Make Rebalancing a Habit
We all know we should rebalance our portfolios
periodically to ensure they stay in line with our targeted asset
allocation. Why, then, is it so difficult for us to do this? The
primary reason is that rebalancing goes against our basic instincts.
With rebalancing, you are generally selling those investments
performing well to purchase those that are underperforming, which
just doesn't seem to make sense. It might help to remember that
by rebalancing, you are following a fundamental investment principle
- you are buying low (those investments that are underperforming)
and selling high (those investments that are performing well).
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Taxes and Your Investments
One of your portfolio's largest expenses
is probably taxes. Ordinary income taxes on short-term capital
gains and interest income can go as high as 35%, while long-term
capital gains and dividend income are taxed at rates not exceeding
15% (5% if you are in the 10% or 15% tax bracket). One way to
help keep your portfolio growing is to invest in a tax-efficient
manner. Some suggestions include.
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Investing Tips
Realize that saving
and investing are two different concepts. Saving involves not
spending current income, while investing requires you to take
those savings and do something with them to earn a return. Saving
often becomes easier when it is separated from the choice of
where to invest. Find ways to make saving as automatic as possible,
perhaps through payroll deductions or monthly checks to an investment
account. Then you can take your time to research and select specific
investments.
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Watch for Slowing Growth
Reports of slowing growth or earnings declines
can severely punish a stock's price. So you aren't surprised by
this type of news for your stocks, look out for three warning
signs when you review financial reports. If a company experiences one of these red flags, it doesn't necessarily mean it will have sales or earnings disappointments in the future.
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Keeping Our Emotions in Check
The biggest obstacle in making good investment
decisions is probably our emotions. Numerous studies over the
years have found that investors have certain psychological biases
that get in the way of making purely rational decisions. Check to see if you are guilty of these common biases.
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David K. Sebastian, CFP®, and his team of experts at The Physicians Wealth Management Group specialize in working with individual physicians and group medical practices. David is considered to be one of the top financial advisors in the country with more than twenty five years of Wall Street experience as a chief investment officer, portfolio manager, institutional bond trader, and estate planning, benefits planning and retirement consultant.
Commitment to his clients’ financial needs and well being is a primary motivation for David.
The Physicians Wealth Management Group was specifically created to address and manage all of the unique financial challenges that doctors are facing both individually and through their group medical practices.
Feel free to contact me at
www.physicianswealth.com or
dsebastian@sfr1.com
or call me at (973) 285-3600
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