Personal Capital – The Best Way To Manage Your Investments

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As my long time readers are well aware, I’m a huge fan of automating your finances.  For about seven years now I’ve been using Mint.com to track all of my spending, and to manage my budget. While Mint is an amazing service, I found it was severely lacking when it came to keeping track of my investment accounts. Enter Personal Capital. I discovered Personal Capital about a year ago after reading about it on another finance blog and decided to give it a try. For those of you who have never heard of Personal Capital, it’s a free website that allows you to track your spending and investments all in the same place. Think of it as Mint.com with its focus on investing rather than budgeting. After a few bumps in the road early on in my experience, I can now confidently say that Personal Capital is the best way … Continue reading

Everyone Is A Genius In A Bull Market

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Everyone is a Genius.  During my years playing tens of thousands of hands of online poker I learned a very important lesson. Variance is a cruel, cruel mistress. If you play enough poker you’ll experience days, weeks, even months where you can do no wrong. You hit every straight or flush you’re drawing for, your pocket aces never get cracked and you make money hand over fist every time you sit down at the table. Many players confuse these hot streaks with their incredible edge in skill over their opponents. They take their newly flush bankrolls, sit down in bigger (read: more expensive) games and more often than not…they get crushed. The mistake these players make is overrating their skill level based on being on the right side of statistical variance. They forget that right around the corner, somewhere, at some point, they’re going to be sitting on the other … Continue reading

Rebalancing Your Portfolio

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It’s time to rebalance my portfolio. I laid out my asset allocation in a previous post. However one of the keys to a good asset allocation is making sure you’re sticking to the strategy you selected for yourself. I like to check up on my asset allocation twice a year, once in the middle of the year and once in late December/early January. A quick look at the calendar shows that it’s time for a check up, so late last week that’s just what I did. For easy reference, here is the asset allocation I have set for myself:  This asset allocation covers all my investment accounts as a whole, not each individual account. As I went over my holdings I found that several asset classes became over/under weighted to the target I have set out for them. More specifically I was very heavily overweight in Large-Cap U.S. stocks. Which actually … Continue reading

Asset Allocation & My Investing Strategy

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I really can’t believe I’ve had this site for so long and haven’t laid out my basic investing strategy and asset allocation. As of the writing of this post, just about all of my investing takes place in retirement accounts. Therefore, by default my timeline is very long. However even if this wasn’t the case, I prefer putting my money into stocks or funds that are solid and fundamentally sound. You won’t find me putting my money anywhere near some biotech stock rumored to have a drug getting FDA approval next week or any other random “hot” tips that I come across. If I wanted to gamble with my money I’d much prefer to hit the roulette tables. My Rules For Investing Invest only in things I understand: Meaning no companies in fringe or confusing industries, no overly complex Funds/ETF’s , no weird derivatives, swaps or whatever else so-called “pro’s” invest in. … Continue reading

Determine Your Risk Tolerance

In my last post on asset allocation I talked about some basics of what do to with your money based on some time frames in which you thought you would need to use the money. I also gave a general rule of thumb for splitting your portfolio between stocks and fixed income. In this post we’ll take things a step further and discuss how to determine your personal tolerance for risk. One of the most important keys to being a successful investor is to understand your risk tolerance. Which loosely defined means how much variance you’re willing to take on in the short-term for greater gains in the long run. The reason this is so key is because it lets you invest at a level in your comfort zone which makes it easier to stick to your master plan even when the markets turn south. Taking on more risk than you can … Continue reading

Asset Allocation 101 (Part 1)

The single most important thing to the success of your investment portfolio after your contributions is your asset allocation. Simply put, your asset allocation is how weighted you are towards different investment types (US Stocks, Bonds, Emerging Markets, etc…). I’m going to say something now that may hurt your feelings, but its 100% true and needs to be said. You aren’t smart enough to beat the market. If you try to be a “trader” and time the ups and downs of the market or constantly try to find the next “hot” stock. You’ll most likely do more harm to your account balance than good. For us small time investors the key is to spread out our risk and try to achieve a return around the market average. But first things first. We have to lay down some ground rules for your hard-earned cash. If you think you’ll need to use the … Continue reading