The Diversified Blog

A wealth management blog dedicated to creating a long lasting sustainable retirement.

Prediction Season


Here is a nice article provided by Dimensional Fund Advisors:

 

Predictions about future price movements come in all shapes and sizes, but most of them tempt the investor into playing a game of outguessing the market. It is wise to remember that investors are better served by sticking with a long-term plan rather than changing course in reaction to predictions and short-term calls. CLICK HERE TO READ MORE: 

Prediction-Season.pdf

 

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The Dimensional Active Passive Powerhouse

Here is a nice article provided by Jason Zweig of The Wall Street Journal:

 

The fastest growing major mutual-fund company in the U.S. isn't strictly an active or passive investor. It is both. Dimensional Fund Advisors is the sixth-largest mutual-fund manager, drawing nearly $2 billion in net assets a month at a time when investors are fleeing many other firms. 

CLICK HERE TO READ MORE:

 The-Active-Passive-Powerhouse.pdf

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Time-Tested Tactics to Build Your Wealth

Here is a nice article provided by the Editors of Kiplinger’s Personal Finance:

 

By the Editors of Kiplinger’s Personal Finance | April 2017

 

We have doled out a lot of good advice over the 70 years we’ve been publishing Kiplinger's Personal Finance magazine. So in many ways it was easy to come up with 70 ideas on how to create wealth. But when our editorial staff submitted nearly 300 ideas, the editors had to roll up our collective sleeves and distill the advice into absolute gems.

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Job-Changer’s Financial Checklist

As you look forward to starting a new job, it's important to consider how you will manage your finances while making the transition from one employer to the next.

The checklist to use before starting a new job:

●  Proactively manage your health insurance to avoid a lapse in coverage.

●  Discuss dates with your old and new employers to assure continuous coverage.

●  Check on the status of any pending claims under your old coverage.

●  Arrange any needed transfers of records from your old insurer to your new insurer.

●  Provide forwarding and contact information to the trustee of any health savings accounts (HSAs). If you expect to enroll in a high-deductible health plan at your new job, you can generally have any remaining balance in your HSA transferred, so you should determine what procedures you may need to follow. If you do not plan to enroll in a new high-deductible health plan, you can generally leave any HSA assets in your current plan and draw them down as needed for eligible future expenses.

If you have a flexible spending account (FSA) with your current employer, it's important to pay attention to the details of the plan before you change jobs.

●  A flexible spending account (FSA) lets you set aside a pretax portion of your paycheck to cover qualified medical expenses that would have otherwise come out of your pocket. Be sure to file all eligible expenses because, under current rules, you may only carry over up to $500 in unused funds to the next year.

●  Prepare for your job change by submitting all eligible expenses for reimbursement under your old programs before you leave your current job, and check with your company's HR department to find out whether or not you have a grace period for submission.

●  Determine whether any future child care or commuting expenses may qualify for reimbursement from your old accounts.

Address important decisions about your future financial security by managing your retirement accounts.

●  Evaluate all of the post-employment options for assets in your current plan -- leave the assets in place, roll them over to an IRA, or roll them over to your new employer.

●  Determine whether your old plan will require you to arrange a transfer within 60 days or get automatically cashed out, keeping in mind that cash-outs carry immediate tax consequences.

●  Provide any necessary change-of-address information.

●  Keep up your retirement savings efforts at your new employer.

Manage your employer-sponsored life and disability coverage.

●  Determine the extent to which your new employer's coverage might be a complete replacement for your existing coverage.

●  Evaluate conversion options for existing coverage.

●  Consider the need for individual disability insurance.

Keep records and receipts of any moving and transfer expenses for potential tax adjustments and reimbursements.

The checklist to use when you don't have a job lined up:
Manage your health insurance.

●  Determine the date for termination of coverage and look into extension and conversion options to avoid a lapse in coverage.

●  Find out what kind of private individual and government-sponsored health insurance might be available in your area and evaluate your options.

●  Check on the status of any pending claims.

●  Track down copies of your insurance records.

●  Provide forwarding and contact information to the trustee of any HSAs. Keep in mind that any remaining HSA balance should remain available to you for future eligible medical expenses, so you should determine what your plan procedures would be.

Manage your FSAs.

●  Submit all eligible expenses for reimbursement before your departure, or confirm that you will have a grace period for submission.

Manage your retirement accounts.

●  Evaluate the post-employment options for assets in your current plan -- leaving the assets in place or rolling them over to an IRA.

●  Determine whether your plan will require you to arrange a transfer within 60 days or get automatically cashed out, keeping in mind that cash-outs carry immediate tax consequences.

●  Provide any necessary change-of-address information.

Manage your employer-sponsored life and disability coverage.

●  Evaluate all conversion and replacement options for existing coverage.


Source:

You have choices for what to do with your employer-sponsored retirement plan accounts. Depending on your financial circumstances, needs, and goals, you may choose to roll over your eligible savings to an IRA or convert to a Roth IRA, roll over an employer-sponsored plan from a prior employer to an employer-sponsored plan at your new employer, take a distribution, or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment, and may provide different protection from creditors and legal judgments. These are complex choices and should be considered with care.


Required Attribution

Because of the possibility of human or mechanical error by DST Systems, Inc. or its sources, neither DST Systems, Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall DST Systems, Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2017 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.


Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.


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Ten Investment Mistakes to Avoid

Who needs a pyramid scheme or a crooked money manager when you can lose money in the stock market all by yourself. If you want to help curb your loss potential, avoid these 10 strategies.

1.  Go with the herd. If everyone else is buying it, it must be good, right? Wrong. Investors tend to do what everyone else is doing and are overly optimistic when the market goes up and overly pessimistic when the market goes down. For instance, in 2008, the largest monthly outflow of U.S. domestic equity funds occurred after the market had fallen over 25% from its peak. And in 2011, the only time net inflows were recorded was before the market slid over 10%.

2.  Put all of your bets on one high-flying stock. If only you had invested all your money in Apple 10 years ago, you'd be a millionaire today. Perhaps, but what if, instead, you had invested in Enron, Conseco, CIT, WorldCom, Washington Mutual, or Lehman Brothers? All were high flyers at one point, yet all have since filed for bankruptcy, making them perfect candidates for the downwardly mobile investor.

3.  Buy when the market is up. If the market is on a tear, how can you lose? Just ask the hordes of investors who flocked to stocks in 1999 and early 2000—and then lost their shirts in the ensuing bear market.

4.  Sell when the market is down. The temptation to sell is always highest when the market drops the furthest. And it's what many inexperienced investors tend to do, locking in losses and precluding future recoveries.

5.  Stay on the sidelines until markets calm down. Since markets almost never "calm down," this is the perfect rationale to never get in. In today's world, that means settling for a minuscule return that may not even keep pace with inflation.

6.  Buy on tips from friends. Who needs professional advice when your new buddy from the gym can give you some great tips? If his stock suggestions are as good as his abs workout tips, you can't go wrong.

7.  Rely on the pundits for advice. With all the experts out there crowding the airwaves with their recommendations, why not take their advice? But which advice should you follow? Cramer may say buy, while Buffett says sell. And remember that what pundits sell best is themselves.

8.  Go with your gut. Fundamental research may be OK for the pros, but it's much easier to buy or sell based on what your gut tells you. Had problems with your laptop lately? Maybe you should sell that IBM stock. When it comes to hunches, irrationality rules.

9.  React frequently to market volatility. Responding to the market's daily ups and downs is a surefire way to lock in losses. Even professional traders have a poor track record of guessing the market's bigger shifts, let alone daily fluctuations.

10.  Set it and forget it. Ignoring your portfolio until you're ready to cash it in gives it the perfect opportunity to go completely out of balance, with past winners dominating. It also makes for a major misalignment of original investing goals and shifting life-stage priorities.


Source:

1.  ICI; Standard & Poor's. The stock market is represented by the S&P 500, an unmanaged index considered representative of large-cap U.S. stocks. These hypothetical examples are for illustrative purposes only, and are not intended as investment advice.


Required Attribution
Because of the possibility of human or mechanical error by DST Systems, Inc. or its sources, neither DST Systems, Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall DST Systems, Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2017 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.


Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

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