Investors hear plenty about asset allocation—what percentage of their investments should be in stocks, bonds, real estate or other asset classes. But asset location—the type of account in which you hold an asset—can be even more important when it comes to taxes: Sin...
Because of thetime value of money—the concept that any given sum is worth more now than it will be in the future because it can be invested in the meantime—the first $1,000 payment is worth more than the second, and so on.
However one manages finances, financial planning starts with understanding spending needs and priorities. In this chapter I give a very simple way to estimate spending needs—essential for knowing how much of savings to hold in stable assets (like bonds
U.S. Federal Reserve interest rates: These have a profound effect on expected returns across various asset classes. When rates rise, bonds may become more attractive, potentially lowering expected returns on stocks as investors shift their allocations. Conversely, lower rates can drive investors towar...