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Investors Shun Risk

On 04/04/2012, in Investment Concepts, by Jordan Wilson

A relationship exists between investment risk and expected return.

The safer the asset, the lower the expected return. The greater the investment risk, the higher the required return. Or it can be a tad more technical if you like.

Investors should take an objective view of investment risk. Unfortunately, investors tend to be emotional creatures and these volatile times lead people to become fearful of investment risk.

So what is happening? And what should you do as an investor?

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Buy and Hold Forever Stock Strategy

On 02/13/2012, in Investment Strategies, by Jordan Wilson

Some financial advisors advocate a buy and hold forever strategy for individual stocks.

They cite such successful investors as Warren Buffett, Benjamin Graham, and John Templeton as staunch believers in a buy and hold forever approach.

Or financial experts tout articles like “The 7 Best Stocks for a Lifetime”.

As a good friend whose birthday is this week would put it, “Complete foolishness, I say.”

And she would be right. 

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Each year seems to bring an ever increasing number of new exchange traded funds (ETFs).

2011 was no exception.

Some say many of the new ETFs are not necessary, but I like the increase. 

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Vanguard Investment Funds

On 12/03/2011, in Exchange Traded Funds, Mutual Funds, by Jordan Wilson

I like Vanguard investment funds for long term individual investors.

Especially investors who follow a passive management style.

As I am not directly or indirectly compensated in any way by Vanguard I recommend them based solely on their merits.

That is not to say that other funds are poorer choices. I recommend a wide variety depending on a client’s investment objectives, desires, and available offering in their home jurisdiction. I believe in a “best of breed” approach for clients, not what is best for my revenue. And within the “best of breed” options, Vanguard funds pop up with regularity.

Why is this so?  

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Fund Fees Barely Budge

On 10/31/2011, in Investment Strategies, by Jordan Wilson

I am a proponent of passive investing.

That means investing in passively managed index funds that track a specific market sector. Primarily, exchange traded (ETF) or open ended mutual index funds.

Research indicates that actively managed portfolios tend not to perform better than passive portfolios. And actively run portfolios cost investors more money in fees and expenses than passive.

So why take an active approach? 

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Index benchmarks for passive investment management are an ideal fit.

And quite easy to implement.

After all, with passive investing you are simply trying to replicate the market (as represented by the relevant index). So it is simple to find an index for comparative purposes.

But there are a few things to remember when benchmarking under a passive approach. 

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Quality and Dollar Cost Averaging

On 03/21/2011, in Investment Strategies, by Jordan Wilson

One final comment on Dollar Cost Averaging (DCA).

For DCA to work, you need to invest in quality assets.

I have mentioned this in prior DCA posts, but I want to emphasize it separately. 

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Previously I have written about potential problems in diversifying one’s portfolio with funds.

The Wall Street Journal nicely illustrates three common concerns in an article today.

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Fund of Funds

On 12/18/2010, in Exchange Traded Funds, Mutual Funds, by Jordan Wilson

We will end our look at exchange traded funds (ETFs) with a few words on fund of funds.

Fund of funds are also available with mutual funds, so my comments equally apply to them.

I am not keen on fund of funds, so I shall keep this brief.  

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Life Cycle ETFs

On 12/15/2010, in Exchange Traded Funds, by Jordan Wilson

Today we will look at life cycle or target date funds.

In this post we will focus on exchange traded funds (ETFs). But be aware that there are also life cycle mutual funds.

Some technical differences between the two, but the fundamental principles are the same.

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