100 Cost-Effective Articles - Investing
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Asset Allocation: Composing Your Financial Symphony
Any classical music composer will tell you that creating a symphony requires a delicate balance of sounds, melodies, and harmonies. Each instrument creates unique sounds and vibrations, which, when heard alone, may not be particularly compelling. However, when the orchestra plays in unison, the end result can be a masterful composition. Hence, the true art of creating a masterpiece is arranging melodies and blending sounds. In this respect, composers and investors share some similarities. Successful investing typically combines a number of different investments in order to create a portfolio that is "in tune" with the investor's goals and objectives. It's no coincidence that such a technique is the foundation for one of the most basic financial investment principles—asset allocation.
(508 words)
A Fresh Look at the Variable Annuity
Many investing pundits criticize variable annuities as the ugly ducklings of the investing world. Critics often claim that the tax benefits may not be to your advantage, and that fees are expensive. However, for long-term investors who have taken advantage of their employer-sponsored retirement plans and are planning for retirement income, variable annuities remain a viable option. They offer investors a range of investment options with varying levels of risk, professional management, tax deferral, a variety of income payout options, and guaranteed death benefits.
(806 words)
Your Portfolio and Tax-Exempt Investments
If you have recently thought about where you can best invest your hard-earned money, you may have come up against the age-old question of whether you will do better in a taxable or tax-exempt investment. While the answer is far from easy or clear-cut, there are some simple rules of thumb that you should know.
(561 words)
Fixed-Income Strategies—Laddering
Conservative fixed-income investments, particularly government securities and federally insured certificates of deposit (CDs), are generally considered less volatile than other investment vehicles, such as common stock, and as a result, they tend to provide lower rates of return. A portfolio that relies too heavily on fixed-income investments may be vulnerable to inflation or fluctuating interest rates. One technique commonly used to balance the return and risk of this particular asset class with an investor's time horizon is laddering—a method of maintaining a series of fixed-interest investments with different maturities.
(542 words)
Retirement Strategies for 401(k) Investors
When you invest, you assume a certain level of risk, which is the likelihood that your holdings will decrease in value. One of the most challenging aspects of investing involves matching your tolerance for risk with your investment objectives. Everyone wants a comfortable retirement, but the road you take there will depend on your specific situation. An investor’s risk tolerance often changes over time, and this is important to keep in mind as you develop strategies for generating retirement income.
(886 words)
Managing Risk and Meeting Goals
Market swings often prompt investors to reassess their portfolios. As you evaluate the efficacy of your investments in light of your financial goals, it's important to revisit two key principles—asset allocation and diversification. Any long-term investment plan will most likely have to weather market "ups" and "downs." Softer markets often create opportunities for purchasing shares at lower prices, and through dollar cost averaging, you may be able to average a lower cost per share over time. Maintaining a regular investment program and balancing your portfolio to account for a level of risk you find comfortable are important to the overall success of your financial strategies.
(664 words)
Assessing Portfolio Risk
Most investors know that they should evaluate their risk tolerance when considering an investment. Oftentimes, investors think of risk only in terms of possibly losing money. However, in the investment world, risk is broadly defined as the probability that the actual return from an investment will be different from its expected return. Actual returns (making or losing money) can be affected by a number of factors, and total risk is a measure of variation in return due to all sources.
(591 words)