Investment Strategies Archives - Page 2 of 2

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Financial Planning, Investment, Retirement Planning, Work and Career

Three Perspectives on Contributing to the 401(k): Dollar-Cost Averaging, Front-Loading and Back-Loading

When you have a buffer of savings and you want to invest that money, do you invest in small chunks spread out over time or in a lump sum all at once? Do you do a mix? How do you decide when to use which strategy? What do you pay attention to? How do you evaluate your investment returns? Maybe you don’t have a preference and just do what feels good or right for your situation?

Three Perspectives on Contributing to the 401(k): Dollar-Cost Averaging, Front-Loading and Back-Loading

Contributing to your 401(k) is a form of investment. As we strive to become diligent and prudent investors, it’s worth taking a look at some of the different perspectives investors generally use to contribute to their accounts. What are the advantages and disadvantages? As you will read, I don’t recommend one strategy over another. I share why my husband and I use a particular strategy given our particular situation during a particular time. From our story, I hope you’ll see why one strategy worked for us at one time and another worked better for us at another time. Ultimately, you need to decide what’s best for you. Knowledge is power. The more you learn, the more you become aware of what’s possible for you. As a result, you’ll be able to make informed financial decisions.

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Financial Planning, Money Psychology, Personal Finance

Don’t Like Budgeting? You Can Still Take Control of Your Finances

Budgeting is just one way of managing your money. My husband and I don’t do budgeting. In this post I shared other strategies and tools we use.

What comes to mind when you think of budgeting? If you think it’s tedious, stressful, or restrictive, then you’re not alone!

budgeting strategies to managing personal finances

Many people claim budgeting is good for your financial health. Much has been written on this topic, from why you need a budget to creating a budget to managing a budget. For a short while, I truly believed having a budget was the way to become wealthy. But my husband and I passed on it after we had a long discussion on the topic. That was in year 2010.

Six years later, my husband and I decided to give budgeting a try. Many personal finance bloggers were doing this. They must knew something, right? We wanted to see what expenses we could cut. The lower our expenses are, the earlier we can retire. We tried for three months. Our consensus? The process was painful, tedious and mentally difficult. It was not about the math. The formulas were simple and the spreadsheet took care of the calculations. It was not about our different views on money. We generally agree on how to manage our household finances. It was not a lack of patience. My husband tracks our portfolio performance almost on a daily basis, and this involves lots of number tracking and focus. So what did it come down to? We lacked commitment. We didn’t see the benefits.

Were we doomed? Continue Reading

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Financial Journey, Financial Planning, Investment, Money Psychology, Retirement Planning

Rule of 72: Harnessing the Cumulative Power of Compound Growth

Readers, does hearing about the prospect of doubling your money get you excited? Wondering what’s the best way to start saving for retirement? Would you be more likely to do financial planning if you have access to simple and efficient tools? Do compound interest formulas intimidate you? Don’t know how to use a financial calculator or don’t carry one in your purse? If you responded “yes” to any of the questions above, the Rule of 72 can be your friend.

Mathematical formulas don’t excite me. I skip over them in my readings. While I enjoy thinking about retirement, I am not interested in running the numbers. Even retirement calculators ask for numbers! My husband told me about the concept of compounding shortly after we met, but I had a hard time grasping how the numbers could work in my favor. Or was that a form of mental resistance?

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Financial Journey, Financial Planning, Investment, Money Psychology, Retirement Planning

Rule of 72: How My Husband Convinced Me to Save for Retirement

My husband and I have been saving 50 to 70% of our net income. I wrote about our story in a previous post. This radical approach on savings was not something we always saw eye to eye. I resisted. He kept giving me high-fives. Despite my resistance, we managed to achieve those high percentages. I was mad that his logic to spend less was always so convincing. I thought I was frugal. He took frugality to an extreme. Much of the frictions through the first half of our marriage revolved around this difference. Then my husband introduced me to the Rule of 72. He converted me to become a radical saver just like that!

rule of 72 save for retirement

When I Was in College

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Financial Journey, Financial Planning, Investment

Wealth Preservation: Strategies to Protect What We Have Built and Lessons Learned

In general, there are four phases to wealth management: accumulation, preservation (protection), distribution and transfer. My husband and I manage our own assets. In this post, I am using our story as an example illustrating why wealth preservation strategies are important for managing an investment portfolio and should be an integral part of financial planning. This is true when one is building wealth (wealth accumulation) and when one is approaching or in retirement (wealth preservation). Based on my research, many financial firms treat the four phases of wealth management as distinct financial steps when delivering financial guidance to clients. However, this approach is limited in scope. A financial plan is not well-thought out when an investor just focuses on the growth and yield components of a portfolio. As we accumulate wealth, we also need to implement financial strategies that safeguard what we have built and cushion the downside should the stock market become volatile.

Chasing Growth (Capital Appreciation) and Cash Flow (High Yields)

Throughout year 2009, all my equity holdings were either in individual stocks or index funds (it took another year before I learned about bonds). My investment goal back then was to see my capital grow as far as it could stretch. I also chased high yields (in the forms of dividends and interest payments), too. However, despite the hot chase, all those investments were done with much caution and education. Still, growth and cash flow were mostly what I focused my investment attention on.

Protecting What We Have Built

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