The Rant: Alpha Teach Yourself Investing in 24 Hours: An Analysis (part 43)

Wednesday, December 20, 2017

Alpha Teach Yourself Investing in 24 Hours: An Analysis (part 43)

Long-Term Investment Objectives

Charles Lamson

Long-term objectives are investments of 10 years or more. For many of us, retirement planning will be at the top of our long-term investment objectives. You may have others that are long-term.

PROCEED WITH CAUTION

Mapping out objectives and strategies to achieve them is an ongoing process that is always being refined and returned.

Ages 20-45

In earlier posts, we noted that the more time you have to reach a goal, the more aggressive you could be in your investment decisions. People within this age range have many years before retirement, so they can be very aggressive in their fund selection, taking into account their own tolerance for risk.

JUST A MINUTE

Small-cap funds can be like cheap fireworks. They have an equal chance of eith shooting straight up in the air or blowing up in your hand.

A single person, age 20, would probably want to charge the market with a small-cap growth fund in his or her retirement account. These funds are not normally tax efficient so they are better suited to tax-deferred retirement accounts.

A company's market capitalization is the market value of its outstanding shares. The definition of small cap can vary among brokerages, but it is generally a company with a market capitalization of between $300 million and $2 billion.

Small-cap funds have the largest potential for growth, but also carry the highest risk and are noted for their volatility. These are not funds for short-term investing.

A mid-cap fund is a type of investment fund that focuses its investments on companies with a capitalization in the middle range of stocks in the investable market. Companies with market capitalizations ranging from $2 billion to $10 billion are typically considered mid-cap companies.

A more moderate approach would be to buy medium-cap funds in the growth area and a more conservative approach would consider large-cap growth funds.

Large cap (sometimes "big cap") refers to a company with a market capitalization value of more than $10 billion. Large cap is a shortened version of the term "large-market capitalization." Market capitalization is calculated by multiplying the number of a company's shares outstanding by its stock price per share.

If you want to follow the path of least resistance (and least work on your part), pick an index fund, such as one that follows the S&P 500. This type of fund would be a large-cap blend, because the S&P 500 index is primarily large-cap stocks. Within the 500 are some value stocks as well as growth stocks.

Ages 45-55

At this point in your life, retirement, while still a long way off, may seem to take on more importance. This would be a good time to consider moving out of the highest risk funds and into areas of more moderate risk, but still plenty of room for growth.

Trading small- and medium-cap growth funds for large-cap stock funds will begin to bring stability to your portfolio and let you begin planning your retirement with more accuracy.

Income funds in your retirement account toward the end of this period also add a degree of predictability to your retirement.

PROCEED WITH CAUTION

Compounding over a long period is like a ball rolling downhill. The closer it gets to the bottom, the faster it goes. What started out as compounding a small amount is now compounding a large amount. Do not turn off compounding too soon.

Ages 55-65

Although the last 10 years before your retirement should be a time for consolidating your portfolio into a shape that will serve your daily income needs in retirement, most financial professionals caution against pulling too far back.

For one thing, if you have been diligent about funding your retirement account, it is probably quite large by now, and the additional compounding will be significant the last 10 years.

Another concern is that there is a good chance, thanks to modern medicine that you will live some 15-25 years after you retire. Putting the breaks on your retirement earnings too quickly may put you in the uncomfortable position of outliving your money.

For example, if your retirement fund is $750,000 and it is earning 10 percent per year, you are making $75,000 in interest before taxes. If you pull back to safer investments to protect your retirement and are only earning 6.5 percent, your annual before tax income is only $48,750, or a loss of $26,250. That can mean a substantial difference in how you live out your retirement.

An income fund is a type of mutual fund or exchange-traded fund (ETF) that emphasizes current income, either on a monthly or quarterly basis, as opposed to capital appreciation.

Many people suggest shifting intro more income-oriented funds during this period to smooth out the peaks and valleys. At this point, you probably do not want to be in anything but large-cap funds, with a stronger emphasis on bond funds than stock funds.

*SOURCE: ALPHA TEACH YOURSELF INVESTING IN 24 HOURS, 2000, KEN LITTLE, PGS. 255-257*

END

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The kingdom of God is among you

Luke 17:20-25 Asked by the Pharisees when the kingdom of God was to come, Jesus gave them this answer, ‘The coming of the kingdom of God does not admit of observation and there will be no one to say, “Look here! Look there!” For, you must know, the kingdom of God is among you.’ He said to the disciples, ‘A time will come when you will long to see one of the days of the Son of Man and will not see it. They will say to you, “Look there!” or, “Look here!” Make no move; do not set off in pursuit; for as the lightning flashing from one part of heaven lights up the other, so will be the Son of Man when his day comes. But first he must suffer grievously and be rejected by this generation.’

Live Adoration Feeds from U.S.A., U.K., and Poland

Adoration, also known as Eucharistic Adoration, is a Catholic prayer in front of the Blessed Sacrament. It is a sign of devotion and worship to Jesus Christ, who is believed to be present in the consecrated host. During adoration, Catholics pray to Jesus Christ before the Eucharist at their local parish. The Eucharist is typically kept in a tabernacle at the parish church, and may be presented in front of a closed tabernacle or in front of the exposed host in a monstrance. A monstrance is a vessel used in Roman Catholic, Anglican, High Church Lutheran, and Old Catholic churches. It is a stand made of precious metal that holds the Blessed Sacrament during adoration. The word "monstrance" comes from Latin and means "to show".

Love

1 Corinthians 13:4-7: Love is always patient and kind; it is never jealous; love is never boastful or conceited; it is never rude or selfish; it does not take offence, and is not resentful. Love takes no pleasure in other people’s sins but delights in the truth; it is always ready to excuse, to trust, to hope, and to endure whatever comes. 1 Corinthians 13:8-9,13: Love does not come to an end. But if there are gifts of prophecy, the time will come when they must fail; or the gift of languages, it will not continue for ever; and knowledge – for this, too, the time will come when it must fail. For our knowledge is imperfect and our prophesying is imperfect. In short, there are three things that last: faith, hope and love; and the greatest of these is love. Colossians 3:14-15: Over all these clothes, to keep them together and complete them, put on love. And may the peace of Christ reign in your hearts, because it is for this that you were called together as parts of one body. Always be thankful.

It is not peace I have come to bring, but a sword

Jesus instructed the Twelve as follows: ‘Do not suppose that I have come to bring peace to the earth: it is not peace I have come to bring, but a sword. For I have come to set a man against his father, a daughter against her mother, a daughter-in-law against her mother-in-law. A man’s enemies will be those of his own household. ‘Anyone who prefers father or mother to me is not worthy of me. Anyone who prefers son or daughter to me is not worthy of me. Anyone who does not take his cross and follow in my footsteps is not worthy of me. Anyone who finds his life will lose it; anyone who loses his life for my sake will find it. ‘Anyone who welcomes you welcomes me; and those who welcome me welcome the one who sent me. ‘Anyone who welcomes a prophet will have a prophet’s reward; and anyone who welcomes a holy man will have a holy man’s reward. ‘If anyone gives so much as a cup of cold water to one of these little ones because he is a disciple, then I tell you solemnly, he will most certainly not lose his reward.’ When Jesus had finished instructing his twelve disciples he moved on from there to teach and preach in their towns.

The beheading of John the Baptist

Matthew 14:1-12 Herod the tetrarch heard about the reputation of Jesus, and said to his court, ‘This is John the Baptist himself; he has risen from the dead, and that is why miraculous powers are at work in him.’ Now it was Herod who had arrested John, chained him up and put him in prison because of Herodias, his brother Philip’s wife. For John had told him, ‘It is against the Law for you to have her.’ He had wanted to kill him but was afraid of the people, who regarded John as a prophet. Then, during the celebrations for Herod’s birthday, the daughter of Herodias danced before the company, and so delighted Herod that he promised on oath to give her anything she asked. Prompted by her mother she said, ‘Give me John the Baptist’s head, here, on a dish.’ The king was distressed but, thinking of the oaths he had sworn and of his guests, he ordered it to be given her, and sent and had John beheaded in the prison. The head was brought in on a dish and given to the girl, who took it to her mother. John’s disciples came and took the body and buried it; then they went off to tell Jesus.

Psalms 9:16

The LORD is known by the judgment which he executeth: the wicked is snared in the work of his own hands. Higgaion. Selah - Question: What does Higgaion and Selah mean? Answer: Both Higgaion and Selah are used numerous times in the Old Testament. They occur together in Psalm 9:16. The meanings of these words are uncertain. We observe Higgaion in such passages as Psalm 9:16; 19:14; 42:3; Lamentations 3:63. In Arabic, the root gives a deep vibrating sound, like the murmering sound of a harp (Psa. 92:3). The International Standard Bible Encyclopedia states that it may be derived from the Greek versions of Psalm 9:16 and takes it to mean an instrumental interlude. It may also mean a soliloquy or meditation such as concerning the judgment of God (Psa. 9:16), the words and work of God (Psa. 19:14), and the loving kindness and faithfulness of God (Psa. 92:2-3). In the Septuagint, Selah is translated as daplasma (meaning a division). It occurs in Habakkuk 3:3, 9, 13 and 71 times in the Psalms. It is used in 39 of our 150 psalms. Of those 39 psalms, 31 they are ones handed over to "the chief Musician." So, pause and meditation may be the predominate idea. In addition, it may mean to lift up (Hebrew, salal) or, in some definitions, a repetition, end of a strophe, or a recurring symphony. In his sermon named "HIGGAION!" about Psalm 9:16, Archibald G. Brown, on August 17, 1873, at the East London Tabernacle said this: "When the psalmist wrote this verse, and reached the words 'The wicked shall be snared in the work of his own hands', he seemed to be overpowered at the terror of the thought, and so put a full stop and wrote in the word 'Higgaion!' As much as to say, 'O my soul, meditate on the tremendous truth my hand has penned, and let all who read the same meditate.' And then after 'Higgaion' he puts 'Selah'. He would have there to be a solemn pause. Oh, I would that there could be just one moment's solemn pause in our meeting tonight. Would that there could be a Selah, a Higgaion! Friends, shall there be? I put it to you. 'The Lord is known by the judgment which he executes; and the wicked shall be snared in the work of his own hands!" Now let us just for a moment meditate on that. Let there be a solemn Higgaion, and let every heart ask itself the question, 'How do I stand in reference to this tremendous truth?' *Answer by Dr. Joseph R. Nally, Jr. (https://thirdmill.org/answers/answer.asp/file/47892)*

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Wednesday, December 20, 2017

Alpha Teach Yourself Investing in 24 Hours: An Analysis (part 43)

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