Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Your Four Best Financial Resolutions for 2013

Stock-Markets / Financial Markets 2013 Dec 31, 2012 - 10:18 AM GMT

By: Investment_U

Stock-Markets

Alexander Green writes: This is the time of year for making New Year’s resolutions. And I have four that are guaranteed to make your portfolio bigger, fatter and wider a year from now.

So listen up:

* Save more. All investment begins with saving. And unlike the performance of the stock market, saving is something that’s under your control. It will also have a significant impact in the long-term value of your portfolio. For example, let’s say you’ve accumulated a portfolio worth $100,000. If it compounds at no more than the long-term return of the S&P 500 – 11% a year – it will be worth $1,358,000 in 25 years.


Not bad. But if you added $500 a month along the way, it would grow to more than $2.1 million.

In “The Millionaire Next Door” Thomas T. Stanley and William D. Danko reported that affluent individuals tend to follow a lifestyle conducive to accumulating money. The seven common denominators among those who build wealth successfully are:

1.They live well below their means.
2.They allocate their time, energy, and money efficiently, in ways conducive to building wealth.
3.They believe that financial independence is more important than displaying high social status.
4.Their parents did not provide economic outpatient care.
5.Their adult children are economically self-sufficient.
6.They are proficient in targeting market opportunities.
7.They chose the right occupation.

*Pay less. When it comes to investing, expenses matter. A lot. Investment costs often get out of hand when markets are soaring and your portfolio is rising. But even then high trading costs, front- and back-end loads, high management fees and other investment costs can eat away at your portfolio like termites in an antebellum mansion. Know what you’re paying. Make sure it’s competitive. And if you don’t know what you’re paying, ask. As a rule, more than 90% of retail clients don’t know their total investment costs because a) they’re often hidden and b) they feel awkward asking. Ask anyway.

*Check your asset allocation. Your asset allocation – how you divide your portfolio up among stocks, bonds, gold shares, real estate investment trusts, cash and so on – is your single most important investment decision.

If you doubt it, consider this. Let’s say you have a portfolio that is 25% stocks and 75% bonds and I have one that is just the opposite, 75% stocks and 25% bonds. At the end of the year, let’s say stocks are up 10% and bonds return 2%. But perhaps you are a great stock picker who doubles the market’s return while I own a boring S&P 500 index fund that generates only the market’s return. Even though you are a far better stock picker, my portfolio gives a higher annual return than yours because my asset allocation was better. In short, get your asset allocation right first. All your investment decisions should flow from that. What should your asset allocation be?

The Oxford Club recommends 30% each in U.S. and international stocks, 10% each in high-yield bonds, short-term corporate bonds and TIPS (inflation-adjusted Treasuries), and 5% each in REITs and gold shares. This should lead to higher returns with less risk.

*Keep a sharp eye on taxes. A recent Vanguard study found that the average investor surrenders 2.5% in taxes each year. Yet many if not most of these tax liabilities are avoidable. How do you keep your taxes minimal without raising eyebrows at the IRS?

You follow basic tax management strategies. Stash away as much as possible in tax-advantaged retirement accounts such as traditional IRAs and 401(k) plans so that you get a break on any pre-tax contributions you make and enjoy tax-deferred earnings until you begin to withdraw the assets.

Also, keep tax-inefficient investments – like high-yield bonds, REITs, utilities and actively managed stock funds – in your retirement accounts. And put tax efficient investments – like index funds, long-term stock holdings and municipal bonds – in non-qualified accounts. (This is known as your asset location strategy.)

Also, hold investments for 12 months or longer where possible to qualify for long-term capital gains tax treatment . And don’t forget to offset realized capital gains with capital losses in your portfolio where possible. (I should note that we are likely to see many changes in the tax code as we pass the fiscal cliff, so I plan to revisit this topic soon.)

In sum, these four resolutions should form the foundation of your personal investment strategy. They will get you off on the right foot in 2013. And we here at Investment U will have many more cost-saving, tax-reduction and money-making ideas to share with you in the weeks and months ahead.

So start getting your financial house in order … and let’s look forward to a happy, healthy and prosperous New Year!

Good Investing,

Alex

Source : http://www.investmentu.com/2012/December/four-best-financial-resolutions-for-2013.html

by Alexander Green , Oxford Club Investment Director Chairman, Investment

http://www.investmentu.com

Copyright © 1999 - 2012 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in