Key Questions for Long-Term Investing

Whether you’ve been investing for decades or are just getting started, at some point on your investment journey you’ll likely ask yourself some of the questions below. Trying to answer these questions may be intimidating, but know that you’re not alone. Your financial advisor is here to help. While this is not intended to be an exhaustive list it will hopefully shed light on a few key principles, using data and reasoning, that may help improve investors’ odds of investment success in the long run. 1. What sort of competition do I face as an investor? The market is an…

Continue

The Uncommon Average

The US stock market has delivered an average annual return of around 10% since 1926.[1] But short-term results may vary, and in any given period stock returns can be positive, negative, or flat. When setting expectations, it’s helpful to see the range of outcomes experienced by investors historically. For example, how often have the stock market’s annual returns actually aligned with its long-term average? Exhibit 1 shows calendar year returns for the S&P 500 Index since 1926. The shaded band marks the historical average of 10%, plus or minus 2 percentage points. The S&P 500 had a return within this…

Continue

Lessons for the Next Crisis

Over the coming weeks and months, as other anniversaries of major crisis-related events pass (for example, 10 years since the bank run on Northern Rock or 10 years since the collapse of Lehman Brothers), there will likely be a steady stream of retrospectives on what happened as well as opinions on how the environment today may be similar or different from the period leading up to the crisis. It is difficult to draw useful conclusions based on such observations; financial markets have a habit of behaving unpredictably in the short run. There are, however, important lessons that investors might be…

Continue

INDEXING VS. EVIDENCE-BASED INVESTING

Many investors realize that an evidence-based investment approach offers many benefits when compared with an active investment approach. Evidence-based investing involves buying and holding market components, whereas an active investor or fund manager tries to pick the next winning stock or time where the market is headed next. An evidence-based approach offers these major benefits: By holding entire market components, the investor maximizes the benefits of diversification. By “tilting” the portfolio to riskier or less risky components, the investor can expect to capture the highest market return given his or her risk tolerance. The investor maintains control over his or…

Continue

EQUIFAX DATA BREACH: WHAT YOU NEED TO KNOW

On Friday, Equifax, one of the major credit reporting bureaus, issued a press release announcing that on July 29 it had discovered “unauthorized access” to data belonging to as many as 143 million U.S. consumers. We have compiled some information that we hope may help you understand what happened and what to do next. As always, please don’t hesitate to reach out to us if you have specific questions. Equifax has stated its internal investigation determined no evidence of unauthorized activity on its core consumer or commercial credit reporting databases. However, the data accessed includes names, Social Security numbers, birth…

Continue

Health Savings Accounts: Are They Just What the Doctor Ordered?

Are health insurance premiums taking too big of a bite out of your budget? Do you wish you had better control over how you spend your health-care dollars? If so, you may be interested in an alternative to traditional health insurance called a health savings account (HSA). How does this health-care option work? An HSA is a tax-advantaged account that’s paired with a high-deductible health plan (HDHP). Let’s look at how an HSA works with an HDHP to enable you to cover your current health-care costs and also save for your future needs. Before opening an HSA, you must first…

Continue