Blog - Page 18 of 71 - NorthStar Capital Advisors

Financial Free Lunch?

Barry Ritholtz lays bare the myth…

Deep down inside, you already know this: There ain’t no such thing as a free lunch, financially or otherwise.

Of so many free lunches, this is the hard truth:

You are not going to win the lottery.
Hot stock tips are worthless (the only exceptions are those especially costly tips that will get you sent to federal prison).
You are not going to buy an iPad from one of those deal sites for $3.
No, you are not likely to buy in early to the next Apple or Netflix, and if you do, you are unlikely to hold it long enough.
No, you are not going to make $10,000 gambling at fantasy sports.
You (or your kid) are not going to be the next Michael Jordan or Adele.
The odds are radically against you finding the mutual fund manager or stock broker who is going to make you fabulously rich.
Indeed, the odds are against you stock picking, market timing or investing in a venture fund, private equity fund or hedge fund that, over the long haul, is going to outperform a simple index fund.

Source: BR

How to Succeed and have a Long and Happy Life

Legendary banker Richard Jenrette passed away last week at the age of 89. In his desk he left a hand-written note listing his 24 rules to succeed in finance and life. The note titled, “What I Learned (How to Succeed and have a Long and Happy Life),” was shared at his memorial service in Charleston, SC:

Stay in the game. That’s often all you need to do – don’t quit. Stick around! Don’t be a quitter!
Don’t burn bridges (behind you)
Remember – Life has no blessing like a good friend!
You can’t get enough of them
Don’t leave old friends behind – you may need them
Try to be nice and say “thank you” a lot!
Stay informed/KEEP LEARNING!
Study — Stay Educated. Do Your Home Work!! Keep learning!
Cultivate friends of all ages – especially younger
Run Scared — over-prepare
Be proud — no Uriah Heep for you! But not conceited. Know your own worth.
Plan ahead but be prepared to allow when opportunity presents itself.
Turn Problems into Opportunities. Very often it can be done. Problems create opportunities for change — people willing to consider change when there are problems.
Present yourself well. Clean, clean-shaven, dress “classically” to age. Beware style, trends. Look for charm. Good grammar. Don’t swear so much — it’s not cute.
But be open to change — don’t be stuck in mud. Be willing to consider what’s new but don’t blindly follow it. USE YOUR HEAD – COMMON SENSE.
Have some fun – but not all the time!
Be on the side of the Angels. Wear the White Hat.
Have a fall-back position. Heir and the spare. Don’t leave all your money in one place.
Learn a foreign language.
Travel a lot — around the world, if possible.
Don’t criticize someone in front of others.
Don’t forget to praise a job well done (but don’t praise a poor job)
I don’t like to lose — but don’t be a poor loser if you do.
It helps to have someone to love who loves you (not just sex).
Keep your standards high in all you do.
Look for the big picture but don’t forget the small details.

This is good advice for anyone!

Source: Bloomberg

Jason Zweig’s Rules for Investing

Jason Zweig is a leading financial journalist and author. You’ll find his stuff in the Wall Street Journal several days a week. Buried within the appendix of his book, Your Money & Your Brain, is this great list of common sense rules that are commonly ignored.

Jason Zweig’s Rules for Investing

1. Take the Global View: Use a spreadsheet to track your total net worth — not day-to-day price fluctuations.

2. Hope for the best, but expect the worst: Brace for disaster via diversification and learning market history. Expect good investments to do poorly from time to time. Don’t allow temporary under-performance or disaster to cause you to panic.

3. Investigate, then invest: Study companies’ financial statement, mutual funds’ prospectus, and advisors’ background. Do your homework!

4. Never say always: Never put more than 10% of your net worth into any one investment.

5. Know what you don’t know: Don’t believe you know everything. Look across different time periods; ask what might make an investment go down.

6. The past is not prologue: Investors buy low sell high! They don’t buy something merely because it is trending higher.

7. Weigh what they say: Ask any forecaster for their complete track record of predictions. Before deploying a strategy, gather objective evidence of its performance.

8. If it sounds too good to be true, it probably is: High Return + Low Risk + Short Time = Fraud.

9. Costs are killers: Trading costs can equal 1%; Mutual fund fees are another 1-2%; If middlemen take 3-5% of your cash, its a huge drag on returns.

10. Eggs go splat: Never put all your eggs in one basket; diversify across U.S., Foreign stocks, bonds and cash. Never fill your 401(k) with employee company stock.

Managing Your Portfolio: One Father’s Advice

Arthur Zeikel, president of Merrill Lynch Asset Management, sent his daughter a letter teaching her some investing basics.

Enjoy!

———

Personal portfolio management is not a competitive sport. It is, instead, an important individualized effort to achieve some predetermined financial goal by balancing one’s risk-tolerance level with the desire to enhance capital wealth. Good investment management practices are complex and time consuming, requiring discipline, patience, and consistency of application. Too many investors fail to follow some simple, time-tested tenets that improve the odds of achieving success and, at the same time, reduce the anxiety naturally associated with an uncertain undertaking.

I hope the following advice will help:

A fool and his money are soon parted. Investment capital becomes a perishable commodity if not handled properly. Be serious. Pay attention to your financial affairs. Take an active, intensive interest. If you don’t, why should anyone else?

There is no free lunch. Risk and return are interrelated. Set reasonable objectives using history as a guide. All returns relate to inflation. Better to be safe than sorry. Never up, never in. Most investors underestimate the stress of a high-risk portfolio on the way down.

Don’t put all your eggs in one basket. Diversify. Asset allocation determines the rate of return. Stocks beat bonds over time.

Never overreach for yield. Remember, leverage works both ways. More money has been lost searching for yield than at the point of a gun (Ray DeVoe).

Spend interest, never principal, If at all possible, take out less than comes in. Then a portfolio grows in value and lasts forever. The other way around, it can be diminished quite rapidly.

You cannot eat relative performance. Measure results on a total return, portfolio basis against your own objectives, not someone else’s.

Don’t be afraid to take a loss. Mistakes are part of the game. The cost price of a security is a matter of historical insignificance, of interest only to the IRS. Averaging down, which is different from dollar cost averaging, means the first decision was a mistake. It is a technique used to avoid admitting a mistake or to recover a loss against the odds. When in doubt, get out. The first loss is not only the best, but is also usually the smallest.

Watch out for fads. Hula hoops and bowling alleys (among others) didn’t last. There are no permanent shortages (or oversupplies). Every trend creates its own countervailing force. Expect the unexpected.

Act. Make decisions. No amount of information can remove all uncertainty. Have confidence in your moves. Better to be approximately right than precisely wrong.

Take the long view. Don’t panic under short-term transitory developments. Stick to your plan. Prevent emotion from overtaking reason. Market timing generally doesn’t work. Recognize the rhythm of events.

Remember the value of common sense. No system works all of the time. History is a guide, not a template.

This is all you really need to know.

When this article was originally published in 1995, Arthur Zeikel was president of Merrill Lynch Asset Management in New Jersey.

Source: Forbes

Salary You Need to Afford the Average Home in Your State

The map above from howmuch shows how much salary you need to afford the average home in your state. This a quick snapshot of housing affordability across the United States.

Top five places where you need the highest salaries to afford the average house:

Hawaii: $153,520 for a house worth $610,000
Washington, DC: $138,440 for a house worth $549,000
California: $120,120 for a house worth $499,900
Massachusetts: $101,320 for a house worth $419,900
Colorado: $100,200 for a house worth $415,000

Top five places where you need the lowest salaries to afford the average house:

West Virginia: $38,320 for a house worth $149,500
Ohio: $38,400 for a house worth $149,900
Michigan: $40,800 for a house worth $160,000
Arkansas: $41,040 for a house worth $161,000
Missouri: $42,200 for a house worth $165,900

Source: howmuch

20 People You Don’t Want to Invest With

Identifying what does NOT work is often a great process for narrowing your list of options of what you should do. In that spirit, here’s Ben Carlson’s list of 20 people you wouldn’t want to invest with:

1. People that are unwilling or unable to admit their limitations.

2. People that are consumed by ideological or political beliefs when making investment decisions.

3. People that are unwilling to say “I don’t know.”

4. People that don’t learn from their mistakes.

5. People that blame external forces for their failures.

6. People that are unable to effectively communicate their process.

7. People that make guarantees about the markets in the future.

8. People that are more interested in selling you a product than creating a beneficial long-lasting client relationship.

9. People that try to invest in the markets as they “should be” instead of how they actually are.

10. People that are more worried about what others are doing instead of focusing on their own process and goals.

11. People that take the markets personally and let their emotions drive their decisions.

12. People that assume “trust me, I got this” is good enough in terms of explaining their strategy.

13. People that believe in conspiracy theories and think the system is out to get them.

14. People that are more worried about sounding intelligent than actually making money.

15. People that obsess over the market’s short-term movements.

16. People that would rather take you golfing than help you solve your problems.

17. People that make you feel like they’re doing you a favor by letting you invest your money with them.

18. People that try to dazzle you with 200 page pitch books.

19. People that are more worried about gathering future clients than taking care of their current ones.

20. People that tell you what you want to hear instead of what you need to hear.

Source: AWOCS

Your Investing Philosophy in Ten Words or Less

Brevity is power. If you truly understand something well, you can explain it in simple terms. Ten individuals share their investing philosophies in 10 words or less:

Barry Ritholtz, Bloomberg: “Keep it simple, do less, and manage your stupidity.”
Ben Carlson, author of A Wealth of Common Sense: “Less is more. Process over outcomes. Behavior is the key.”
Harold Pollack, University of Chicago: “Save 15-20%. Low-fee Indexes. Pay off plastic. Maximize 401(k).”
Robert Brokamp, Motley Fool: “Diversification reduces risk, increases predictability, and boosts returns.”
Michael Batnick, Ritholtz Wealth Management: “Avoiding catastrophic mistakes matters more than constructing the ‘perfect portfolio.'”
Cullen Roche, Pragmatic Capitalism: “Low-fee, tax-efficient, index-based global-macro asset allocation.”
Eddy Elfenbein, blogger, Crossing Wall Street: “Be patient and ignore fads. Focus on value. Never panic.”
Seth Jayson, Motley Fool: “Be safe, keep your costs low, and don’t overthink.”
Josh Brown, CNBC, The Reformed Broker: “Roses are red, violets are blue. I don’t know what will happen and neither do you.”
Morgan Housel: “Worry only when you think you have it figured out.”

Source: MF

3 Characteristics of Good Financial Advice

Searching for a good advisor? Here’s an insightful opinion on the 3 characteristics good financial advice should demonstrate:

It should be given by someone you like who is qualified to be giving advice. This may seem so elementary, but it’s absolutely worth noting. Financial success is not typically something that happens in short periods of time. Most times it requires long stretches of behavioral adjustment. Therefore, the giver of advice is likely someone you will want to develop a relationship with. Relationships without chemistry are not usually very successful for any useful period of time. They should also be qualified to be giving the advice.

It should only be given after arriving at a conclusion based on an exploration into your needs. Taking off the cuff financial advice should be avoided at most costs. If it is simply a fact or specific rule that applies to anyone – like IRA contribution limits at a certain age / income level, that’s fair. But if it has to do with how you should be allocating assets, how much you should be saving, what types of accounts you should have – these are all things that require developing a far deeper understanding than a brief conversation can offer.
It should be simple for both the receiver and giver to understand. If the person giving the advice has your better interest in mind, they will have a deep grasp whatever it is they are recommending you do or invest in. If they truly do, it will be conveyed with ease. It may require some detective work on your part, but it shouldn’t be too difficult to figure out if you are listening to someone who doesn’t deeply understand the stuff they are talking about.

Source: TCP

Planting a Tree

Warren Buffett once said, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” It’s planting season and your deadline to act is coming up very soon!

If you have an individual retirement account (IRA) or are considering opening an IRA, 2017 contributions to IRAs can still be made up through April 17, 2018.

[Tax day falls on April 17, 2018. Usually, April 15 is the day taxes and IRA contributions are due. But in 2018, that falls on a Sunday. On Monday, the District of Columbia celebrates Emancipation Day. That affects taxes the same way federal holidays do. Therefore, the tax deadline is pushed out to the following Tuesday, April 17.]

Make it a double? If you really want to make the most of the growth potential that retirement accounts offer, you should consider making a double contribution this year: a last-minute one for the 2017 tax year and an additional one for 2018, which you’ll claim on the tax return you file next year. That strategy can add much more to your retirement nest egg than you’d think.

2017/2018 Annual IRA Contribution Limits*

Traditional/IRA Rollover: $5,500 ($6,500 if you are 50 years old or older)
Roth IRA: $5,500 ($6,500 if you are 50 years old or older)
SIMPLE IRA: $12,500 ($15,500 if you are 50 years old or older)
SEP IRA: $54,000 (2017); $55,000 (2018)

*Note: The maximum contribution limit is affected by your taxable compensation for the year.

The savings, tax deferral, and earnings opportunities of an IRA make good financial sense. The sooner you make your contributions, the more your money can grow, and the more “shade” you’ll have to enjoy in the future.

If you have any questions about how to make the most of your IRA savings opportunity, please give us a call at 704-350-5028.

Location, location, location!

As we head into the spring real estate season, many of our clients are busily buying and selling properties. As the old adage goes, location, location, location. The fascinating visualization above underscores the importance of geography in median housing prices and land valuations.

Blue dots represent the value of an acre of land, and the red circles indicate the median value of a home. The bigger the blue dot and the larger the red circle, the more expensive it is to become a property owner. Small circles and dots likewise indicate a very low cost of purchasing property.

A couple of things stand out:

An acre of land is much more valuable in the Northeast compared to any other part of the country
Median home prices generally high in the Northeast as well
There’s a noticeable decline of both land and housing prices in southern and midwestern states

Source: howmuch

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