Consumer page: Manage your choice investments
BY PHIL MULKINS World Action Line Editor
Wednesday, October 10, 2012
10/10/12 at 3:01 AM
If you've already started a financial plan that includes investing and saving, you are on the right path to a secure financial future. But you still must take steps to ensure your money grows, says the 22-member nonprofit Alliance for Investor Education.
Successful investors do two things: (1) choose investments suited to their own circumstances and (2) monitor and make decisions about those investments as their circumstances change.
We hear a lot about how to make investment decisions on the front-end, but relatively little about what to do after that. The alliance's "Monitoring and Evaluating the Performance of Your Investments" is available at tulsaworld.com/AIEInvestPerform featuring 10 top resources for investors.
Evaluating performance: Financial Industry Regulatory Authority - tulsaworld.com/FIRAportfolio. The site says choosing investments is just the beginning of your work as an investor and you'll need to monitor performance of investments to see how they are working together in your portfolio to help you progress toward your goals. Progress means your portfolio value is steadily increasing, even though one or more of your investments might have lost value.
Evaluate portfolio risk: American Institute of Certified Public Accountants - tulsaworld.com/AICPA360finlit We were reminded in 2008 that returns aren't the only factors to consider when determining your portfolio is allocated appropriately. Also important is the level of risk you take in pursuing those returns. There are many ways to estimate risk levels in portfolios. The term "risk" is often used interchangeably with "volatility" (portfolio value tendency to rise or fall sharply, especially in a short period of time). However, a portfolio is just a means to an end: paying for retirement or a child's education.
Life Stages Series: Certified Financial Planner Board of Standards - tulsaworld.com/CFPBS5lifemilestones CFPBS developed a series of 25 relevant and timely tips and strategies for the five key milestone phases in one's life: starting out years, nesting years, prime time years, wealth accumulation years and reinvention years.
Five keys to investing success: Investor Protection Trust - tulsaworld.com/IPTInvProtec As you work to create an investing plan that suits you, know that you can accumulate substantial sums of money by applying five keys to investment success: make investing a habit, set exciting goals, don't take unnecessary risks, keep time on your side and diversify.
Researching and managing investments: The U.S. Securities and Exchange Commission - tulsaworld.com/SECMangInves - says the laws and rules governing the securities industry in the U.S. derive from a simple and straightforward concept: all investors should have access to certain basic facts about an investment prior to buying it and as long as they hold it. To achieve this, the SEC requires public companies to provide financial and other information to the public, which investors can use to judge whether to buy, sell, or hold particular securities.
Keeping up a portfolio in a volatile market
Dealing with a portfolio in volatile times is often a balancing act - featuring "what do I need now" and "what will I need later?"
The Balancing Act: North American Securities Administrators Association - tulsaworld.com/NASAARetPlan - says to gain control of your financial balancing act as follows: Use income from raises or elimination of debt to add to retirement assets and add up sources of retirement income, such as pension, retirement plans, Social Security benefits, rental property income, etc.
Assume you will need as much in retirement as you need now to support your lifestyle. Look at estate planning: do you have long term care insurance, life insurance or medical insurance? Will you be able to afford these or benefit from these when you retire? Does your portfolio need adjustment to meet retirement goals?
A Simple Valuation Spreadsheet: American Association of Individual Investors - tulsaworld.com/AAIIValuSpreadSht
Investors often view stock analysis and selection as daunting tasks but evaluating pertinent data and information in a logical sequence best facilitates reasonable decisions.
Option-Based Risk Management in a Multi-Asset World is a study by the Options Industry Council - tulsaworld.com/OICOptions The credit crisis and the associated decline in equity markets have rekindled new interest in "option-based equity collars" and in protective strategies generally. The study considers performance of "passive collar strategies" on a variety of long exchange-traded fund positions covering a wide range of asset classes. For most ETFs considered, the collar strategies provide improved risk adjusted performance as well as significant risk reduction. Collar strategy is more effective in declining markets than in rising markets.
Tax Benefits and Revenue Costs of Tax Deferral: Investment Company Institute - tulsaworld.com/ICITaxDefrl The benefits of tax deferral are equivalent to facing a zero rate of tax on investment income. The benefits of facing a zero rate on investment income will depend on how much investment income is generated by the deferral and how much tax revenue would otherwise have been generated by that income.
Behavioral Finance - What Can Investors Learn From Their Mistakes: CFA Institute - tulsaworld.com/CFAIlearnfrommistake
Original Print Headline: Manage your choice investments
Tulsa World consumer writer Phil Mulkins wants to know which topics interest you. Call 918-699-8888, email your suggestion to firstname.lastname@example.org or mail it to Tulsa World Consumer, PO Box 1770, Tulsa, OK 74102-1770.
Traders monitor prices on the floor of the New York Stock Exchange. The nonprofit Alliance for Investor Education provides investors with access to information for making decisions about retirement saving. The association's online "Monitoring and Evaluating the Performance of Your Investments" features 10 top resources for investors. Associated Press file