With stocks trading at all-time highs, many investors are sitting on significant capital gains and may have positions that become untradable because of the potential tax implications. Whether the stock has appreciated over many years or accumulated as a company executive, dealing with a stock with a huge unrealized gain can become a good problem to have.
How to Diversify Your 401(k)
When it comes to trying to reduce risk in your 401(k), the phrase “”don't put your eggs in one basket”” applies. Therefore when selecting investments, it's important to diversify.
Taking Too Much Risk May Sink Your Retirement
Thanks to the Fed's zero interest rate policy (ZIRP), baby boomers are facing a much tougher road to retirement than those in the past. While it may seem like an eternity, it was only 10 years ago when you could park your money in a savings account and earn interest of 5%. Retirees who worked hard and saved their money could safely invest their assets in retirement and not have to worry about suffering any losses.
Today is an especially challenging environment for investors who are looking to generate a safe income stream. No Treasury bond will pay a safe 5% return as a 30-year Treasury Bond yields just 2.69%. This is causing a massive gap between what boomers say they want in retirement and what they're doing to make it happen.
What is Your Strategy in Volatile Markets?
World stock markets have been increasingly volatile this summer. Returns for market indices have turned negative and the S&P 500 suffered its first 10% correction since 2012. Because of this, I have received several message in my inbox that ponder what do in this environment. A couple of the titles were “”What you should do in volatile and uncertain markets”” and “”When market conditions become volatile, how will you react?”” The two main strategies that they suggest are 1) stay the course and 2) a diversified portfolio is the best way to be positioned. While this seems sensible in a bull market cycle, these two strategies do not work in a bear market cycle. Therefore, the most important question is not what to do in a volatile market, but is this a bear market?
https://www.youtube.com/watch?v=DH6V2yp4ty0
Building an Investment Portfolio That Sparks Joy
This week, I continue from where I left off in The Life-Changing Magic of Tidying Up… Your Investment Portfolio. What I like about the KonMari method is its simplicity. Keep the things that spark joy and dispose of the rest. There is also a specific order to the decluttering madness: clothes, books, papers, komono (miscellaneous), and finally mementos. Basically, you start with the low hanging fruit. I quickly reduced my collection of 100 t-shirts that no grown man needs. The idea is to work through each category, carefully honing your skills so that you're ultimately prepared to sort through your toughest opponent, keepsakes and sentimental belongings. Why stop there? I suggest that you keep going.