Target-date mutual funds have gained popularity in recent years as a convenient and seemingly straightforward option for retirement investing. However, despite their appeal, there are compelling reasons why investors should carefully consider whether target-date mutual funds align with their financial goals and preferences. In this post, we’ll explore some advantages and drawbacks of target-date mutual […]
Cash Reserve in Retirement
Do you keep a spare tire in your car? You hope you will never have to use it, but it is good to know it is there in case you have an emergency with a flat tire. The same can be said of a cash reserve in retirement – you would rather not dip into [...]
Long Term Investment Truths Part 2
In Long-Term Investment Truths Part 2, we aim to highlight some of the strategic aspects long-term investors should consider. While there are several aspects to consider when investing for the long-term, we’ve limited the scope of this letter to some of the most common items we’ve seen investors overlook. Long-Term Investment Truths: Part II • [...]
Long Term Investment Truths Part 1
We believe a long-term investment philosophy is key to creating and preserving wealth. While many investors claim to be “long-term” oriented, many of these self-proclaimed long-term investors act as anything but when things get tough. After all, it’s human nature to doubt ourselves; especially when things don’t go as smoothly as anticipated. Endless warnings from [...]
Pension Lump-Sum vs. Annuity: Which to Choose?
One of the questions we often get from our clients is, “Should we take the lump-sum option or the annual payments when receiving distributions from our company pension plan?” Just like deciding whether to “buy or rent”, there are several factors in play in determining the best course of action. Let’s first go over these [...]
The Hidden Cost of Owning Too Many Investments – Part 2
While diversification is a crucial way to spread risk across multiple investments, over-diversification1 occurs when a portfolio owns too many investments. In this instance, there can be some potential "hidden" costs, including reduced return potential without a material reduction in risk.2 If we think of diversification as the cost investors incur to reduce the risk [...]
The Hidden Cost of Owning Too Many Investments – Part 3
As we reviewed in the two previous posts, diversification is an effective way to reduce risk. If you own too many investments, however, there can be hidden costs without a material reduction in the risk of loss. These costs may include: Reduced returns which can increase the risk of not reaching your financial goals Unnecessary [...]
The Hidden Cost of Owning Too Many Investments – Part 1
Assuming you invest in individual stocks and/or mutual funds, what is one of the first questions you should ask if you want higher investment returns? The answer is, “Do I own too many investments?” This is an essential question because of the potential hidden costs of owning too many investments, also known as over-diversification. While [...]
Inflation and Retirement
Inflation – even minor inflation – reduces purchasing power over time. Like the famed economist Milton Friedman once said, it's the hidden tax that creeps up on us because it is not legislated. Inflation slowly reduces the dollar's value, meaning each dollar will buy less and less. Many people look to the Bureau of Labor [...]
Oxy Pension: Lump-Sum or Annuity – Which is Better?
Upon approaching retirement, you may be asking yourself, "Should I take the lump sum or the annuity payment option with my pension plan?" We get this question often, and the difference in lifetime value between options can be significant. Before making any decisions, you'll need to complete a careful and thorough analysis. A competent financial [...]
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