Investing trends, topics, and money management strategies from professional money managers. The Darrow Wealth blog covers a wide range of topics, such as rebalancing your portfolio, setting your asset allocation, when to consider buying Treasuries, ways to diversify a concentrated stock position, and reasons to diversify globally.
What is a concentrated stock position? If one stock makes up more than 10% of your overall asset allocation, it’s probably too much. A diversified portfolio is the cornerstone of a risk-adjusted investment strategy. Since single stocks don’t move like the broader market, you’re exposed to much greater risk. Whether
You may want to think twice before taking the old saying cash is king too literally. Even though interest rates have risen in the last few years, over time, holding cash will yield a real negative return after inflation and taxes. Keeping cash is important, the key is finding the right
Stocks and bonds differ in many aspects, including the risk and return investors can expect. Because of these differences, stocks and bonds accomplish different things in an asset allocation. When you own a stock, you’re buying a piece of equity ownership in the company. With bonds, you’re buying the issuer’s
Although past performance is not indicative of future results, history can be a helpful lens to view bond performance during past recessions and bouts of volatility. Swings in the financial markets also highlight the benefits—and limitations—of diversification. During times of economic, financial, and political uncertainty, investors often wonder where to
Don’t stress out about every headline, stress test your retirement plan instead. Markets move every day and the news cycle is 24-7. Unfortunately, headlines often leave investors wondering what the news means for their portfolio and financial outlook. We can’t predict the future, but we can control how we prepare a
The idea of living off dividends in retirement sounds nice, but investors often don’t realize how much money they’ll need invested to generate enough income from dividends to cover lifestyle expenses. Over the last 30 years, the S&P 500’s average dividend yield was 1.98%.¹ So historically, every $1 million invested
Rebalancing your 401(k) and investment portfolio is an important part of a successful investment strategy. Your asset allocation is the percentage of your portfolio that you distribute between different asset classes, like stocks and bonds. Without periodic rebalancing, your investment mix will change as the market fluctuates, falling out of
How does the stock market perform when Republicans or Democrats have control of Congress vs when it’s mixed? Although volatility is often heightened during an election year, historically, US stocks have ended the year with gains more frequently compared to non-election years. The good news is that over the long-term,
The Federal Reserve is going to be raising interest rates (via the target Federal Funds rate). This is likely to happen next month. Rising interest rates affect the stock and bond market in different ways. Interest rates don’t have a uniform impact on sectors within each broad asset class, either.
Whether you’re managing your own investments or working with a financial advisor, setting the right asset allocation is key. But what’s the best way to apply an asset allocation to multiple investment accounts? Managing your accounts at the portfolio level vs each account individually is advantageous in many situations. A