Personal Finance Guide

Archive for July, 2009

Five Asset Allocation Principles for Use in Improving Financial Market Conditions

Here are five Asset Allocation and investment principles to keep in mind:

Asset Allocation Principles 1

Know who you are as an investor. Understand your psychology and emotions, as well as your tendency to buy-to-hold investments versus buy-to-sell investments. Also consider the degree of opportunism in your investment approach, your current and future financial and tax status, risk and liquidity preferences, and annual capital inflows and outflows.

Asset Allocation Principles 2

Make sure to consider all of your financial assets (and any liabilities) holistically. Recognize the strengths and weaknesses of each asset class and specific asset, what each asset can and cannot do, and in which structural form it is best to hold each type of asset. In addition, seek to gain an understanding of the longterm forces which determine an asset’s returns, risk, and correlations.

Asset Allocation Principles 3

Be mindful of short-term and long-term market cycles. Many asset classes have the tendency to reach extreme levels of overvaluation or undervaluation.

Asset Allocation Principles 4

Recognize when certain types of assets may exhibit a period of multiyear returns substantially below long-term averages.

Asset Allocation Principles 5

Be mindful of the fundamental diversification choices in Asset Allocation. These choices include the degree of exposure to stocks vs. bonds, to U.S. vs. non-U.S. securities, and to alternative vs. conventional assets; how frequently to rebalance the portfolio; and what guidelines to follow in readjusting the portfolio in response to price-driven changes in asset weightings.

Question: budgeting and Personal Finance?

can anyone recommend a free download and free to use money management software?
with a link please.
thanks

Answer: Bank of America has a nice little web-based manager. You can keep track of all your accounts online in one place and track your spending and net-worth. Only problem is, you have to have some sort of account w/ the bank. I have a credit card issued by them. The card is free and so is the “My Portfolio” portion of their website.

Quicken is not free but I like it and they now have an online only version for $2.99/month. MSN and Yahoo! used to have nice online tools, but I think they both got rid of them.

I’ll be curious to see if anyone else has a good option for you.

Good Luck!

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Question: College / Personal Finance / difficult, time, costs?

I’m 19 and just went to high school. I live in a small town. They have a college here. I’m not sure which course I should take. I’m interested in Personal Finance.

Is this course very difficult?

How much money do you spend for this course?

How much time do you spend to learn?

Answer: You may need to do some “homework” on your own to answer these questions.

How difficult a Personal Finance course may be for you depends on your background, learning style, and abilities relative to the instructor’s the teaching style, textbook for the class. For starters, get the course description to see if there are pre-requisites (requirements that prepare you for taking the class). Visit the college bookstore and look at the textbook to get a feel for the course. And if possible, talk with students that are taking the class now. (If you can, get a copy of the current class schedule to see when the class meets. Get to the class just before it ends, and then talk to students coming out of the class…ask them about the lessons, tests, etc.) This should help you determine how difficult the class may be.

Cost…well, fees vary from school to school. In my state, some colleges charge as little as $27/unit and others $3000/unit. So don’t worry what others say about the costs from their experience….what really matters is what your costs will be. So check with your local college. I assume you are not currently enrolled in the college, so you have to consider paying the application fee. Tuition (the cost for the courses) is often charged per unit or the number of credits for the class. Most college classes are 3 credits. So check with your college about the fees

As for the time needed to study….well, a good rule of thumb is that for every hour you spend in class with the instructor, plan on spending at least 1 hour (sometimes 2 hours) outside of class to prepare. So, if the Personal Finance course is a 3 unit course, you should plan about 6 hours total per week to study….though some students spend 9 hours per week.

Hope this helps. Best wishes.

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