Wednesday, September 29, 2010
Tuesday, September 28, 2010
5 phases
1. Wealth creation
2. Wealth growth
3. Wealth accumulation
4. Wealth preservation
5. Wealth transfer
www.bankrate.com
www.choosetosave.org
10 10
9 11
8 12
7 14
6 17
5 21
4 27
1. You must identify your goal in terms of time, priority, and cost.
2. You must know what you own, what you owe, and what's available.
3. You must compare what you have with what you want and identify, if need be, what you are willing to do to achieve what is really important to you.
4. This analysis should be done at least every five years (every three if you are near or in retirement).
5. Do no focus on what you are "giving up"; instead focus on what you will be "getting" from the path you take.
6. What you've learned:
National Savings Rate Guidelines for Individuals by Roger Ibbotson et al. in April 2007 Journal of Financial Planning
Historical returns of stocks, bonds, T-Bills, and inflation from 1926-2008*
*Past performance does not guarantee future results
Large-cap stocks 9.6% *more than $10 billion
Small-cap stocks 11.7% *between $2 and $10 billion
Intermediate-term government bonds 5.4% *less than $2 billion
U.S. Treasury Bills 3.7%
Inflation 3.0%
FDIC-insured* Go to www.FDIC.gov for a more detailed look at the specific rules and restrictions and updates.
There are three basic ways that stocks are organized:
Size (large, mid, small-cap), style (growth, value), location (foreign, domestic)
A simplified way to think of mid caps is that they are either the small companies that made it past the dangerous start-up phase of their lives but haven't yet reached full potential or they are larger companies that are in decline for some reason or another. Recognizable mid caps are Under Armour, Vail Resorts, and Ross Stores.
Small-cap stocks
The Russell 2000 is the most widely used index for small-sized companies.
Investors often look to a stock's price-earnings ratio (P/E ratio) as an indicator of its style tilt.
Bonds:
Treasury (U.S. government)
Municipal (state, cities, and so on)
Corporate
Foreign governments
Foreign coporate
Munis
Government obligation bonds (GOBs)
Revenue bonds
TEY is tax equivalent yield
Tax-free yield / (1-your federal tax rate)
1. Under each of the four basic asset class categories are subcategories that all have different risk-and-return profiles.
2. Cash has the lowest risk-and-return profile out of the four. The major risk with cash is inflation riskk.
3. Stocks are categorized by size, style, and nationality. Each has an effect on the risk-and-return profile of a stock. Due to the economy, interest rates, and other uncontrollable external factors that market as a whole is subject to their own unique risks known as unsystematic risk. The goal of diversification is to minimize unsystematic or company-specific risk.
4. Bonds are loans to organizations. Issuer and time to maturity are the key differentials. They are subject to credit risk and interest rate risk. Treasuries are said to have the lowest credit risk whereas international corporate bonds are said to have the highest. Gnerally speaking, the longer the term to maturity the greater the interest rate risk.
5. Alternatives are basically anything that does not fall into the "big three" asset classes. Their risk-and-return profiles vary greatly.
6. What you've learned:
Expected returns
Standard deviationis stated as a percentage from the expeceted return.
Sample expected standard deviation
Cash 1.0
Intermediate bonds 6.0
High-yield bonds 10
U.S. large-cap stock 16.0
Small-cap stock 22.0
International stock 19.0
Emerging market stock 28.0
Private equity/venture capital 35.0
Portfolio (asset allocation) flavors - balance between risk and return
Conservative, Moderate, Aggressive
Cash - conservative 10; moderate 6; aggressive 2
Bonds - conservative 43; moderate 30%; aggressive 19
Stocks - conservative 42; moderate 54; aggressive 64
Alternatives - conservative 5; moderate 10; aggressive 15
1. The randomness associated with returns or the lack of pattern makes it very difficult for anyone to time the market perfectly
2 This lack of predictability is one of the great arguments for multi-asset class investing
3. The goal of portfolio optimzation is to create target portfolios that provide the greatest return for a given level of risk (or vice versa)
4. Your personal risk profile defines your asset allocation and is dependent on your financial risk capacity and your emotional risk tolerance.
5. To improve the risk-reward trade-off for your long-term investments you need to look at your strategy from a portfolio level, then asset class level, and then finally a security level.
6. What you've learned:
1. Wealth creation
2. Wealth growth
3. Wealth accumulation
4. Wealth preservation
5. Wealth transfer
www.bankrate.com
www.choosetosave.org
10 10
9 11
8 12
7 14
6 17
5 21
4 27
1. You must identify your goal in terms of time, priority, and cost.
2. You must know what you own, what you owe, and what's available.
3. You must compare what you have with what you want and identify, if need be, what you are willing to do to achieve what is really important to you.
4. This analysis should be done at least every five years (every three if you are near or in retirement).
5. Do no focus on what you are "giving up"; instead focus on what you will be "getting" from the path you take.
6. What you've learned:
National Savings Rate Guidelines for Individuals by Roger Ibbotson et al. in April 2007 Journal of Financial Planning
Historical returns of stocks, bonds, T-Bills, and inflation from 1926-2008*
*Past performance does not guarantee future results
Large-cap stocks 9.6% *more than $10 billion
Small-cap stocks 11.7% *between $2 and $10 billion
Intermediate-term government bonds 5.4% *less than $2 billion
U.S. Treasury Bills 3.7%
Inflation 3.0%
FDIC-insured* Go to www.FDIC.gov for a more detailed look at the specific rules and restrictions and updates.
There are three basic ways that stocks are organized:
Size (large, mid, small-cap), style (growth, value), location (foreign, domestic)
A simplified way to think of mid caps is that they are either the small companies that made it past the dangerous start-up phase of their lives but haven't yet reached full potential or they are larger companies that are in decline for some reason or another. Recognizable mid caps are Under Armour, Vail Resorts, and Ross Stores.
Small-cap stocks
The Russell 2000 is the most widely used index for small-sized companies.
Investors often look to a stock's price-earnings ratio (P/E ratio) as an indicator of its style tilt.
Bonds:
Treasury (U.S. government)
Municipal (state, cities, and so on)
Corporate
Foreign governments
Foreign coporate
Munis
Government obligation bonds (GOBs)
Revenue bonds
TEY is tax equivalent yield
Tax-free yield / (1-your federal tax rate)
1. Under each of the four basic asset class categories are subcategories that all have different risk-and-return profiles.
2. Cash has the lowest risk-and-return profile out of the four. The major risk with cash is inflation riskk.
3. Stocks are categorized by size, style, and nationality. Each has an effect on the risk-and-return profile of a stock. Due to the economy, interest rates, and other uncontrollable external factors that market as a whole is subject to their own unique risks known as unsystematic risk. The goal of diversification is to minimize unsystematic or company-specific risk.
4. Bonds are loans to organizations. Issuer and time to maturity are the key differentials. They are subject to credit risk and interest rate risk. Treasuries are said to have the lowest credit risk whereas international corporate bonds are said to have the highest. Gnerally speaking, the longer the term to maturity the greater the interest rate risk.
5. Alternatives are basically anything that does not fall into the "big three" asset classes. Their risk-and-return profiles vary greatly.
6. What you've learned:
Expected returns
Standard deviationis stated as a percentage from the expeceted return.
Sample expected standard deviation
Cash 1.0
Intermediate bonds 6.0
High-yield bonds 10
U.S. large-cap stock 16.0
Small-cap stock 22.0
International stock 19.0
Emerging market stock 28.0
Private equity/venture capital 35.0
Portfolio (asset allocation) flavors - balance between risk and return
Conservative, Moderate, Aggressive
Cash - conservative 10; moderate 6; aggressive 2
Bonds - conservative 43; moderate 30%; aggressive 19
Stocks - conservative 42; moderate 54; aggressive 64
Alternatives - conservative 5; moderate 10; aggressive 15
1. The randomness associated with returns or the lack of pattern makes it very difficult for anyone to time the market perfectly
2 This lack of predictability is one of the great arguments for multi-asset class investing
3. The goal of portfolio optimzation is to create target portfolios that provide the greatest return for a given level of risk (or vice versa)
4. Your personal risk profile defines your asset allocation and is dependent on your financial risk capacity and your emotional risk tolerance.
5. To improve the risk-reward trade-off for your long-term investments you need to look at your strategy from a portfolio level, then asset class level, and then finally a security level.
6. What you've learned:
Sunday, September 26, 2010
Monthly cash flow statement
Sources of cash:
Take-home pay*
Dividends/Interest
Rental income
Other
Total sources of cash (A)
USES OF CASH
Fixed expenses
Mortgage
Loan payments
Utilities
Insurance
Property taxes
Other
Total fixed expenses (B)
Variable expenses
Charitable contributions
Clothing
Travel and entertainment
Gifts
Other
Total variable expenses (C)
Total expenses (B+C)
Positive/negative monthly cash flow available for investing A-(B+C)
*Make note of employer saving plan's monthly contributions
-The Five Phases of Your Financial Life
1. Wealth creation
2. Wealth growth
3. Wealth accumulation
4. Wealth preservation
5. Wealth transfer
Sources of cash:
Take-home pay*
Dividends/Interest
Rental income
Other
Total sources of cash (A)
USES OF CASH
Fixed expenses
Mortgage
Loan payments
Utilities
Insurance
Property taxes
Other
Total fixed expenses (B)
Variable expenses
Charitable contributions
Clothing
Travel and entertainment
Gifts
Other
Total variable expenses (C)
Total expenses (B+C)
Positive/negative monthly cash flow available for investing A-(B+C)
*Make note of employer saving plan's monthly contributions
-The Five Phases of Your Financial Life
1. Wealth creation
2. Wealth growth
3. Wealth accumulation
4. Wealth preservation
5. Wealth transfer
Sunday, September 19, 2010
Chicago Symphony Orchestra
Riccardo Muti
Giuseppe Verdi Overture to La forza del destino
Franz Liszt Les préludes, Symphonic Poem No. 3
Piotr Tchaikovsky Romeo and Juliet
Fantasy Overture
Ottorino Respighi Pines of Rome
Hyde Park Suzuki Institute
Music Institute of Chicago
Midwest Young Artists
Merit School of Music
Chicago Children's Choir
Chicago Youth Symphony Orchestra
Riccardo Muti
Giuseppe Verdi Overture to La forza del destino
Franz Liszt Les préludes, Symphonic Poem No. 3
Piotr Tchaikovsky Romeo and Juliet
Fantasy Overture
Ottorino Respighi Pines of Rome
Hyde Park Suzuki Institute
Music Institute of Chicago
Midwest Young Artists
Merit School of Music
Chicago Children's Choir
Chicago Youth Symphony Orchestra
Tuesday, September 14, 2010
Thursday, September 2, 2010
Ecole des Hautes Etudes en Sciences Sociales
Death is often a good career more for an author, A poet.
I am dead serious.
Platonic love.
Mandel broatian randomness
Epistemology
Consilient School
A story of recursion
From Kundera to Krasnova
Gregory Bateson
Ivan the Terrible
Get a profession that is scalable. Monstrous regulation.
Turn from a logical impasse to easy-to-implement solution
Your revenue depends on your continuous efforts more than on the quality of your decision
Idea person
Labor is mostly thinking
I am a Black Swan
Pierre Bourdieu
French sociologist-philosopher
Yevgenia Nikolagevna Krasnova is a fictional character
Information is costly to store
Information is costly to manipulate and retrieve
Parisian novelist and intellectual pursuit. Georges Pall.
Andrey (or Andrei?) Nikolaeyskcostly Kolmogorav
Death is often a good career more for an author, A poet.
I am dead serious.
Platonic love.
Mandel broatian randomness
Epistemology
Consilient School
A story of recursion
From Kundera to Krasnova
Gregory Bateson
Ivan the Terrible
Get a profession that is scalable. Monstrous regulation.
Turn from a logical impasse to easy-to-implement solution
Your revenue depends on your continuous efforts more than on the quality of your decision
Idea person
Labor is mostly thinking
I am a Black Swan
Pierre Bourdieu
French sociologist-philosopher
Yevgenia Nikolagevna Krasnova is a fictional character
Information is costly to store
Information is costly to manipulate and retrieve
Parisian novelist and intellectual pursuit. Georges Pall.
Andrey (or Andrei?) Nikolaeyskcostly Kolmogorav
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