Life, like investments, has its ups and downs. That is, it has volatility. People attempt to prepare for the volatility of life in various ways. Each person has different dynamics that make up their life. They must address those areas based on their own circumstances. Even people who have seemingly similar lives may have different reactions to life given their individual emotions, resources, etc.
For many people, investing is a part of life that must also be dealt with and understood. Not only should individuals understand their own reactions to their investments through a risk profile, but they should also understand the ups and downs of their investments. One way to understand this is through market volatility.
Market volatility is a factor that measures the rate at which the prices of different securities move up and down. A security whose prices changes quickly over a short time period is said to have high volatility. On the other hand, a security whose price changes slowly and infrequently is considered to have low volatility.
Market volatility is an important consideration in evaluating investment choices. Investing is a dynamic of life, like other areas of life, in which volatility should be taken into account. Market volatility can help to distinguish whether a certain investment is appropriate to a particular style of investing and risk profile.
*This article is provided for informational purposes only and should not be construed as individualized investment advice. Please contact Atlanta Wealth Consultants for more information.
A man wins $5,000 in a contest. He can take all $5,000 now or take payments of $1,000 a year over the next five years.
Which should he do? Does it matter?
The short answer is – “Yes, it does matter.” It matters because of a concept called the time value of money. This moves us to a longer answer. It is an answer of understanding how different investments affect the value of money invested given their returns and time invested.
A certain amount of money is worth more today than it would be in the future. It only seems wise for our contest winner to take the $5,000 now than to wait five years. It is possible because of the inflation rate that $5,000 today may only be worth about $4,600 in five years. So, all things being equal, he probably should take the money now.
The dilemma of the contest winner helps us see a parallel in considering today’s investments. What is the five year goal of a $5,000 investment today? This question shows the importance understanding the value of an investment today. It also leads us to consider the potential future value of investment returns that may be considered in order to meet future financial goals.
*This article is provided for informational purposes only and should not be construed as individualized investment advice. Please contact Atlanta Wealth Consultants for more information.
In a quest for lower cost and transparency, investors have flocked to buying and trading Exchange-Traded funds commonly known as ETFs.
Many investors do not know the perils of investing or trading in ETFs. One example is ETF’s objective may be to invest in large cap domestic stocks, but the ETF itself may be small and the result can be wide spreads, especially during market volatility. As of January 31, 2010, 15% of all ETFs had market caps of less than $10 million dollars. Illiquidity could be complicated by an ETF’s objective to invest in niche or less liquid markets.
ETF’s are a wonderful investment tool if used correctly. The ETF market will continue to grow. Buyer beware.
Peter Miralles, CFP® CIMA® CLU
*This article is provided for informational purposes only and should not be construed as individualized investment advice. Please contact Atlanta Wealth Consultants for more information.
The price of gold continues to rally, primarily from declines in the U.S. Dollar. It was announced recently that the Central Bank of India bought 200 metric tons of gold. The weight of that much gold has been compared to 44 Asian elephants, 3000 North Georgia deer or 120 Toyota Camry’s. Any way you look at it that is a lot of gold.
More importantly – Why is the Central Bank of India is buying that much gold? One might answer, “It’s the dollar, stupid.” That is, the U.S. Dollar. As the dollar declines, organizations such as the Central Bank of India understand the importance of risk management aided by diversification.
Governments, corporations and individuals are all worried about excessive spending by the United States Congress. Much of the spending is seen as short term stimulus rather than long term investing. Cash for Clunkers is gone. First time homebuyers are being encouraged with tax credits to borrow money with minimal down payments. It seems that the behavior that got this country into the current situation is being encouraged.
The Central Bank of India offers one proactive example of attempting to protect ones portfolio against certain government actions that may be causing the decline of the U.S. Dollar. Atlanta Wealth Consultants has always recommended global diversification and multiple asset classes for long term success with investments. This is what the Central Bank of India is doing, diversifying their portfolio away from the U.S. dollar.
~Peter Miralles, CFP® CIMA® CLU
*This article is provided for informational purposes only and should not be construed as individualized investment advice. Please contact Atlanta Wealth Consultants for more information.
