Some avid investors will say that there’s an art and a science to investing. But when it comes to choosing an investment style that works for you and your specific needs, you’ll likely come across terms such as passive investments, active investments, emotional investing, and evidence-based investing without much knowledge of what they are or how they differ.
If an investor just looked at the headlines – record breaking market returns – they might think that the long bull market had returned with a vengeance. And it may have – that remains to be seen as events play out in 2021
Investing in retirement used to be simple – switch to a 60/40 allocation, take out 4% a year, adjust for inflation, done. The goal was to avoid risk to the principle.
How much do you need for retirement? Well, investment research firm Morningstar has a handy but somewhat scary stat: $1.18 million. Using average annual returns of 6 percent and pegging inflation at 2.5%, Morningstar calculates that’s the amount of savings needed to achieve $40,000 per year in annual income for 30 years.
When it comes to investment management and asset allocation, it is essential that you include diverse and non-corelated assets in your portfolio. This can allow you to ensure stable income generation amid changing economic conditions and protect your financial health.
Market psychology is the reaction to investing. Overcoming market psychology is not easy but learning how the market works can reduce the number of surprises and increase the degree of success.
