one year return of 21.91%, a five-year return of 11.60%, and a ten-year return of 7.06%. Although a 10-year return of 7.06% is still decent, I would also recommend this as a medium-term hold. You can find this fund with the ticker symbol TRSGX.
This fund has a minimum of $2,500 so hypothetically if you invest $2,500 today and sell out in 5 years, you’ll have made roughly $1,827.74. This fund is of a lower risk and consists of Cash, convertibles, domestic bonds, preferred stock, foreign bonds, foreign stock, domestic stock, and others, whatever that means. Because this is a balanced fund, it’s already diversified which makes it a lot easier for the investor. The reason I recommend this fund is because it has a lengthy history of excellent performance and it’s already diversified which makes it a nice holding during a recession.
NPFFX
FXAIX
NPFFX
My pick for the best mutual fund with a 1-year return is the American Funds New Perspective Fund® Class F-1 which boasts a 1-year return of 28.78%. You can find this fund with the ticker symbol NPFFX. Now although future returns are all speculative, that is a phenomenal return for any short-term investor. Hypothetically that means that if you invest $2,500, which is the minimum to invest, today and sell out at the end of the year, you’ll have made $719.50. Now, this fund is of a moderate risk and has 319 holdings, the top 5 of which are Amazon, Facebook Inc. A, Taiwan Semiconductor Manufacturing Co Ltd, Naspers Ltd Class N, and Microsoft Corporation. This fund is technically a world fund which is why you see such a diverse set of holdings. As mentioned earlier this fund is a 5-star fund and has no transaction fees.
FXAIX
Alright, so my pick for the best 5-year fund is the Fidelity® 500 Index Fund — Institutional Premium Class which boasts a 5-year return of 15.78%. You can find this fund with the ticker symbol FXAIX. This fund has no minimum so hypothetically if you invest $2,500 today and sell out in 5 years, you’ll have made roughly $2,703.50 which I found using a custom Excel calculator that accounts for compound interest.
FNCMX
Moving into my third pick which is for the mutual fund with the best 10-year return. The fund I pick for this category is the Fidelity® Nasdaq® Composite Index Fund which boasts a 10-year return of 11.09%. You can find this fund with the ticker symbol FNCMX.
Similar to the first fund, this fund has a minimum of $2,500 so hypothetically if you invest $2,500 today and sell out in 10 years, you’ll have made roughly $7,156.32 which I again found using a custom Excel calculator that accounts for compound interest. This fund is of a moderate risk and consists of 2,196 holdings, the top 5 of which are Apple Inc., Microsoft Corp, Facebook Inc. A, Amazon Inc., and ALPHABET INC CL C. So I think we’re starting to see a trend here between the top holdings of these funds. As our world becomes more tech-driven, leading companies such as apple an Microsoft will continue to grow.
FIENX
Alright, my fourth pick which is for the best foreign mutual fund is the Fidelity® International Enhanced Index Fund which boasts one year return of 27.59%, a five-year return of 9.35%, and a ten-year return of 2.3%. Because of its weak 10 year return, I would consider this a short to mid-year hold which would be around 2 to 5 years. You can find this fund with the ticker symbol FIENX. Like most Fidelity funds, this fund has a minimum of $2,500 so hypothetically if you invest $2,500 today and sell out in 5 years, you’ll have made roughly $1,406.93. This fund is of a moderate risk and consists of 264 holdings, the top 5 of which are, excuse my pronunciation, NOVARTIS AG (REG), NESTLE SA (REG), ROCHE HLDGS AG (GENUSSCHEINE), TOTAL SA (FRAN), and BAYER AG. So it's nice to see some different holdings than the last funds but I’m sure you saw some familiar names there like Bayer and Nestle. Now the benefit to holding a foreign fund is that it’s less correlated with the US stock market. That means that during a recession, your foreign holdings may fair better than your US holdings.
TRSGX
Okay, so my fifth and final pick which is for the best balanced mutual fund is the T. Rowe Price Personal Strategy Growth Fund which has one year return of 21.91%, a five-year return of 11.60%, and a ten-year return of 7.06%. Although a 10-year return of 7.06% is still decent, I would also recommend this as a medium-term hold. You can find this fund with the ticker symbol TRSGX.
This fund has a minimum of $2,500 so hypothetically if you invest $2,500 today and sell out in 5 years, you’ll have made roughly $1,827.74. This fund is of a lower risk and consists of Cash, convertibles, domestic bonds, preferred stock, foreign bonds, foreign stock, domestic stock, and others, whatever that means. Because this is a balanced fund, it’s already diversified which makes it a lot easier for the investor. The reason I recommend this fund is because it has a lengthy history of excellent performance and it’s already diversified which makes it a nice holding during a recession.
Monday, April 15, 2019
Date my money: 401K par tech fund transfer
April 15, 2019
It is my personal finance research. I do not grow up very well, I should parent myself better from 2007 to 2019. I should invest time to learn stock market, capitalism. I just could not believe how hard it is for me to learn the economy last six months. I like to write a story how I date my money today. It is my par tech 401K.
I like to get familiar with the 401K software environment. I know that I have to be patient to myself, allow myself to learn and warm up. I just learn dollar cost average through one of my favorite financial planner. So I plan to adopt the strategy, and like to come out a plan how to transfer my fund into index fund.
One of ideas is to purchase $3000 US dollar to index fund once, and then forget about it.
Another idea is why is now? I do not like to time the market. The idea is to invest on index fund next 12 months, if there is a crash, then I will add more fund into index fund. I can make it longer, I like to take 3 years to transfer $3000 us dollars to index fund. I like to try dollar cost average and hopefully the price in next three years will go down and then up, so I can benefit more on value once the price goes up.
To warm up, I just transfer 4%, $200 US dollar to index fund first.
I just did purchase Jan. 2019 using Canada RRSP with Scotia bank. I just did quarterly review on RRSP. It went up over 10% this year.
It is tough lesson for me to learn. I do not give myself long time horizon to learn personal finance. I started in Nov. 2018, over 50 years old. It is never too late. All I have to do is to date my money, learn and get familiar with concept, tools, and learn a few more strategies.
When opportunity comes, I will know what to do. I also can identify the opportunity as well.
Best date in the world. I love stock market and I like to learn how Capitalism works.
Introduction
It is my personal finance research. I do not grow up very well, I should parent myself better from 2007 to 2019. I should invest time to learn stock market, capitalism. I just could not believe how hard it is for me to learn the economy last six months. I like to write a story how I date my money today. It is my par tech 401K.
Date my money
I like to get familiar with the 401K software environment. I know that I have to be patient to myself, allow myself to learn and warm up. I just learn dollar cost average through one of my favorite financial planner. So I plan to adopt the strategy, and like to come out a plan how to transfer my fund into index fund.
One of ideas is to purchase $3000 US dollar to index fund once, and then forget about it.
Another idea is why is now? I do not like to time the market. The idea is to invest on index fund next 12 months, if there is a crash, then I will add more fund into index fund. I can make it longer, I like to take 3 years to transfer $3000 us dollars to index fund. I like to try dollar cost average and hopefully the price in next three years will go down and then up, so I can benefit more on value once the price goes up.
To warm up, I just transfer 4%, $200 US dollar to index fund first.
I just did purchase Jan. 2019 using Canada RRSP with Scotia bank. I just did quarterly review on RRSP. It went up over 10% this year.
Actionable Items
It is tough lesson for me to learn. I do not give myself long time horizon to learn personal finance. I started in Nov. 2018, over 50 years old. It is never too late. All I have to do is to date my money, learn and get familiar with concept, tools, and learn a few more strategies.
When opportunity comes, I will know what to do. I also can identify the opportunity as well.
Follow up
Best date in the world. I love stock market and I like to learn how Capitalism works.
Date my money: Chat with Charles Schwab online support
April 15, 2019
It is my personal finance. After six month personal finance research, I start to work on my par tech 401K performance review. This is the first time I took what ever I need to learn again, I asked a few questions first time from 2007. I could not believe that it is the first chat last 12 years. Thank you Par Tech, my ex-employer in USA. The 401K provides so much good feature for me to rebalance, transfer the fund.
I like to share my chat history here. I like to encourage myself to learn and be humble. Build wealth and grow rich is so exciting. I need to invest time to learn stock market first. I invested 401K in 2007 $8,000 dollars. If I am smart enough, then I should double or triple the money after 12 years. Specially if I choose to put all the money into fidelity index fund.
Introduction
It is my personal finance. After six month personal finance research, I start to work on my par tech 401K performance review. This is the first time I took what ever I need to learn again, I asked a few questions first time from 2007. I could not believe that it is the first chat last 12 years. Thank you Par Tech, my ex-employer in USA. The 401K provides so much good feature for me to rebalance, transfer the fund.
Chat
I like to share my chat history here. I like to encourage myself to learn and be humble. Build wealth and grow rich is so exciting. I need to invest time to learn stock market first. I invested 401K in 2007 $8,000 dollars. If I am smart enough, then I should double or triple the money after 12 years. Specially if I choose to put all the money into fidelity index fund.
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ReplyForward
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Case study: Par tech 401K plan performance review
April 15, 2019
It is my personal finance research. Today I spent one hour to go over the performance of my 401 K with par tech with Charles Schwab, and also this is the first time since 2007 I chatted with a representative online how to rebalance the portfolio. I like to do a case study on my performance.
It is the first time in my life I realize that that is my job to keep those 401K money grow. I did not show any curiosity to learn how to grow the money. I did not have annual statement, I did not chat with representative. I was too busy with my life.
One thing I chatted with my sister last August when she visited me, she said that if you like to make more money, you should consider to sell something on wechat or on internet. I was so ashamed about my financial situation, so I chose to start personal finance study starting from Nov. 2018.
After six month study, over 500 hours watching videos from youtube.com, morningstar.com, I spent hundred hours with personal finance director Christine and her teaching. I finally figured out that it is not difficult for me to learn and come out a plan, double the money based on Future value calculation and the rule of 72. Based on stock market bull market last 10 years run, it should be taken less than 10 years to double the money.
I only could find my 401K fund performance from 2010 to 2019. The following is my performance.
I have to push myself hard to figure out how to cover last 12 years loss. Ideally I should be able to double the money from 2007 to 2019. I have 12 years for me to learn how to double money. If I start to learn personal finance, economics, morningstar videos on youtube.com from 2010, I spend over 1000 hours to learn, I definitely should come out a few ideas how to do it.
As a matter of fact, I do not learn the importance of personal finance. Last 20 years I did not find any investment opportunity to fit for me. I just could not believe that I was so lazy to grow rich and build wealth. I enjoy so much activity, indulge in consumption. I just could not believe how superficial I am. I keep buying clothes, I purchase 10 jeans one time, 10 jackets one time. I just could not believe what I have in my mind from 2010 to 2015.
Here is my account balance in April 2019. I finally know that I have to give myself time to learn stock market, economy first. And then I will figure out ways how to make sound investment strategies.
I like to compare the performance with existing funds available in my Par Tech 401K plan. This is the first time from 2010 to 2019 I checked how many funds available for the purchase. I need to learn growth equity and long term performance of strong growth of US economy.
Introduction
It is my personal finance research. Today I spent one hour to go over the performance of my 401 K with par tech with Charles Schwab, and also this is the first time since 2007 I chatted with a representative online how to rebalance the portfolio. I like to do a case study on my performance.
Case study
It is the first time in my life I realize that that is my job to keep those 401K money grow. I did not show any curiosity to learn how to grow the money. I did not have annual statement, I did not chat with representative. I was too busy with my life.
One thing I chatted with my sister last August when she visited me, she said that if you like to make more money, you should consider to sell something on wechat or on internet. I was so ashamed about my financial situation, so I chose to start personal finance study starting from Nov. 2018.
After six month study, over 500 hours watching videos from youtube.com, morningstar.com, I spent hundred hours with personal finance director Christine and her teaching. I finally figured out that it is not difficult for me to learn and come out a plan, double the money based on Future value calculation and the rule of 72. Based on stock market bull market last 10 years run, it should be taken less than 10 years to double the money.
I only could find my 401K fund performance from 2010 to 2019. The following is my performance.
As a matter of fact, I do not learn the importance of personal finance. Last 20 years I did not find any investment opportunity to fit for me. I just could not believe that I was so lazy to grow rich and build wealth. I enjoy so much activity, indulge in consumption. I just could not believe how superficial I am. I keep buying clothes, I purchase 10 jeans one time, 10 jackets one time. I just could not believe what I have in my mind from 2010 to 2015.
Here is my account balance in April 2019. I finally know that I have to give myself time to learn stock market, economy first. And then I will figure out ways how to make sound investment strategies.
Comparison with TRBCX fund
I like to compare the performance with existing funds available in my Par Tech 401K plan. This is the first time from 2010 to 2019 I checked how many funds available for the purchase. I need to learn growth equity and long term performance of strong growth of US economy.
TRBCX
Progress report for personal finance research - first six months
April 15, 2019
It is hard for me to evaluate my personal finance research. I tried to solve my house problem in Vancouver area, and then I started the research in Nov. 2018. It is almost six month already. I like to write a report for six month study.
Also I do not work on investment and learn risk not to investment on equity market and also growth fund.
Introduction
It is hard for me to evaluate my personal finance research. I tried to solve my house problem in Vancouver area, and then I started the research in Nov. 2018. It is almost six month already. I like to write a report for six month study.
Six month progress report
I start to work on morningstar personal finance and learn how to invest into stock market, mutual fund from March 2019, 4 months after I started personal finance research. It it so surprsing that I figure out that my biggest mistake again - out of stock market, my retirement fund over $25,000 US dollar seed money from 2001 to 2019.Also I do not work on investment and learn risk not to investment on equity market and also growth fund.
Sunday, April 14, 2019
Bond Fund Picks to Keep It Simple - Morningstar Video
Here is the link.
Inflation - take home return
ETF - slice and dice
Keep it simple.
One easy strategy - index -
big drop is to heavily government bond.
PTTRX
HABDX
MWTIX
DODIX - minimum $3,000 dollar purchase
PRWBX
Inflation - take home return
ETF - slice and dice
Keep it simple.
One easy strategy - index -
big drop is to heavily government bond.
PTTRX
HABDX
MWTIX
DODIX - minimum $3,000 dollar purchase
PRWBX
Stock Market at All Time High - Can You Still Invest?
Here is the link.
9 year bull market run.
1926 to now, there are 1200 highs
Here is the link of bull and bear market since 1926.
2014 S&P 500 - too high, over 2000 first time.
40% percent return from 2014 to now in 2019
Dow Jones 2014 hit 20,000
40% return from 2014 to now
The longer your money in market, the better you will do.
2007 market crash
2007 -> 2009 going down
2009 -> 2019
Total return 80% return
You can't predict what will happen.
9 year bull market run.
1926 to now, there are 1200 highs
2014 S&P 500 - too high, over 2000 first time.
40% percent return from 2014 to now in 2019
Dow Jones 2014 hit 20,000
40% return from 2014 to now
The longer your money in market, the better you will do.
2007 market crash
2007 -> 2009 going down
2009 -> 2019
Total return 80% return
You can't predict what will happen.
OUR STOCK PORTFOLIO UPDATE | How to Pick Winning Stocks (Ep. 5 - Apr 2019)
Here is the link.
High dividend portfolio, every month $1,000 dollars dividends.
5 different ways to pick up stocks
1. Hire a financial advisor
2. Copy celebrity investors
Delayed action
It may be too late.
3. Following a bragging friend
4. Headline picker
What is the plan?
5. Do your own research
Book: The intelligent investor
You pick a large company vs small company.
1. Size of company
2. Financial condition
3. Earning stability
4. Dividend record
5. Earning growth
6. Price to earnings ratio
7. Price to book value ratio
Free filter, Vanguard account, Yahoo market watch.
Dividend this month: $83.00 this month
total market value around $15,000
AT & T
IBM
AbbVie - ABBV
GM
F
IRM
AGNC
PSEC
MAIN
High dividend portfolio, every month $1,000 dollars dividends.
5 different ways to pick up stocks
1. Hire a financial advisor
2. Copy celebrity investors
Delayed action
It may be too late.
3. Following a bragging friend
4. Headline picker
What is the plan?
5. Do your own research
Book: The intelligent investor
You pick a large company vs small company.
1. Size of company
2. Financial condition
3. Earning stability
4. Dividend record
5. Earning growth
6. Price to earnings ratio
7. Price to book value ratio
Free filter, Vanguard account, Yahoo market watch.
Dividend this month: $83.00 this month
total market value around $15,000
AT & T
IBM
AbbVie - ABBV
GM
F
IRM
AGNC
PSEC
MAIN
Investing Insights: Morningstar's Top Picks for Retirement Portfolios
Here is the link.
Bond funds:
BSBIX minimum $25,000
FTBFX, VTIPX, VIPSX
PBHAX, SPHIX, LSBDX
VIPSX - $3000 purchase
More corporate bonds - 5 to 10 years bonds
Play defense - equity risk
Bucket 3: Growth Portfolio
DODGX - Gold, 11.76%
IGAAX
I need to go over all those bond funds and mutual fund one more time.
Bond fund:
BSBIX
FTBFX
VTIPX
VIPSX
Junk bond - high risk, hold longer to get high yield
PBHAX
SPHIX
LSBDX
Mutual fund:
VIPSX
DODGX
IGAAX
Stock - wide moat
GILD - Aids drug
D - utility
INTL -
PG - Procter & Gamble Co
Bond funds:
BSBIX minimum $25,000
PBHAX, SPHIX, LSBDX
VIPSX - $3000 purchase
More corporate bonds - 5 to 10 years bonds
Play defense - equity risk
Bucket 3: Growth Portfolio
DODGX - Gold, 11.76%
IGAAX
Actionable Items
I need to go over all those bond funds and mutual fund one more time.
Bond fund:
BSBIX
FTBFX
VTIPX
VIPSX
Junk bond - high risk, hold longer to get high yield
PBHAX
SPHIX
LSBDX
Mutual fund:
VIPSX
DODGX
IGAAX
Stock - wide moat
GILD - Aids drug
D - utility
INTL -
PG - Procter & Gamble Co
Morningstar’s Personal Finance Guru, Christine Benz With an Annual Financial Wellness Checkup
Here is the link.
4:15/ 26:46
Learn more about retirement calculator at WEALTHTRACK.COM
Christine Benz Financial Wellness Checkup
1. How am I doing with my financial plan?
2. Assess your asset allocation
3. Estimate adequacy of liquid reserves
4. Assess the sub-allocation and trouble shoot other portfolio risk factors
5. Review tax strategies
6. Treatment of charitable deductions
7. Review tax loss sales and gains
Look into those statements:
Offset capital gain, up to $3,000 ordinary income.
8. Develop next year tax strategy.
The one investment
BENZ: inflation protection
- Own inflation protected bond fund
- Particularly beneficial for retirees and pre-retirees
- Treasury inflation-protected securities - TIPs
- Recommends low cost index funds
- iShares, Vanguard and Schwab have good TIPS index funds
Natural tendency - leave it alone when thing does very good.
re-balance your portfolio to reduce equity if the stock goes very well.
Force you to buy low and sell high - rebalance!
4:15/ 26:46
Learn more about retirement calculator at WEALTHTRACK.COM
Christine Benz Financial Wellness Checkup
1. How am I doing with my financial plan?
2. Assess your asset allocation
3. Estimate adequacy of liquid reserves
4. Assess the sub-allocation and trouble shoot other portfolio risk factors
5. Review tax strategies
6. Treatment of charitable deductions
7. Review tax loss sales and gains
Look into those statements:
Offset capital gain, up to $3,000 ordinary income.
8. Develop next year tax strategy.
The one investment
BENZ: inflation protection
- Own inflation protected bond fund
- Particularly beneficial for retirees and pre-retirees
- Treasury inflation-protected securities - TIPs
- Recommends low cost index funds
- iShares, Vanguard and Schwab have good TIPS index funds
Natural tendency - leave it alone when thing does very good.
re-balance your portfolio to reduce equity if the stock goes very well.
Force you to buy low and sell high - rebalance!
Inflation, Compound Growth, and the Time Value of Money
Here is my favorite financial planner's blog.
When it comes to saving, some people delay starting early - they want to leave it a few years. The problem is, you can’t make up for lost time when it comes to compound growth. Take a look at the table below - it represents two savers; the first starts saving aged 21 years, and saves $5000 per year for just ten years. The second starts saving aged 31 years, and saves $5000 per year for thirty years.
The results are clear. The early saver has built a fund worth almost 30% more than the late saver.
Compared to my 401K and IRA from 1999 to 2019, twenty years, I only made $4,000 net income on IRA CDs, and my 401K after 12 years still $2000 below the original investment into 401K plan in 2007. Here is one of my blogs related to IRA CDs.
When it comes to saving, some people delay starting early - they want to leave it a few years. The problem is, you can’t make up for lost time when it comes to compound growth. Take a look at the table below - it represents two savers; the first starts saving aged 21 years, and saves $5000 per year for just ten years. The second starts saving aged 31 years, and saves $5000 per year for thirty years.
The results are clear. The early saver has built a fund worth almost 30% more than the late saver.
Actionable Item
Compared to my 401K and IRA from 1999 to 2019, twenty years, I only made $4,000 net income on IRA CDs, and my 401K after 12 years still $2000 below the original investment into 401K plan in 2007. Here is one of my blogs related to IRA CDs.
Margin of safety study
April 4, 2019
It is my personal finance research. I like to learn margin of safety today.
Margin of safety is a principle of investing in which an investor only purchases securities when their market price is significantly below their intrinsic value. In other words, when the market price of a security is significantly below your estimation of its intrinsic value, the difference is the margin of safety. Because investors may set a margin of safety in accordance with their own risk preferences, buying securities when this difference is present allows an investment to be made with minimal downside risk.
For example, if he were to determine that the intrinsic value of XYZ’s stock is $162, which is well below its share price of $192, he might apply a discount of 20% for a target purchase price of $130. In this example, he may feel XYZ has a fair value at $192 but he would not consider buying it above its intrinsic value of $162. In order to absolutely limit his downside risk, he sets his purchase price at $130. Using this model, he might not be able to purchase XYZ stock anytime in the foreseeable future. However, if the stock price does decline to $130 for reasons other than a collapse of XYZ’s earnings outlook, he could buy it with confidence.
Introduction
It is my personal finance research. I like to learn margin of safety today.
What is margin of safety
Margin of safety is a principle of investing in which an investor only purchases securities when their market price is significantly below their intrinsic value. In other words, when the market price of a security is significantly below your estimation of its intrinsic value, the difference is the margin of safety. Because investors may set a margin of safety in accordance with their own risk preferences, buying securities when this difference is present allows an investment to be made with minimal downside risk.
For example, if he were to determine that the intrinsic value of XYZ’s stock is $162, which is well below its share price of $192, he might apply a discount of 20% for a target purchase price of $130. In this example, he may feel XYZ has a fair value at $192 but he would not consider buying it above its intrinsic value of $162. In order to absolutely limit his downside risk, he sets his purchase price at $130. Using this model, he might not be able to purchase XYZ stock anytime in the foreseeable future. However, if the stock price does decline to $130 for reasons other than a collapse of XYZ’s earnings outlook, he could buy it with confidence.
Dollar Cost Averaging
Here is my favorite finance planner's blog. What I like to do is to go over the blog again, I specially like to dive into the dollar cost averaging table, and then look into things I should learn from.
This is best teaching compared to all other on youtube.com. I specially like to learn from data. Based on the table in the blog, I will write another blog and continue to do my case study of IRA CD account analysis.
Highlights of good teaching in the blog:
1. Market timing, how to avoid market timing
2. Falling market is the great time to invest, why? How to invest?
This is best teaching compared to all other on youtube.com. I specially like to learn from data. Based on the table in the blog, I will write another blog and continue to do my case study of IRA CD account analysis.
Highlights of good teaching in the blog:
1. Market timing, how to avoid market timing
2. Falling market is the great time to invest, why? How to invest?
Falling market, gains, regular saving, how to gain from a falling market. There are a lot of good ideas out there. One of them is to save monthly and put them in the stock market.
Dollar cost averaging
Dollar Cost Averaging is a strategy in which an investor places a fixed dollar amount (or indeed any other currency) into a given investment such as a unit trust, on a regular basis.
The investment generally takes place each and every month regardless of what is occurring in the financial markets. As a result, when the price of a given investment rises, the investor will be able to purchase fewer units. When the price declines, the investor will be able to purchase more units.
The investment generally takes place each and every month regardless of what is occurring in the financial markets. As a result, when the price of a given investment rises, the investor will be able to purchase fewer units. When the price declines, the investor will be able to purchase more units.
Millions of investors around the world employ a dollar cost averaging strategy because it offers the following benefits:
- It’s an attractive option for investors who want to contribute to their investment portfolios on a regular basis.
- It eliminates the issue of ‘market timing.’ As a result, an investor’s returns will be determined more by the overall trend in a given fund as opposed to the investor’s specific entry price. In addition, it helps investors reduce their cost basis on securities that decline in value.
My sharing
Why market timing is not a good idea? I like to say something. Buy high and sell low. Cut the loss when the market is low. Loss aversion is bias of investor, I did sell VIGRX fund in 2002 and then I totally forgot it.
Example:
Two cases
It is great investment opportunity for a stock price with 30% loss in value; how to take advantage of the loss of value? One of ideas is to continue to purchase no matter the price goes down or goes up.
You decide to invest $1000 per month into two funds. During the first 12 months, Fund A shows steady growth at 2% per month. Fund B falls by over 30% in the first few months, recovering back to the initial level by month 12. In which fund will you have accumulated your greatest investment value?
The answer might be surprising. Take a look at the figures:
Let us review the facts:
Fund A Fund B
gain $1401 $3389
units 107.82 153.89
For example, if I purchase Vanguard total market index fund, as long as I continue to purchase the fund, I will be able to make more profit if the market goes down and goes up again. Recession, market correction is good for me as a long term investor.
In summary, over 12 months, Fund B has delivered better than twice the returns of Fund A in percentage terms!
Fund A Fund B
gain $1401 $3389
units 107.82 153.89
For example, if I purchase Vanguard total market index fund, as long as I continue to purchase the fund, I will be able to make more profit if the market goes down and goes up again. Recession, market correction is good for me as a long term investor.
A few more ideas to share in the following:
- The Dollar Cost Averaging strategy for reducing market risk relies on (i) you having a suitable time horizon for your investments, and (ii) your chosen fund recovering from the decline and returning to the upward trend. In the example above, if you needed access to your funds when Fund B is low, you will make a loss on surrender.
- Dollar Cost Averaging reduces market timing risks for volatile investments and is a reason why regular savings plans are so popular for building long term financial security. The example above could be twelve years rather than twelve months, but the concept and outcome holds true.
- Dollar Cost Averaging can be appropriate when considering higher-risk investments such as emerging market funds, if the investor anticipates a positive overall trend in the medium to long term.
Actionable Items
Case study: Why I did not purchase RRSP starting from June 2010?
April 14, 2019
It is my personal finance research. I started the full time job in the city of Vancouver June 15, 2010. I still continued to pay another $2,000 US dollars to register one credit for Ph.D. study, but I did not purchase RRSP. I like to do a case study and figure out what lessons I should learn from.
I will come back to write more later.
Introduction
It is my personal finance research. I started the full time job in the city of Vancouver June 15, 2010. I still continued to pay another $2,000 US dollars to register one credit for Ph.D. study, but I did not purchase RRSP. I like to do a case study and figure out what lessons I should learn from.
Case study
I will come back to write more later.
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