This article is the second of a five part newsletter series I published a couple of years ago on investments – Letting Your Winners Run and Protecting Your Downside (this stuff never gets old!) Part 2 0f 5 – Asset Allocation and Industry Diversification: In Part 1 of this 5 part series on general investing we discussed that there are ways to limit losses and let your winners run when you invest your money. Asset Allocation is the process on investing a certain percentage of your money in different asset classes, the object being that different assets behave differently – some are going up when others are going down. The object of the allocation is that most of the time most of the assets are going up, so the allocation will over time generate positive returns. Allocation classes are normally stocks, bonds, commodities (gold, silver, land, oil, etc) and of course, cash. A lot of the allocation classes can be further broken down (stocks into large, mid and small cap stocks; most catagories into domestic and foreign investments, etc.) It is best to figure out what percentage to allocate to each asset class, maybe at the first of the [...]
Financial Musings of a Burbank CPA: Letting your investment winners run and protecting your downside Part 1 of 5
First of all – Happy Martin Luther King’s Birthday. Hope you have the day off (my firm has the general policy that the owner doesn’t get holidays off during tax season, which started after my wife’s birthday on January 9th. Oh well.) This article is the first of a five part newsletter series I published a couple of years ago on investments – Letting Your Winners Run and Protecting Your Downside (this stuff never gets old!) Part 1 0f 5 – Investing to protect assets and minimizing losses: This week I am beginning a five part posting on general investing. I used to have my series 7 and 66 brokerage licenses and have managed my own investment accounts for about 20 years. There are many ways to find stocks, bonds and other assets to invest in – investment newsletters, research services, your brother in law, etc. but the most important item is to protect your investments so that you minimize losses and let your winners run. The old adage of buying low and selling high is so obvious we usually pay it lip service, but it is amazing how many people don’t really follow it. Next in Part 2 I [...]
Musings of a Burbank CPA: Things to Think About When You Buy a House
If you are tired of renting and are planning to buy a house in the near future, there are some things to seriously think about before buying: 1. FIGURE OUT WHAT YOU CAN AFFORD: Figure out all the monthly expenses that will go into the house; always remember the mortgage, real estate tax, utilities, association fees (if any), insurance, plus repairs and other potential emergency items. Also figure a down payment on the house to reduce Private Mortgage Insurance plus the mortgage payment before buying a house. Be sure to figure in any tax savings from real estate tax and mortgage interest deductions to reduce your monthly expenses. Put it all together and see what you can actually pay for a house within your budget. 2. CHECK OUT THE HOUSE PAPERWORK AND OTHER ITEMS: As well as a home inspection, make sure all renovations are permitted and all other items are in order. You need a good realtor who can check out items on the MLS, then follow up with associations and other organizations before you get in too deep. 3. PICK OUT A HOUSE YOU LIKE: Buying a residence you don’t like owning just to buy something [...]