The gifting phase is similar to, and may be concurrent with, the spending phase. In this stage, individuals believe they have sufficient income and assets to cover their expenses while maintaining a reserve for uncertainties. Excess assets can be used to provide financial assistance to relatives or friends, to establish charitable trusts, or to fund trusts as an estate planning tool to minimize estate taxes.
November 16th, 2010 - 3:35 pm § in Investment, Spending Phase
Spending Phase
The spending phase typically begins when individuals retire. Living expenses are covered by social security income and income from prior investments, including employer pension plans. Because their earning years have concluded (although some retirees take part-time positions or do consulting work), [...]
November 15th, 2010 - 3:34 pm § in Consolidation Phase
Consolidation Phase
Individuals in the consolidation phase are typically past the mid- point of their careers, have paid off much or all of their outstanding debts, and perhaps have paid, or have the assets to pay, their children’s college bills. Earnings exceed expenses, so the excess can be invested to provide for [...]
November 14th, 2010 - 3:32 pm § in Accumulation Phase, Investment
Accumulation Phase
Individuals in the early-to-middle years of their working careers are in the accumulation phase. As the name implies, these individuals are attempting to accumulate assets to satisfy fairly immediate needs (for example, a down payment for a house) or longer-term goals (children’s college education[...]
July 4th, 2010 - 8:35 am § in Management
Tracking Error
Just as corporations have to deal with “forecasting error” in terms of the deviation of forecast exchange rates relative to the actual future rate, so investors have to deal with “tracking error” within their portfolios, which is the return of the portfolio relative to the investment benchma[...]
June 10th, 2010 - 2:54 pm § in Investment
Preparing Yourself for the World of Investing
Bulls, bears, stocks and bonds. Many people enjoy the notion of saying that they are investors, but few are actually prepared to invest in the right way. Investing is like a boxing match in that there must be adequate preparation and training before a boxer ever steps into a gym. Like a boxer, an in[...]
May 23rd, 2010 - 4:11 pm § in debt
The No-Debt Vow
The No-Debt Vow Everybody always asks me what the first step to getting out of debt is, and the answer is always the same — stop digging. If you have already put yourself in a very deep hole, the only way to start getting out of that hole is to stop digging. Debt reduction may [...][...]