The reason people first bear the investment risk is to achieve a higher "realized" rate of return than the risk-free environment... that is, the FDIC insurance bank account has compound interest.
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In the past decade, due to artificially low interest rates, this risk-free savings has not been able to compete with riskier media, forcing traditional "storage depositors" into mutual funds and ETF markets. -
[Funds and ETFs have become "new" stock markets, where individual stock prices have become invisible, questions about corporate fundamentals are satisfied with blank eyes, and media talk leaders tell us that individuals are no longer stock markets].
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Financial risk involves the ability of companies, government entities and even individuals to meet their financial commitments. -
Market risk means that all securities will experience absolute certainty of market volatility...sometimes more obvious than other securities, but this "reality" needs to be planned and dealt with and never worried. -
Question: Does the demand for individual stocks push up the fund and ETF prices, and vice versa?
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How can banks get the amount of interest they guarantee to depositors? Regardless of how the market value changes, they invest in securities that pay a fixed rate of return.
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For example, the annual portfolio "rebalancing" is a symptom of an asset allocation dysfunction. Regardless of how the market value changes, asset allocation needs to control every investment decision every year throughout the year.
What you need is common sense, reasonable expectations, patience, discipline, soft hands and oversized drivers. The "KISS Principles" should be the basis of your investment plan; the composite revenues maintain a structurally safe epoxy resin during the development period.
In addition, emphasizing "working capital" [rather than market value] will help you complete all four basic portfolio management processes. [Business, remember PLOC?] Finally, have the opportunity to use what you have learned in college!
Planning retirement
The retirement income portfolio [almost all portfolios eventually become retirement portfolios] is a timely financial hero on the scene to fill the income gap between your retirement income and the margin you receive from your uncle and/or past deposits. employer.
However, how powerful the superhero is is not dependent on the amount of market value; from a retirement perspective, this is the income generated inside the garment, which protects us from financial villains. Which heroes do you want to cheer for your wallet?
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The $1 million VTINX portfolio has an annual expenditure of approximately $19,200. -
A multi-million dollar, diversified, long-lasting CEF portfolio generates more than $70,000 a year...even with the same equity allocation as the Vanguard Fund [slightly less than 30%]. -
The one million dollar GOOG, NFLX and FB portfolios do not incur any expenditure at all.
When you look at the actual portfolio of 401k, IRA, TIAA CREF, ROTH, etc., it becomes even more ugly, and realizes that the actual disposable income is even less than 4%. Total return, yes. Achieved disposable income, "No.
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Of course, the market value of your portfolio has been "growth" over the past decade, but it is likely that there is no effort to increase the annual income it generates. Financial markets rely on market value analysis, and as long as the market is rising every year, we will be told that everything is fine. -
So what if your "income gap" exceeds 4% of your portfolio? What if your portfolio's output is less than 2% of the Vanguard Retirement Income Fund? Or if the market stops growing more than 4% per year... What happens when you still consume capital with 5%, 6% or even 7% of the funds?
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Reinvestment every month must not be a DRIP [Dividend Reinvestment Plan] approach. Monthly income must be pooled for selective reinvestment in order to maximize revenue. The goal is to reduce the cost per share basis and increase position revenue by clicking the mouse.
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The "Working Capital Model" is a vehicle pilot asset allocation system that has been tested for more than 40 years. When properly used, it can almost guarantee annual revenue growth with a minimum income target of 40%.
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Regardless of the size of the portfolio, the age of the investor or the amount of current assets available for investment, the "revenue-based" asset allocation begins with 30% of working capital. -
Starting a portfolio [less than $30,000] should have no equity and no more than 50% before reaching six. From $100,000 [up to 45 years old], only 30% of income is acceptable, but income is not particularly high. -
At 45 years old, or $250,000, income is 40%; 50% at 50 years old; 60% at age 55, 70% or 70% income-receiving securities at retirement, whichever comes first. -
The target of the portfolio's income should be fully invested as much as possible, and all asset allocation decisions must be based on working capital [ie, the cost of the portfolio]; cash is considered part of equity, or "growth purpose" allocation -
Equity investments are limited to seven years of experienced equity CEF and/or "investment grade value stocks" [as defined in the book "Brainwashing"].
So this is the plan. Determine your retirement income needs; start your investment plan with a focus on income; increase your portfolio as your age grows, and your portfolio becomes more important; after retirement, or the size of your portfolio becomes serious, it will also make you The purpose of income distribution is serious.
Don't worry about inflation, the market or the economy... Your asset allocation will keep you moving in the right direction, while focusing on increasing your income every year.
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This is the key point of the entire "retirement income preparation" scenario. Each dollar added to the portfolio [or earned from the portfolio] is redistributed according to the "working capital" asset allocation. When income distribution exceeds 40%, you will see a magical increase in revenue per quarter... no matter what happens in the financial markets. -
Please note that all dividends paid by IGVS are also allocated based on asset allocation.
Stock market adjustments and rising interest rates will not have a negative impact on my retirement income; in fact, in any environment, I can better increase my income.
Orignal From: Manage retirement income portfolio: plan
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