The Rich Uncle Scenario
AKA: The Economic Value of Certainty
Certainty in investing? What does that mean? Shouldn’t you just look for an investment that offers a high rate of return now so that you will have income during retirement? There is a place for those type of investements – right after you have created certainty in your financial life. Here is a story to illustrate this point. Read More.
Average vs. Actual Rate of Return
Do you know the difference between average and actual rate of return in an investment? If not, you are probably losing a lot of money without realizing it. When you get the statements in the mail from your 401k or mutual fund and you see the percentage of how much your portfolio made or lost, do you know what they are talking about? One very important thing to understand is the difference between average and actual rates of return. Read More.
Internal vs. External Rate of Return
Do you know the difference between internal (or micro) and external (or macro) rate of return. If not, you are probably losing a lot of money in your retirement planning without even knowing it. Most people tend to focus on the internal rate of return in their portfolio, and completely ignore the much more powerful, much more impactful external rate of return. For retirement planning it is imperative to know the difference, and understand how both types of rate of return fit into your overall financial picture. Read More.
The Risk Management Matrix™
There are essentially four categories of risk that you should be aware of, each of which has a different way to handle it. For the purpose of this article we need a short explanation of risk management and The Risk Management Matrix™. There are only three options for dealing with risk, you can try to avoid it, you can transfer it to someone else, or you can retain it for yourself. Read More.
