by Doug Goldstein CFP® | Sep 26, 2017 | Asset Allocation, Financial Plan |
One great tool for assessing the probability of risk and future success is the Monte Carlo simulation. This is true in both chess and personal finance. What is a Monte Carlo simulation, and how can it help you plan ahead? No one knows the future A Monte Carlo simulation is a computerized mathematical algorithm that builds models of possible outcomes and probabilities that may occur. It was first invented during World War II by scientists working on the atom bomb and was named after Monte Carlo, the capital of Monaco, which is famous for its casinos. Monte Carlo simulation featured in high level chess programs (like this popular chess software) assesses the risks and probabilities of using various openings and moves. While you can’t predict the future, using the Monte Carlo simulation to play out each possible move in thousands of different iterations can give you an idea of which path has the greatest odds of success. Use Monte Carlo simulations to assess your asset allocation Monte Carlo simulation is also applied to financial planning. While past performance is not a guarantee of future returns, Monte Carlo simulations can determine – based on a very large number of tests – the probability of achieving certain outcomes using real past historical data. With a database of historical asset returns, Monte Carlo simulation programs can look at specific asset allocations (i.e., 30% U.S. stocks, 25% foreign stocks, 40% corporate bonds, 5% cash) and simulate how that asset allocation would perform over a randomized assortment of market conditions. Plug your actual allocation into the system, or test any model you want, and... Click for more
by Douglas Goldstein | Aug 8, 2017 | Asset Allocation, Financial Strategies, Podcasts |
One way of strategic investing is to buy ETFs (Exchange Traded Funds). Sometimes investors are worried about risk, and as a result, limit their choices of ETF to local companies that they already know. Learn about the wide range of ETFs that you can choose from, and why playing a defensive chess game of chess (or being too conservative with your investments) is not always enough in order to succeed. Click here to learn about the different varieties of... Click for more
by Douglas Goldstein | Jun 27, 2017 | Asset Allocation, Financial Strategies, Podcasts |
Which chess quote from Garry Kasparov inspired this financial podcast? Find out what this chess quote teaches about taking opportunities, and also why it’s important to have a specific line of strategy when you invest. Watch a free video about separately managed accounts... Click for more
by Douglas Goldstein | Apr 19, 2017 | Asset Allocation, Podcasts |
Real estate investors hope to get a quick return on their initial purchase. While multi-millionaires are often real estate moguls, is this a good investing strategy for the ordinary person? Regular folks don’t realize what being a landlord entails or the time-consuming and expensive problems that may arise. On this financial podcast, find out how to invest in real estate without having to be a landlord. Even more importantly, learn to diversify your real estate investments. Also, get a free tool to help you work out your STRATegic... Click for more
by Douglas Goldstein | Jan 24, 2017 | Asset Allocation, Decision Making, Podcasts |
Global diversification, spreading out your investments among various countries, is an important part of investing. But how can you determine the best countries to invest in? Global diversification is an important part of asset allocation. Want a chess metaphor to think about the importance of diversification? Think of diversification as “castling” ? a way to protect your investments. What are the tactics that you can use to diversify, yet invest safely? Need a guide to diversify and allocate your assets efficiently and responsibly? For the first steps to take, go to www.richasaking.com/tools and use our asset allocation... Click for more
by Doug Goldstein CFP® | Dec 20, 2016 | Asset Allocation, Financial Strategies |
What’s an effective investment strategy for when interest rates are low? The problem with investing during periods of low interest rates is that your returns may not beat inflation and your money may lose its real value. One practical solution is to invest with a bond ladder. What is a bond? To understand why bond ladders are a frequently used investing strategy, you need to know how bonds work. A bond is a loan that you make to a corporation or government. Each loan has a set time period (term) and rate of interest. When the bond reaches its maturity date (the end of the set time period), you get back your original loan in addition to the final interest payment. What is a bond ladder? A bond ladder is a portfolio of individual bonds or CDs (certificates of deposit in a bank) that you buy to diversify your account. Each bond matures at a different date and has its own rate of interest. Buying bonds/CDs in this manner means that you don’t tie up all of your money in a single issue at one set interest rate. For example, you may buy a ladder of individual bonds that mature in one, two, three, four, and five years. If you have $100,000, you may decide to put $20,000 into each bond, which will then mature over consecutive years. Why this is helpful to lock in good interest rates If you invest the $100,000 mentioned above into a single bond with a rate of 1% for five years, you won’t benefit if an interest rate rise occurs during this time.... Click for more
