Today is “529 College Savings Day”—a day designated to raise awareness about the value of planning ahead for college expenses with 529 plans. Many CCM clients have opened 529 accounts for their children or grandchildren as a tax-advantaged tool for saving for higher education expenses. If you’ve been considering a 529 plan, please call your CCM Integrated Wealth Advisor for a conversation. We’re happy to discuss the options and what might be right for your family and your situation. Information ... [Continue Reading]
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In last week’s post, we gave the example of anchoring to market highs as a poor way of determining when to sell. Our investments grow precisely because they consistently see new highs; not because we sell when they get there. The chart below shows just how common it is to see new market highs. This chart’s twin, showing new all-time low stock market values, has only one very short bar in the 1950s. It turns out that it is easy to invest for the long-term and difficult to invest for the ... [Continue Reading]
'Anchoring' is the psychological bias that causes us to apply a reference point in our decision-making process. Anchors often have little meaning and serve only to negatively influence a decision. Unfortunately, this bias frequently finds its way into decisions about investing. “The market is at an all-time high, so I’m going to sell.” “I don’t like ABC stock anymore, but I’ll wait until it gets back to $X to sell so I don’t take a loss.” Anchoring is a big hurdle to a disciplined investment ... [Continue Reading]
As our nation's largest generation begin to enter retirement, a lot of discussion has been had about what effect this retirement boom might have on domestic stock prices. Vanguard uses logic and common sense to dispel some of the more popular talking points in their infograph, Baby Boomers and Equity Returns. The bottom line -- "numerous factors influence long-term stock returns, and, historically, demographics have contributed only modestly." ... [Continue Reading]
Every year, DALBAR, Inc. releases a study showing the difference between investment returns and investor returns. Investment return is the return of a specific investment over a specified time period. Investor return is the actual return of the average investor in that same investment over that same time period. The difference between these two numbers is what Carl Richards famously refers to as the “behavior gap.” Sean Hanlon, a Forbes Magazine contributor, describes this effect in more detail ... [Continue Reading]