In the story of Alice in Wonderland, Alice arrives at a fork in the road and wonders aloud which road to take. A smiling Cheshire Cat appears and asks her what her destination is, to which she replies, “I don’t know.” The toothy cat then proffers the only possible response, “Well, then it doesn’t matter.”
At its core, diversification is deliberate uncertainty recognizing that it is difficult to know with particular subset of an asset class, or sector is likely to outperform another. Broad diversification, done effectively, seeks to capture the returns of different types of investments over time but with less volatility at any one time.
Until recently, many retirees have been able to rely upon the three-legged stool of retirement income sources: A defined benefit pension plan that guarantees a lifetime income, their own savings, and Social Security.
Watching the roller coaster ride of the stock market can make many investors queasy. Even though the stock market has, historically, always trended up, investors can’t help but feel uneasy as they watch the values of their portfolios rise and fall with the market.
With the holiday season looming, it’s not too soon to do your year-end tax planning. One of the consequences of achieving financial success is that, what was once a relatively straightforward tax return increasingly becomes more involved as more tax issues come into the picture.