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7 Investment Concepts

Top 7 Investment Concepts by Samuel A. Kiburz:

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Investing 101: Risk and the Possibility of Loss

In the financial planning world, the concept of risk is often used in conversation. Risk has multiple meanings, but the first definition in the Merriam-Webster dictionary is quite simply the “possibility of loss.”

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Recession? That’s a word my parents use.

We’ve all seen them. They scream at us. We’re just minding our own business admiring cute cat videos as we scroll and they ruin it. Those fearmongering, anxiety-spiking headlines that desperately want you to click them, because, even though we’ve been here before, YOU haven’t been here before. And they know it.

Recession. It evokes plenty of negative emotions and fears on its own, but couple that with cleverly titled click-bait articles and they have you right where they want you – feeling dependent on whatever they’re selling so you don’t fall into financial ruin. Here’s a little PSA: The only one who can help you not only survive but thrive in a recession is YOU.

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Seven Steps to Manage Your Retirement

You made it to retirement! Now what?

How do you plan to pay all the expenses you’ll have for the rest of your life? This can be a daunting task. Many retirees simply open their monthly statements, check the balance, and hope that it’s enough. Hope is not a plan. Those with a plan will have better options and more choices regardless of what happens in the next twenty or thirty years. The outcome will be impacted by many known and unknown variables between the beginning and end. An effective retirement plan will require some time, effort, optimism, and a realistic view of the future. Most importantly, you’ll need to stick to the plan to make it effective and be prepared to adjust along the way. So, where to begin?

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The Shying Away from ESG

Today's chart is from Bloomberg Intelligence, which shows the money flows into ESG (Environmental, Social, and Governance) ETFs since they appeared in 2015.

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No More Heydays for Hedge Funds

People may ask, “Why not use hedge funds?” Today's chart comes from Bloomberg and shows us the reason why.  In addition to their typical expense ratio of 2% and 20% of gains above a benchmark, hedge funds have consistently under performed the stock market, denoted by the S&P 500 index, every year since 2014. In fact, they haven’t performed well since their heydays in the 1980s, and even less so since 2007.

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S&P 500 vs. Average Investor

Today's chart comes from OneDigital and shows that the average return for 20-years ending in 2015 was 8.2% for the S&P 500, while the average investor only earned 2.1%. The hypothesis is: Too many investors stop investing when the market is down and/or try to time the market.

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Total Return Since 1802

The following chart from Brian Ferdoldi shows the ultra long-term history of real returns from various asset classes dating back to 1802. Real returns, the returns after inflation, are important to know due to inflation’s elevated levels.

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Hard to Hurt Earnings

Today's chart comes from LPL Research and shows the growth of company earnings since 1950. When you buy a stock fund you are purchasing the steam of their combined future earnings. Yes, that stream can temporarily decline during recessions, but over time the economy and that stream of earnings returns and continues to grow.

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Record Real Estate Prices

Today's Chart of the Day is a Bloomberg chart of the U.S. Median Existing Home Price provided by the National Association of Realtors going all the way back to 1999.

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