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Top 12 Reasons You Should Fire Your Financial Advisor

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Hiring a financial advisor is a significant decision that can greatly impact your financial future. One in three Americans have sought advice from a professional financial advisor. However, not all financial advisors are created equal. There may come a time when it’s necessary to part ways with your current advisor. Here are the top 12 reasons why you should fire your financial advisor.

1. Lack of Communication

lack of communication

If your financial advisor is unresponsive or fails to keep you updated on your investments and financial plan, it may be time to move on. Open communication is crucial in any client-advisor relationship. As a rule of thumb, you should talk to your financial advisor at least once or twice a year.

2. Poor Performance

poor performance

Consistently poor performance in your investment portfolio compared to market benchmarks or your financial goals is a clear sign that your advisor may not be effectively managing your assets. If your portfolio is underperforming in both good and bad markets to a risk-adjusted benchmark, then there may be an issue. It’s best to not look at your investments over a few months or a year to gauge performance.  However, if over 5 years you haven’t made progress this could be a red flag, and it may be time to fire your financial advisor.

3. Conflicts of Interest

conflict of interest

If your advisor’s recommendations seem to be influenced more by their own interests or incentives rather than your financial well-being, it’s a red flag that shouldn’t be ignored. Also, it’s important to ask your advisor if they are a fiduciary. Fiduciaries are legally or ethically bound to put their client’s best interests ahead of their own.

4. High Fees

high fees

Excessive or hidden fees can eat into your investment returns over time. Fees should always be clear and presented upfront. If you feel like you’re paying too much for the services provided by your financial advisor, it’s worth exploring more cost-effective alternatives.

5. Lack of Expertise

lack of expertise

Financial advisors should have the knowledge and expertise to guide you through various financial situations. If your advisor lacks expertise in areas relevant to your needs, it could be detrimental to your financial health.

6. Inappropriate Risk Tolerance

risk

Sometimes, you and your advisor may have a mismatched investment philosophy. If your advisor consistently pushes you into investments that are too risky or too conservative for your comfort level, it’s a sign that they’re not considering your risk tolerance and investment objectives.

7. Overtrading

overtrading

Excessive trading in your investment accounts can lead to unnecessary transaction costs and tax consequences. If your advisor seems to be excessively trading without a clear strategy, it could be detrimental to your long-term financial goals.

8. Lack of Personalization

lack of personalization

Of course, your financial advice should be tailored to your specific financial situation, goals, and preferences. If your advisor provides generic advice or fails to consider your individual circumstances, it may be time to find someone who will provide more personalized guidance.

9. Ethical Concerns

ethics

Any unethical behavior or breaches of trust should not be tolerated. If you suspect your advisor of engaging in unethical practices, such as unauthorized trading or misrepresentation of investment opportunities, it’s crucial to take action.

10. Inability to Explain Strategies

financial advisor

Your advisor should be able to clearly explain the strategies behind their recommendations and how they align with your financial goals. If you find yourself confused or uncertain about the reasoning behind their advice, it may be a sign of incompetence or lack of transparency.

11. No Clear Financial Plan

no clear financial plan

A comprehensive financial plan is essential for long-term financial success. If your advisor fails to provide you with a clear and actionable plan to achieve your goals, it’s time to find someone who will help you map out your financial future.

12. Loss of Trust

firing financial advisor

Ultimately, trust is the foundation of any successful client-advisor relationship. If you no longer trust your advisor to act in your best interests, it may be time to seek a new advisor who can rebuild that trust.

Making The Decision

fired financial advisor

Firing your financial advisor is not a decision to be taken lightly, but there are certain warning signs that should not be ignored. If you find yourself experiencing any of the above issues with your current financial advisor, it may be time to fire them. Remember, your financial future is too important to leave in the hands of someone who isn’t meeting your needs and expectations.

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Market Mayhem: 15 Investment Ideas We’d Rather Forget

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15 Investment Ideas We'd Rather Forget

In the unpredictable world of investments, there are success stories that inspire, and then there are tales of market mayhem that haunt investors. As we traverse the financial landscape, certain investment ideas stand out not for their brilliance but for the lessons they impart. Here are 15 investment ideas that, in hindsight, we’d rather erase from our portfolios.

 

In the volatile world of investing, not every idea sparkles with the promise of returns. Some, in hindsight, are better left forgotten. From overly hyped stocks to misunderstood markets, the investment landscape is littered with strategies that seemed like a good idea at the time but ended up being financial flops. Here, we dive into 15 investment ideas that turned into cautionary tales, reminding us that not all that glitters is gold. This article isn’t just a trip down memory lane; it’s a lesson in humility, risk assessment, and the importance of due diligence.

1. Dot-com Bubble Stocks

In the late 1990s, the internet was the new frontier, and investors rushed to back any company with a ‘.com’ in its name. The promise of exponential growth led to inflated stock prices that bore no relation to underlying earnings or even viable business plans. When the bubble burst, it wiped out fortunes and served as a harsh lesson in the fundamentals of investing. The dot-com crash is a stark reminder to look beyond the hype and evaluate the real value and potential of an investment.

2. Subprime Mortgage Investments

Subprime Mortgage Investments
The 2008 financial crisis brought the dangers of subprime mortgage investments to the forefront. Banks bundled risky loans and sold them as seemingly secure investments. When homeowners began defaulting, the house of cards collapsed, leading to massive financial losses and a global economic downturn. This disaster highlighted the perils of complex financial products and the importance of understanding what you’re investing in.

3. Cryptocurrency Speculation

Cryptocurrency has been a rollercoaster ride of highs and lows. While it’s created some spectacular successes, it’s also seen dramatic falls. Many investors jumped in without understanding the market, lured by tales of overnight riches. The volatile nature of cryptocurrencies and the regulatory uncertainties make them a high-risk investment that many wish they’d steered clear of.

4. Trendy Health and Wellness Stocks

From diet fads to fitness crazes, the health and wellness industry is prone to trends that suddenly explode in popularity. Investors often rush to capitalize on the latest fad, only to find that the market is oversaturated or the trend was a fleeting one. This area remains a challenging investment landscape, where distinguishing a lasting shift in consumer behavior from a temporary craze is often tricky.

5. Exotic ETFs

Exotic ETFs
Exchange-traded funds (ETFs) can be an excellent tool for diversifying portfolios, but some exotic ETFs promise high returns based on obscure or complex strategies. These funds often come with high fees and significant risks, and many investors have found that the promised returns were too good to be true. It’s a stark reminder that complexity doesn’t necessarily mean better when it comes to investment.

6. Overseas Property Markets

Investing in property abroad seemed like a ticket to riches for many, with promises of high returns and new developments in burgeoning markets. However, issues like unfamiliar legal systems, political instability, and market oversupply have turned many overseas property investments into nightmares. Investors learned the hard way that high returns often come with high risks.

7. Penny Stocks

The allure of buying thousands of shares for a few dollars is hard to resist for some. However, penny stocks are notoriously volatile and susceptible to manipulation. Many investors have been burned by sudden drops or found themselves unable to sell at a critical moment. This investment idea often ends up being a speculative gamble rather than a strategic move.

8. Retail Company Turnarounds

Investing in a well-known retail brand facing hard times can seem like a savvy move, banking on a turnaround to reap rewards. However, the retail landscape is brutal, and many such investments have led to losses when the expected recovery didn’t materialize. The rise of e-commerce and changing consumer habits have made retail turnarounds a particularly risky bet.

9. Luxury Goods Investments

Luxury Goods
Collectibles, fine wines, and luxury watches are often touted as investment pieces, but the market for these items is highly specialized and can be unpredictable. While some have made money in this arena, many others have found that their luxury investments didn’t appreciate as expected, proving that not all that glitters is a solid investment.

10. Initial Coin Offerings (ICOs)

When ICOs burst onto the scene, they were heralded as a revolutionary way to raise capital. However, the lack of regulation and the prevalence of scams quickly turned them into a minefield for investors. Many who poured money into ICOs have been left with nothing, a sobering reminder to approach emerging investment vehicles with caution.

11. High-Yield Bonds

Bonds are typically seen as a safe investment, but high-yield (or ‘junk’) bonds offer the temptation of better returns, along with significantly higher risk. When markets turn or issuers face trouble, these bonds can plummet in value. Many investors attracted by the potential for higher income have instead faced substantial losses.

12. Leveraged Investing

Using borrowed money to amplify investment returns can seem like a fast track to wealth. However, leverage also amplifies losses, and many have found themselves owing more than they invested initially. This strategy requires a strong stomach and a deep understanding of the risks involved.

13. Green Energy Startups

Investing in green energy is not only a financial decision but often a moral one. However, while supporting the environment is commendable, not all green startups succeed. The sector is fraught with technical challenges and intense competition, and many investors have seen their green dreams dissolve into financial nightmares.

14. Thematic Investment Funds

Thematic funds focusing on hot trends like AI, biotech, or cannabis might promise growth, but they can also be narrow and volatile. Investors who’ve jumped onto these bandwagons have often found that a lack of diversification and rapid shifts in market sentiment can lead to significant losses.

15. Peer-to-Peer Lending

 

P2P lending platforms have offered the chance to earn higher returns by lending directly to individuals or small businesses. However, higher returns come with higher risks, and many lenders have faced defaults that eroded their earnings. The lack of liquidity and the risk of platform failure have also been concerns.

Reflecting on these investment ideas isn’t just an exercise in what to avoid. It’s a call to become more informed, cautious, and diversified in your investment approach. It’s about recognizing that while the promise of high returns can be enticing, understanding the risks and doing thorough research is crucial. Before making your next investment, consider consulting with a financial advisor and remember that if an opportunity sounds too good to be true, it probably is.

 

Market Misery: 10 Stocks That Have Overstayed Their Welcome

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"Market Misery: 10 Stocks That Have Overstayed Their Welcome"

 

Navigating the stock market demands careful consideration, especially when confronted with well-known companies that may not be the safest bets. Analyst recommendations serve as valuable indicators, shedding light on stocks that might not be favorable for new investments. Let’s delve into the details of ten such stocks, exploring the reasons behind their less-than-rosy outlook and the challenges they face in the current market landscape.

Intel (INTC)

Intel, a leading chipmaker, currently holds an average recommendation of 2.93 among analysts. Despite its reputation and dividend growth, the global slowdown induced by COVID-19 has cast uncertainty on its future, with analysts divided on its prospects.

Ventas (VTR)

Specializing in senior living facilities and medical office buildings, Ventas (VTR) faces analyst skepticism, earning an average recommendation of 2.96. Challenges in the senior housing segment contribute to the lukewarm sentiment, making it a cautious choice for potential investors.

J.B. Hunt Transport Services (JBHT)

As the foremost player in intermodal shipping, J.B. Hunt Transport Services (JBHT) grapples with softer demand, high inventory levels, and unfavorable industry trends, reflected in its average recommendation of 2.96. The logistics slowdown triggered by the COVID-19 pandemic adds further complexity, prompting most analysts to adopt a wait-and-see approach.

Cognizant Technology Solutions (CTSH)

Cognizant (CTSH), an infotechnology consulting and outsourcing firm, undergoes a turnaround, earning an average recommendation of 3.00. While some analysts express concerns about the impact of COVID-19, others highlight the company’s limited exposure to the travel industry and a potential uplift in employee morale.

Rockwell Automation (ROK)

With a focus on industrial automation, Rockwell Automation (ROK) grapples with sensitivity to a global manufacturing slowdown, resulting in an average recommendation of 3.04. Analysts, including JPMorgan, underscore concerns about an overly optimistic outlook and unattractive valuation.

Comerica (CMA)

Facing a challenging interest rate environment, Comerica (CMA) experiences a decline in net income, earning an average recommendation of 3.08. Analysts emphasize the bank’s vulnerability to further rate cuts and the imperative to grow its loan portfolio to offset margin pressures.

Kraft Heinz (KHC)

Despite being a prominent consumer staples company, Kraft Heinz (KHC) grapples with a substantial debt load and sluggish growth, reflected in its average recommendation of 3.10. Analysts highlight the company’s fallen angel status and question its ability to navigate a competitive market.

Wells Fargo (WFC)

Wells Fargo (WFC) faces challenges from the aftermath of the phony accounts scandal and shrinking net interest margins, contributing to an average recommendation of 3.18. While the settlement with the Justice Department marks progress, analysts caution about the ongoing enforcement actions and the impact of rate cuts.

Walgreens Boots Alliance (WBA)

Walgreens Boots Alliance (WBA) struggles to spur growth in a changing drug retail business landscape, earning an average recommendation of 3.21. Analysts express concerns about the company’s ability to position itself for future success amid macroeconomic challenges and reimbursement cost worries.

General Electric (GE)

General Electric (GE) emerges as another cautionary stock, with an average recommendation of [insert average recommendation]. The company, known for its extensive industrial operations, grapples with challenges ranging from a complex turnaround to debt-related concerns. Analysts express reservations about GE’s near-term prospects, advising potential investors to exercise caution amid ongoing uncertainties in the industrial sector.

In the world of stock investments, staying informed about potential pitfalls is crucial. The cautionary notes sounded by analysts on these ten stocks provide valuable insights for investors looking to navigate the market wisely. While some companies face challenges in adapting to changing landscapes, others grapple with economic uncertainties. As with any investment, thorough research and a nuanced understanding of market dynamics are essential for making informed decisions in the pursuit of financial success.

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How to Invest for the Long Term

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Investing is an important part of your financial life. What’s more important is investing for the long-term.

With a long time horizon, you have the ability to ignore short-term market volatility and you have the ability to let your investments compound over time.

Investing this way can be difficult, however, so here are some tips on how to do that.

Pick a strategy and stick with it

You need to pick and stick with what works for you. There are several strategies that you could choose.

Value – A strategy that involves a deep dive into company/industry fundamentals. Companies/industries in this area may or may not be out of favor. All you care about is how the underlying fundamentals look.

Growth – High flyers. Companies with high P/E ratios. Companies that have a strong case for continued growth. Sectors like technology and consumer discretionary are considered growth.

Contrarian – If you buy when others sell or sell when others buy, you may be a contrarian investor. You go against the herd. Someone who does this has a unique ability to be extremely objective.

Momentum – You invest in companies or sectors that are performing well and are fairly likely to continue that trend going forward.

Start early

This is no secret, the earlier you start the better. Albert Einstein once said, “Compounding is the eighth wonder of the world.” It really is amazing what compounding can do. If you have 20, 30, or 40 years to invest, you should be sitting pretty at that finish line.

For example, say you have two investors. One investor starts contributing $1,000 per month to an account and invests in a stock market index ETF, starting out at 25 and stops contributing after 10 years.

Another investor starts contributing $1,000 and that same index ETF, starting at 35 and they contribute until they turn 65. At age 65 person A ends up with 1.49 million, and person B ends up with 1.26 million.

Compounding truly works wonders. Start early and give compounding a chance to work its magic.

Make every move with the future in mind

Every decision that you make needs to be a slow and thoughtful one. It’s particularly important to make decisions with your future self in mind. Delayed gratification is HUGE when investing for the long term.

For example, you have your debts paid off and now have a little extra money each month. You decide that you want to buy a boat. You save up and pay $20,000 for a nice, new boat.

Here’s the flip side. Say it took you three years to save up for that boat. Instead of saving, you deposited $5,500 per year into a Roth IRA (max contribution amount). This is invested in a stock market index ETF we mentioned earlier.

Now, let’s go out 10 years. You still have that boat and have taken good care of it. However, it’s lost over 50% of value over that time period. Conversely, that $16,500 that you invested has grown to $33,600.

Buying the boat may have felt good before, but investing that for the long-term is by far the better financial decision.

Invest in what you know

Peter Lynch famously said, “Invest in what you know and know why you own it.” (Oh and there are more great Peter Lynch quotes here). This is such an important principle within investing. If you are competent in the consumer staples sector, stay in the consumer staples sector.

At times you may see technology stocks return far more than your sector, but you could have easily invested in a technology company that went bust. You don’t know the industry so how would you know what’s good and what isn’t.

By sticking with an industry that you are knowledgeable about, you increase your chances of success.

Contribute regularly

Contributing at regular intervals does two things.

One, you’re saving and investing more, which increases the size of your nest egg.

Two, when the market ebbs and flows, you will continue to invest the same amount each month/year. You’ll buy more when it’s low and buy less when it’s high.

This is called dollar cost averaging. It effectively reduces your cost basis for your entire position, which effectively increases your gain, if your investment is up when you sell it.

Diversify

One of the most effective ways to reduce how much your portfolio reacts to dramatic shifts in the market is to diversify. Hold some stocks, some bonds, some cash, some gold, and some real estate. There are other investment products you could own, but these are usually the big ones.

Be objective

Try to take your emotions completely out of it.

When the market starts to sell off, you need to objectively look at your positions. Look at the characteristics of the business. Has anything changed? Or is it just declining due to a broader market selloff?

If it’s the latter, take some of that cash you have and buy that baby at a discount.

Use stocks

Over the long-term, stocks are the best investment to a) outpace inflation and b) effectively appreciate the money that you’ve saved.

Utilize various products

There are a variety of vehicles out there for your investments. Take advantage of as many as you can.

A 401(k) is an employer-sponsored retirement plan. Money saved in it can lower your taxable income and investments grow tax-deferred.

Traditional IRA – Individual retirement account. You open it up and save in it. Tax-deductible contributions. Investments grow tax-deferred.

Roth IRA – Similar to a Traditional IRA, except money contributed is not tax deductible, but money withdrawn is tax-free (money withdrawn from 401k and IRA is taxed).

These are just a few of the vehicles that can be used to save for retirement.

Next week I will dive deeper into the various products available.

Say no to penny stocks

These are stocks that cost less than $5 per share. More often than not, these are very risky and the companies themselves have a much higher probability of going out of business than other companies with higher stock prices.

Don’t invest via “hot tips”

Your friend says, “A stock I invested in last week is already up 100%, you need to get in on this before it goes any higher.”

When you hear this, just let it filter out of your brain. Odds are, the dramatic increase in price is pure behavior related, and no stock can sustain that kind of growth. That stock will come crumbling down at some point.

Think of the tech bubble from the 2000s. There were companies with literally no information about them, and they were going from $10/share to $200/share within a matter of weeks.

Just 48% of companies from the dot-com bubble survived past 2004. (Source)

Conclusion

Investing for the long-term is your greatest chance for financial success. Starting early, contributing regularly, and ignoring the noise are only a few great tips discussed here, but they are probably the most important.

If you would like to hear more about long-term investing and/or for our disclosures visit www.crgfinancialservices.com.

Rates of return are hypothetical, are provided for illustrative purposes only, and do not reflect the performance of an actual investment. All investments involve the risk of potential investment losses and no strategy can assure a profit. Past performance does not guarantee future results. Diversification seeks to reduce the volatility of a portfolio by investing in a variety of asset classes. Neither asset allocation nor diversification guarantee against market loss or greater or more consistent returns.

Best Cryptocurrency to Invest in Today for Short-Term Gains

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There are principally two strategies for profiting from purchasing and selling cryptocurrencies. One can either opt for long-term investments or engage in short-term trading. Even though long-term investing tends to be less complex, this guide will concentrate on selecting cryptocurrencies for short-term trading today. This guide will encompass the specific cryptocurrencies to target for trading, the assorted trading approaches you can implement in the crypto market, and steps to initiate your trading journey.

Bitcoin

Bitcoin unsurprisingly takes the top spot as the prime cryptocurrency for investment today, whether you’re eyeing short-term or long-term gains. Its commanding presence and leadership in the crypto landscape make it an unmissable choice. Bitcoin is consistently at the forefront of significant market shifts, and given its high value, even the slightest positive fluctuation can yield substantial BTC to USD returns.

As the pioneering and most seasoned cryptocurrency, Bitcoin is virtually interchangeable with the term ‘crypto industry’. Its anticipated role as a future store of value makes it an ideal selection for both immediate profit and enduring investment.

Axie Infinity

Axie Infinity emerges as a top-tier cryptocurrency investment for those seeking immediate returns. This metaverse game enables users to purchase unique creatures called Axies, each associated with a distinct NFT. By owning Axies, players can augment them using any of the 500+ accessible body parts, thus providing them an upper hand over other in-game creatures.

Moreover, players can breed their Axies to produce new and exclusive ones. They can choose to monetize these freshly bred Axies by selling them as NFTs or retain them for further enhancements.

Once players have assembled and fortified their team, they can engage in duels with other participants. Victorious battles yield significant rewards, chiefly in the form of the game’s native token: AXS. Axie Infinity is an enticing investment opportunity for those keen on making rapid gains in the cryptocurrency market.

Cardano (ADA)

Investors are drawn to the Cardano network for its smaller size, which brings several benefits. One of these is that transactions on Cardano consume less energy than those on more extensive networks like Bitcoin, resulting in quicker and more cost-effective operations.

Cardano executed a “hard fork” in 2021 to enhance its functionality, allowing for smart contract deployment. Mint reported that a subsequent hard fork named Vasil, launched in September 2022, is expected to boost the scalability of the Cardano blockchain.

Cardano recently rolled out a trial version of a platform dubbed AdaSwap. This platform is a space where developers can create decentralized finance applications. The introduction of AdaSwap could potentially enhance Cardano’s reputation as a Web3 network and increase the value of its coin. Forbes indicated that even though Cardano’s coin ranks eighth in market value, its non-fungible-token protocol is the third-largest globally.

Ethereum

Presently, investing in Ethereum is almost as secure as investing in Bitcoin. Despite its short-term performance being influenced by numerous factors, the value of ETH is expected to fluctuate significantly in response to market activity. Ethereum, being the origin of smart contracts, dApps, DeFi, metaverse, and virtually all other blockchain products, it’s reasonable to expect that upcoming products and trends will likely emerge from its network.

Decentraland

Decentraland, possibly one of the earliest metaverse initiatives, presents a virtual environment where users can buy a digital parcel of land, represented as an NFT. Once they gain ownership, they have the autonomy to exploit this land however they desire.

This could mean utilizing it for software creation, starting an internet-based business, leasing it out to others, developing games, coordinating VR conferences or even staging events, among other possibilities. Much like Bitcoin in the metaverse industry, Decentraland holds the position as the foremost project in this domain.

Endnote

Investing in cryptocurrency can sometimes feel as if you are playing a game of luck combined with skill. You have to pick the right asset, have confidence that it will reach its full potential and of course make sure you do your own research.

Appreciating vs. Depreciating Assets

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appreciating and depreciating assets

African American woman reviewing her assets.

It’s widely known that there are two types of assets: appreciating and depreciating.  However, what is less well known is the difference between what’s classified as appreciating and depreciating.

In this article, we will look at what each term means, examples of each, and how to use them effectively.

What’s appreciation?

Appreciation is the increase in value. The majority of assets used to accumulate and grow wealth, appreciate. An asset can appreciate because of supply, demand, or a change in interest rates.

What’s depreciation?

Depreciation is the exact opposite. It’s the loss of value. The most common example is a car, but more on that later.

It is a new year and time to start thinking about tax plans for this financial year. The tax depreciation schedule calculator is a simple online tool that allows an employer to calculate the depreciation value of vehicles used for commercial purposes. This tool can help employers who wish to ensure that the correct amount of tax is deducted from their staff’s wages and prevent any penalties from being handed out.

Appreciating assets

  • Stocks – It’s commonly known that investing in stocks is the best way to not only keep pace with inflation but to grow your wealth. A stock is partial ownership in a public company. Popular examples include Apple, Amazon, Facebook, etc. (Click here to learn more about stocks)
  • Real estate – Single-family homes, duplexes, apartment complexes, etc. Though the pace at which real estate appreciates dwarfs compared to stocks, it does so slightly over time (source).
  • Private equity – This can be starting a company of your own or you can invest in a startup. There are also private equity funds that exist, as well. Basically, it’s a company or venture that is not open to the public (i.e. stocks on the exchange, etc.).
  • Alternative – Less common assets that could appreciate (cryptocurrencies, precious metals, art, and other collectibles).
  • Bank accounts – Savings accounts, certificates of deposit, etc. These don’t appreciate much, especially in the current “low-interest-rate”. Some may argue that you shouldn’t classify these as appreciating assets because inflation erodes away the purchasing power over time.

Depreciating assets

  • Cars
  • Boats
  • Furniture
  • Equipment
  • Patents/Copyrights – Patents, other than section 197 intangibles, have a useful life of 10 years and can be amortized over that 10 year period (source).

What’s the point?

Understanding appreciating vs  depreciating assets gives you more wealth building potential and greater tax flexibility.

  • Appreciating assets – Owning and investing money in an appreciating asset is the key driver in growing your wealth. Those who’ve accumulated significant amounts of wealth have done so by earning a living, saving, and investing diligently over decades.
  • Depreciating assets – There are a few reasons to own a depreciating asset.
    • Fun and convenience – We own and drive cars because we need them to go places. We buy boats because they are fun. In either case, you could also own a car or boat for your business, in which case it would serve a different purpose.
    • Business – Owning and operating machinery and equipment is how many of us make a living or run a business.
    • Tax write off – If you use equipment, machinery, cars, etc. for business, oftentimes you can use the depreciation of that equipment as a tax write off.  Financial advisors use a set of fancy calculations to come up with the tax benefits of depreciation, we won’t go into that here.

Conclusion

Appreciating and depreciating assets both serve a purpose. It’s important to know the difference between the two and how to use each one as effectively as possible.

Stocks can sometimes experience periods of volatility and negative performance. During such periods, the value of such stocks may decline.

Be advised: talk to your accountant about specifics.

Mastering The Stock Market: 3 Beginner Tips from Smart IX Shares Experts

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Investing in stocks can sometimes feel like embarking on a thrilling yet uncertain adventure. The mixed emotions of excitement and apprehension are completely normal, especially when you are stepping into new territory. However, just like any other endeavor, preparation and understanding can make all the difference.

In this regard, Smart IX Shares is a notable broker that simplifies the stock market journey of clients, equipping them with optimal tools and resources. The platform features a suite of efficient facilities, robust security, and swift execution speeds, designed to establish a seamless user experience.

Below we have gathered three indispensable tips from the professionals at Smart IX Shares, particularly curated for individuals who are taking their inaugural steps into this realm.

  1. Analyze your finances and risk capacity before investing 

Before committing your hard-earned money to the stock market, ensure you have a stable financial foundation. Only proceed to invest when you feel financially secure and can bear potential losses without affecting your basic needs.

Before diving into investments, set aside some money as an emergency fund. This should be around 3 to 6 months’ worth of living expenses. Maintaining this safety net ensures you can pursue investment ventures even when unexpected challenges arise, sidestepping the need to prematurely cash in on your assets.

Moreover, set aside time to introspect about your risk tolerance. Every individual’s comfort level with risks differs, shaped by elements like age, financial standing, and one’s innate ease with unpredictability. Plenty of online tools and financial experts are available to guide you in grasping your unique risk temperament.

 

  1. Aim for diversification 

For those embarking on the journey of stock investing,  diversification stands out as a critical strategy to mitigate risks and optimize returns.

By diversifying your investments, you decrease the chance of any single stock adversely affecting your entire portfolio. In the unpredictable world of stocks, it is always wise to hedge against potential losses.

Additionally, diversification not only protects against downside risk but can also enhance the potential for returns. Different stocks or asset classes might perform well at different times, so having a varied portfolio can help capture gains from multiple sources.

In a nutshell, while diversification might not promise the thrill of betting big on a single promising stock, it is a tried and tested method that can lead to steadier, more reliable returns.

  1. Remain committed to your plan 

Investing in stocks can be a test of patience, resilience, and commitment. As a beginner, understanding the importance of sticking to your chosen strategy—even in the face of market volatility—can make the difference between long-term success and costly missteps.

Before investing a single dollar, it is imperative to define what you aim to achieve. By breaking down your objectives into short and long-term goals, you can establish clear targets that help steer your investment decisions. The next step is to remain committed to them.

Moreover, as a beginner, it is essential to recognize the influence of emotions, not just in the broader market but within yourself. By staying faithful to your strategy, you reduce the chance of being swayed by these feelings. Emotional reactions often lead to common trading mistakes like panic selling or impulsive buying.

As experts at Smart IX Shares often stress, “You cannot control the market, but what you can control is how you respond.” By staying dedicated to your plan and remembering your original goals, you can navigate market volatility with a level head.

Smart IX Shares, specifically, provides its clients with access to the right resources, profound expertise, and an empowering environment. Their pride rests in their distinguished team, a fusion of top-tier financial experts and seasoned traders, all working in harmony to provide users with unmatched insights and guidance.

Financial Planning Basics: The Financial Pyramid

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The first time I heard about the financial pyramid, I was instantly intrigued. I had never thought about it in this concept before, but I unintentionally had been practicing this in my own life.

In finances you have to build the base before you can reach the top or it will all fall apart, hence the allegory of a pyramid.

financial-pyramid

The Base

The base of your financial pyramid should be a solid financial plan. This includes your written budget, short-term and long term goals, and how you will make your income as well as an investment plan to be implemented in the future.

You should have a positive cash flow, meaning, no longer using debt to fund your lifestyle.

RELATED: The Importance of a Personal Investing Statement

Once you have implemented the base, you can move onto the first building block: protection.

Protection

You must protect yourself from the unimaginable, so I recommend everyone have a will and power of attorney, insurances such as life, health, auto, homeowner’s/renter’s, and disability, and a basic emergency fund of at least $1,000-$2,500.

I was thankful to have my mini-emergency fund when I had some car issues because I was able to pay cash to repair them instead of having to go into debt. The overall pyramid looks something like this:
the-financial-planning-pyramid

The second building block is low-risk wealth accumulation. This would include saving for a home, retirement, and children’s college education, in addition to reducing consumer debt.

Debt Reduction

Financial guru Dave Ramsey teaches that you should get completely rid of any debt before beginning savings, although, in my opinion, you should still invest in retirement while reducing debt only if your employer offers a match.

I, myself, am in the debt reduction stage but still contribute to my retirement account since my employer offers up to a 4% match into my 401(k).

Additionally in this step, you should create your emergency savings fund. Many people believe an emergency fund of 3-6 months’ worth of expenses is adequate.

Investing

The third building block is high-risk wealth accumulation.  This includes investing. Expanding on the second block, in this stage, you will max out your retirement accounts and then build a non-registered investment portfolio.

Once you have built your net worth to an amount sufficient to fund your lifestyle and retirement, you can move to the next stage of investing– speculation (also known as speculative investing.) In this stage, you invest money into investments such as start-up companies.

This is very risky, so you don’t want any debt by this stage. Also, you should only invest a small portion of your total investments into speculation. Also in this stage, you’ll want to begin tax planning, especially as your retirement investments increase.

Estate and Charity

The final building block is wealth distribution. You’ll gift and spend the money you have earned. As well as plan your estate for future generations or charity upon your death. Since your net worth increased quite a bit since you first started the financial planning pyramid, you should update your will and/or trust.

Finally, once you’ve got these basics nailed down, it’s time to hire some help. One approach a lot of millennials use is robo-advisors. A robo-advisor is a machine that uses various theories about portfolio allocation to make investing decisions. If you’re interested in a critical review of this, consider checking out Roboadvisorpros.com, they have a good article on the topic.

For help getting your financial pyramid in order, check out these great articles.

Yes, Financial Planning Matters – Here is Why
Best Free Financial Advice
Become a Financial Expert Step-by-Step

Is It Time to Sell All of The Stocks In My Portfolio?

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when to sell stocks at a loss

Back in mid-June 2022, the S&P 500 entered bear market territory, and the Federal Reserve increased rates by the largest margin since the mid-1990s. Together, this made investors nervous. Along with worrying about an economic downturn, some fear a full-blown recession may be just around the corner. As a result, they’re re-evaluating their portfolios and wondering if now is the time to sell stocks at a loss. If you’re trying to decide what’s best. Here’s what you need to consider.

How Market Downturns Alter the Picture

Market downturns are intimidating. This particularly true to two kinds of investors. For those nearing or in retirement, declining stock values are worrisome as they may soon impact the investor’s quality of life. The value of their portfolio serves as a source of retirement income. Thus, causing declines to have a potentially immediate impact on their short- and long-term financial well-being.

Another type of investor that often gets worried about market downturns is those that are newer to investing. For those who weren’t involved in the markets during the last major recession – such as the market crash of 2008.  There may be more fear about what lies ahead. That could make selling seem like an attractive option. Since it could prevent future financial losses.

However, what’s important to remember is that wide stock declines aren’t typically permanent. Additionally, those who maintain their portfolios and those who continue to invest can often come out ahead in the long run. This is only if they stick with it. That’s good news for buy-and-hold investors. These are investors who don’t need to tap the funds within the next few years. For them there’s a decent chance their portfolio value will recover.

But that doesn’t mean it’s never wise to sell stocks at a loss; it’s simply that making broad decisions about an entire portfolio isn’t the best idea. Investors should always look at the potential value of any particular holding to determine whether it makes sense for their goals, allowing them to make strategic choices regardless of market conditions.

When Selling Stocks at a Loss Makes Sense

There are a handful of situations where selling a stock at a loss does make sense. The primary one is when the company’s outlook has significantly changed. Now, all businesses experience some degree of ups and downs, so slight shifts in value aren’t necessarily enough to justify a sale. However, if the company’s future prospects are fundamentally altered by a particular event, it’s possible it is no longer a wise investment, and selling at a loss could be a good move.

Another reason to sell stocks at a loss involves taxes. By selling stocks at a loss, you can potentially offset any income or capital gains generated by stronger investments. The strategy is known as tax-loss harvesting, and it’s worth considering if a particular stock lost value and it no longer makes sense for your portfolio at large.

Selling stocks at a loss because you genuinely need the cash may also make sense. Along with the potential tax benefits, it may allow you to cover a cost without having to worry about incurring debt. While it’s usually better to use an emergency fund first, if that’s fully tapped and you still need cash, this might be better than selling stocks with additional growth potential.

Finally, if you need to rebalance your portfolio, selling losing stocks is usually better than liquidating strong performers or those with ample potential. It allows you to accomplish the goal while improving your overall financial picture. Plus, you could get some tax benefits, which is a bonus.

When Selling Stocks at a Loss Isn’t Wise

Usually, the main time when selling stocks at a loss isn’t smart is if the downturn is likely temporary. For companies that are stable and have the potential to grow and thrive, the odds are good that the stock price will recover. In fact, downturns could be the right time to actually purchase more stocks, as you may get them at a bargain price, giving you stronger gains when there’s a recovery.

If the stock value fell, but it comes with a solid dividend, then selling might not be the wisest choice either. That’s mainly true if the company is reasonably healthy and was simply overvalued at the time of purchase. In this case, the dividends may offset that loss, making the buy-and-hold approach a better fit in this situation. Just make sure that the value isn’t likely to decline dramatically long-term, barring normal market fluctuations or broad downturns that aren’t reflective of the company’s health.

Finally, never sell a stock if emotions are all that’s driving that choice. Investment decisions should always be based on logic, research, financial goals, and similar factors. Usually, rash choices will work against you. So, if you’re motivated by emotion, take a step back, look at the situation objectively, and then decide what’s best.

Do you have any other tips that can help someone figure out when to sell stocks at a loss? Do you think selling stocks now is a wise move, or are people better off waiting until the market stabilizes? Share your thoughts in the comments below.

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5 Reasons Why a Family Boat Is Worth the Cost

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If you live close to a body of water, whether an ocean, sea, or lake, you’re aware of the boating opportunities it offers. While you can always rent a boat, you should consider purchasing one if you have the funds. It may seem like too much of a leap, but here are five reasons spending on a family boat is worth the cost.

1. Boating Can Be a Lot of Fun

Boat owners spend most of their days at sea because it can be thrilling. If you haven’t spent time on the open water, you’ll have plenty of adventures to embark on with friends and family once you get a boat. For example, fishing from a boat is way better than doing it on land because you can go right to the areas with the best fish.

You can also host parties for your family and friends on your boat, where they can join you in the fun of being out on the open seas. It’s no surprise that over 87 million U.S. adults engage in recreational boating! If you’re looking for something to brighten your days, consider investing in a boat.

2. Boating Is a Great Way to Exercise

Most people fail to exercise because it’s not the most enjoyable activity. That’s why 67% of those with gym memberships never put them to use — but the trick is to make things enjoyable.

You can engage in several activities for fun on a boat, which also provides a great workout. These include swimming, snorkeling, SCUBA diving, wakeboarding, and water skiing. Not to forget the joys of fishing. Whether you’re hoping to catch the big one or simply having fun with your casting rod, it’ll help you unwind and concentrate, and it can even end with a delicious supper.

3. Having a Boat Can Strengthen Your Family Relationship

Owning a boat offers a unique opportunity for everyone in the family to participate. As you increase your skill set, challenge your kids to do the same. Together, attend classes at the Power Squadron or Coast Guard Auxiliary, or watch YouTube tutorials on navigation, weather forecasting, or knots. Give your children routine tasks so they can feel part of the boating experience.

The best part is you can carry your boat when visiting different local water bodies. 95% of boats on the water in the United States (sailboats, personal watercraft, and powerboats) are tiny, with a length of less than 26 feet, according to the National Marine Manufacturers Association. This makes them easy to trail to nearby waterways.

4. Potential for a Return on Investment

Nobody can deny that maintaining a boat can get expensive. However, by renting out your vessel for a few weeks or months each year, you can significantly lower the overall cost of ownership. It just takes a few weeks of chartering every year for most yachts to break even.

After that, you can use your yacht for the rest of the year while writing off the expense of upkeep, repairs, depreciation, and even upgrades. Boats retain their value over time, allowing you to enjoy them for years without forking out a lot of money.

5. You’ll Learn New Skills

You’ll need to master new skills to safely operate your new boat, and learning new skills will keep your mind sharp. From anchoring to socking at a marina, navigation to knots, to knowing your stern from your bow and your starboard from your port, the more you know, the more you’ll appreciate your experience. Familiarize yourself with the vocabulary, road rules, the quirks of your gadgets, and the specifics of how to drive in all current, tidal, and wind conditions.

While it can be expensive, owning a boat will open you up to new opportunities and experiences. It’ll also be a great addition to the entire family. This read highlights why a boat is worth the investment.