Your Money Management Strategies

Portfolio and Money Management

I manage my own investment portfolio. My core investment strategies are index and dividend investing that are applied to both my personal (not-tax exempt) and retirement accounts (tax exempt). I maintain active positions in individual stocks, ETF's, bonds, CD's, and high-yield online savings accounts. 


Hot Stock Tip from your Brother, Neighbor, Colleague.

Of course everyone hears about a hot tip on a single stock that is guaranteed to make them wealthy. As tempting as these tips are, I typically avoid any large single stock purchase, and only buy single stocks as a fractional percentage of my overall investment portfolio. 


I have witnessed countless people lose a significant portion of their savings on one single stock. My approach to investing is a long term road that consists of buying and holding low cost index funds, which provides you a mathematical investing advantage. Pairing this approach with a secondary much smaller dividend investing strategy to create income (along with dollar-cost-averaging) can increase your mathematical advantage-- You can try to argue the math. but I believe you will mostly end up on the losing side when doing so. 


Taking a lesson from Warren Buffet, the founder of Berkshire Hathaway, Warren's entire fortune will be left in a trust upon his passing, with the majority of his holdings in a S&P500 index fund. Warren Buffet clearly understands the mathematical advantages revealed by the late John C. Bogle of Vanguard who created the concept and application of the index fund earlier in this century.


Managing my own personal brokerage accounts and other investments essentially means that I plan, propose, and implement investment changes myself without the paid advice of a financial advisor.  Although there are obvious financial benefits to managing your own portfolio, there are also advantages to utilizing good financial and legal professionals to assist in your finances and estate/retirement planning. In my case I found that I simply enjoy doing this work myself. 


So why do I go through the trouble of keeping such a close watch on my own investments? To use an extreme example, ask Kevin Bacon, the famous actor who reportedly lost the majority of his fortune to Bernie Madoff's pyramid scheme how he feels about blindly trusting his nest egg to others. My net worth may not be as large as a successful Hollywood actor, but I know exactly how my money is invested, the exact fee's I pay, and I understand the risks I am willing to endure as part of my long term planning.


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