Steven A. Branson, Esq. – Financial Strategies

Doing well with investments over time means avoiding emotional input in your decisions – fear, greed, emotional attachment to or aversion to certain investments and so on

Right now, fear may seem the prominent emotion: “I can’t afford to be in stocks, look what happened in the last few years!” (The same person might have wanted to be 100% stocks 4 years ago ….)

However, if you listen to this fear, and buy only bonds, CDs, fixed annuities, REITS, etc., you risk the greed reaction down the line: “How come my returns are the same as my pal’s? Why didn’t you have me investing for growth?”

Obviously, stripping the emotions out of the decision making is critical. Doing so would allow for balanced allocation to stocks, bonds and other appropriate investments. This way, the volatility now is dampened some, yet the return in the future has the requisite growth for the risks taken.

Where are you on the fear/greed balance? Do you have stocks you refuse to sell (or will never buy)?

Let us know if you have questions or comments. Thanks,

Steven

(We made this a free download, so please check it out and submit a review!)

Ever want to be able to calculate your own mortgage payments, in terms of interest and principal to see the impact of the tax decution? We have launched iMortgage (the one with the big “M” in red) via the Apple Store (go to http://store.apple.com/us then click on iPone or iPod and search apps)

The financial world for buying a house has changed. This app allows you to take control of your house buying and mortgage application process by being able to calculate what the costs will be for you over time, after-taxes. This way, you know how much you can afford, whether refinancing will pay off, whether you should rent instead of buying, and whether it pays to increase your principal payments or up your investing instead.

This new App allows you to calculate the answers to these and other financial questions relating you home ownership. The input/output includes standard mortgage principal and interest payments, the after-tax amount for these payments using your tax bracket, the comparison of home ownership costs, including property taxes and maintenance, vs. renting, over time, and the savings on total interest paid by increased principal payments vs. the portfolio value you would have if invested instead.

Let us know if you have questions or comments. Thanks,

Steven

What does it mean, in today’s world, to invest long-term, that is to buy and hold funds or managers for years? The question is a serious one in that investment performance is measured over very short periods and then comparisons are made. Such analysis fails to account for whether a strategy has had time to realize its goals, let alone whether competing strategies have had a chance as well.

The short-term rating of investments has two serious problems: it forces many managers to push for short-term results, often leading them to drift from their announced strategy (or turn over their portfolios each year, which increases transaction costs and taxes due), and it leaves investors looking for results too soon, so that they may end up selling what may be a great long-term investment because a competitor looks better in the short run.

How do you guard against this? First, understand that the volatiliy you see in the short term dampens down over time. That is, swings in the stock market could be plus or minus 30% in a year but come down to plus or minus say 5% for a 5 year annualized return. Second, realize that you are giving your strategy a fair chance by waiting, rather than panicking or responding on impulse. Third, realize that the real way to ultimately achieve good returns from the market is by waiting. The uncertainty built into the market means that it rewards those who can wait, and they are the ones with lower trading costs and less taxes due.

How do you find managers to help you invest this way? Look for those with low turnover of key people, who invest in their own funds, and who have the conviction to stick to their strategy even when it is out of favor. They often buy a stock that continues to go down in price before it ultimately turns up, over time.

So be a contrarian, invest for the long term!

Let us know if you have questions or comments. Thanks,

Steven