Anyone who has owned a home for a long time knows the most visible projects are not always the most important. Paint colors, kitchen updates, and landscaping get the attention, while the roof, furnace, and water heater do their jobs in the background until something goes wrong. Retirement planning works the same way. Investment performance, withdrawal rates, and Social Security claiming strategies tend to dominate the conversation, but some of the most consequential issues show […]

MBA Series – What Makes Asset Allocation So Important? “Don’t put all of your eggs in one basket.” The beginning of the year is typically portfolio rebalancing time for investors. I write a lot about investing as it is an achievable path to long-term wealth. If you don’t know what asset allocation is or much about investing at all, then this article is for you. Modern Portfolio Theory is the science that drives most of the writing about investing today. After teaching a university Investments class, and reviewing the concepts of Modern Portfolio Theory, I’m reminded the key reasons that asset allocation is important. What is Asset Allocation? When creating an investment portfolio, asset allocation means selecting specific asset classes and choosing the percentage amount invested in each asset class.  Sample asset classes are: U.S. Stocks U.S. Corporate Bonds International Stocks International Bonds Real Estate or REITs Government Bonds Small Cap Stocks Large Cap Stocks Diversification – Tried and True Investing Diversification in investing means don’t put all of your money in one investment or one type of investment. Why diversify? There aren’t many people that can stomach three years of declining stock prices. In 2000, the market dropped a total of a 42.85% during 2000 through 2002. S&P 500 With a concentrated portfolio, when that investment goes down, there goes the value of your invested assets-down. And vice versa. Buy different types of investments, so that when one goes down in price, the others may go up, or at least remain stable. Diversification smooths out the ups and downs of your investments. For example, it is rare for bonds and stocks to go down drastically at the same time. During certain years, bonds will outperform stocks, and in others, stocks outperform bonds. S&P 500 Dividends ReinvestedUS Small Cap3-month T. BillUS T. Bond (10-year)Baa Corporate BondReal EstateGold201721.61%15.13%0.95%2.80%9.15%6.21%12.66%2018-4.23%-16.21%1.97%-0.02%-3.18%4.52%-0.93%201931.21%11.92%2.11%9.64%15.25%3.69%19.08%202018.02%34.16%0.36%11.33%10.60%10.43%24.17%202128.47%22.41%0.04%-4.42%1.02%18.86%-3.75%2022-18.04%-22.90%2.09%-17.83%-15.23%5.65%0.55%202326.06%5.19%5.28%3.88%8.74%5.68%13.26%202424.88%8.70%5.18%-1.64%1.74%3.96%25.96%202517.78%16.53%4.21%7.80%6.96%1.58%66.22% Source: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html Take a look at a 2022 anomaly: high inflation and subsequent interest rate spikes, caused a S&P 500 tumble of -18.04% and the 10-year US Treasury bond to plunge -17.83% simultaneously. However, look at how beautifully the balance restored itself just a year later: in 2023, the S&P 500 soared 26.06% while bonds stabilized with a return of 3.88%. Despite the stock and bond market losses in 2022, your investment losses would have been tempered, had you also owned real estate and gold. Real estate delivered a 5.65% gain and Gold remained flat with a 0.55% uptick. Over long periods, combining these asset classes drastically curtails your portfolio’s overall volatility. Bonus: What Should My Asset Allocation Be? Over long periods of time stocks have outperformed bonds, but a combination of diverse asset classes reduces your portfolio volatility (as measured by standard deviation). Notice that in 2021, the S&P 500, a proxy for the stock market averaged 28.40% return, while the 10 year Treasury bond lost 4.42%. Next, travel back in time to 2008 when the S&P 500 sunk a disastrous -36.55% and the 10

There’s nothing wrong with buying secondhand. In fact, some of the best deals you’ll ever find come from thrift stores, Facebook Marketplace, garage sales, and resale shops. I’ve bought used furniture.Used tools.Used sporting equipment.Even used cars. The trick is knowing the difference between a bargain and a future headache. Because while some items age beautifully, others hide problems you won’t discover until after you’ve handed over your money. And by then, it’s usually too late. […]

The most treacherous beliefs are the ones that are never questioned. This doctrine applies to both your health and wealth. The fitness industry isn’t immune to spreading misinformation on a colossal scale. Many “Influencers” are more concerned with clicks as as opposed to facts. Our health hasn’t profited from this new age of unlimited data and advice. Here a few myths we confuse for truth. Ca…The post Certainty Is Just Ignorance With Good PR appeared first on A Teachable Moment.

Most people have no idea how much money they need to retire. They just keep working and hoping it’ll somehow be enough. Here’s a simple calculation that gives you an actual number. Not a guess. Not a vague “as much as possible.” A real target you can work towards. It’s called the Rule of 25. And it changes everything once you understand it. This post contains illustrative examples and is not financial advice. Capital is […]

Listen to the pod It’s time to put your money to work. This is the guide I wish I’d had when I first started. Stop letting your money rot in your bank account and build something for future you. ———A huge thanks to the episodes sponsor – Trading 212. Get FREE FRACTIONAL SHARES worth up £100 when you deposit £1 with Trading 212  https://www.trading212.com/join/MGP If you don’t receive the free fractional shares – head to […]

Life with JB Grown adults still thinking that getting paid more means losing it all to taxes makes me batty. After another athlete shared that they had their contract written for a dollar less than $1M because of taxes, I pulled JB aside to explain marginal tax rates to them. They need to know well […]

The post Your American Money in 2026 appeared first on youramericanmoney. For the past couple of months I’ve thought about working on Your American Money again. In fact, you could say that I’ve been feeling “called” to do so. Gas is currently around $4.79 a gallon (or, $5.19 at the weird expensive gas station) in my hometown of Denver, Colorado-the highest I’ve ever seen it in my entire time of living here. Protections that were […]