Investment Articles

There is a difference between being afraid to invest and be cautious. When you are considering whether or not to buy stocks, invest in ETFs or purchase mutual funds for your financial future being afraid to act does nothing but insure that you will not be successful.

Being cautious with your investments is totally different from being afraid. Caution should be part of every investment decision. But there are precise ways to exercise caution so you can be successful with your investments and grow your money.

Growing your money is what investing in the stock market is all about. If you grow your money you accomplish many key factors including:

• Less stress because your portfolio or checkboo9k is expanding
• Comfort in knowing you will have enough money to live in retirement
• Comfort in knowing you have a financial cushion if it is ever needed.
• Knowledge you can dream about big purchases or trips and they can become a reality.

So how do you invest cautiously yet with confidence and knowledge that your money will grow? A few simple premises:

• Pick a proven method of analysis to guide you in your evaluations.
• Pick a software program that enables you to invest to meet your objectives.
• Pick a software program where help from a real human being is just a quick phone call or email away.
• Back test your investment strategies or ideas to make sure they are most likely to see going down the road.
• Pick a software program that makes reading charts clear and easy.
• Pick a software program that goes beyond charts and evaluates your stocks, mutual funds or ETFs on other factors, especially in comparison to the general market and other stocks, ETFs or funds.
• Use a software program that tells you when to get out of the market and preserve your money.

If you follow these principles the fear of investing, the fear of losing, will be diminished. Will it go away completely? No. We are all human and all afraid of losing but if you invest with caution and base your decisions on solid recommendations your likelihood for success jumps dramatically.

Will you ever lose in the stock market? Yes. Not every decision, even with the best of analysis is going to turn out right. But remember that a successful baseball play is one who bats over 300 which means he gets a hit one out of three times. A successful quarterback never throws each pass for completion, just the majority. On the other hand if you can score a gain on 60% or 80% of your investments while keeping those losing choices to a bare minimum your portfolio, your checkbook is going to see substantial growth.

You can see substantial investment success if you follow these key principles.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana.

View his software at: http://www.dynamicinvestorpro.com

The person who often assists a company by guiding them through the different procedures and techniques of investment, in return for compensation, is an investment advisor. Their role is to help guide companies and give them all the necessary information about an investment before the company enters the stock market. There are different kinds of investments from purchasing and selling of shares in the stock market to other security transactions. An investment advisor is the person who can help make proper sense of a business’s financial plans.

Investment advisors, also abbreviated as IA, are often associated with various government regulatory agencies, while some remain associated with the Security and Exchange Commission. They are usually paid with either a part of the asset dealt by them, while some prefer hourly fees or a fixed price for their assistance. From business firms to individuals and even government bodies, investment advisors are used everywhere.

Whenever a company wants to make a wholesome investment, they need to make sure that they choose the correct investment advisor for their cause. The first thing about the investment advisor is that they must be reliable and trustworthy. Sometimes, people tend to go for seeking help from advisors but end up calling their own doom as they might be betrayed by the advisors. The advisor must be capable of making proper decisions. If a plan is to make some investment in purchasing shares from the stock market, be careful to read the offer document carefully before investing. Lack of foresight can lead to severe financial losses in such cases. The advisor must have proper knowledge of the trading policies and should be able to tell their employer clearly when to invest and when not to. The stock market is something that cannot be trusted as the values of shares keep changing in every hour. The investment advisor is one who needs to be aware of the pros and cons of a particular investment.

Another kind of investment is the insurance. Different insurance companies have their own insurance advisors. These advisors assist individuals or companies to insure their lives and estates, property and business for a definite investment and for a limited span of time, after which the insurance has to be renewed. Such investments also involve risks, like a person having life insurance will not be benefited in case of any unnatural death. When it is not possible for the common people to know the details in great depths, it becomes the responsibility of the investment advisor to guide their client sensibly through the legal proceedings before they make an investment. In such cases, the advisor is to be blamed for unusual loss without the investor’s knowledge. Thus, it becomes very important to choose the advisor properly and only after knowing that, they will be able to help a client without letting them down.

Located on Houston, Texas Paul Comstock Partners is a fee only, private, independent, investment and wealth advisory firm. For more information call now 713-977-2694 or visit our website http://www.paulcomstockpartners.com/.

An independent investment advisor is someone who will help you with your long-term investment goals. They will handle all types of investing, which is usually done to plan for retirement. The earlier you get started on retirement planning the better, but in a lot cases, younger adults don’t think about these things.

The mentality of “I have plenty of time” is common among young people, yet if they took the time to get started early, it becomes a way of life that they don’t really even have to think about and by the time they reach retirement, they have a huge nest egg that can be the difference between struggling as an elderly person, or having a life that is stress free financially.

Independent investment advisors are trained in many aspects of investing. Some may specialize in stocks and bonds; others will be knowledgeable in precious metals or mutual funds. Most investment firms will have people who are knowledgeable in all aspects of investment options so they can give their clients the best possible advice for their investment choices.

Now there are some independent investment firms that will also help with financial planning and business planning as well, so if you have those needs, you can look for a place that keeps it all under one roof. That is probably the easiest if you can find a firm you like, because then all your interests are in one place and that makes keeping it organized so much easier.

Whenever you have a question about investments, business planning, or financial goals, your independent investment advisor will be there to help you sort things out and choose the right plan that fits with all of your goals. Knowing that the future of your family and yourself is secure, or being secured if you are just getting started, is truly a fantastic feeling.

In today’s economic uncertainty, having some security and stability in place can be the difference between keeping your home and losing it later in life when you need it most. Your investment advisor will be able to make sure you have all your bases covered and that every aspect of your financial life is secure.

Some questions to ask a potential investment advisor you are considering would be:

- What is their experience? Ask them to describe what they’ve done for others, and don’t be shy about asking for references. If they are good, they will be happy to pass that information on and should have it on hand.

- What are their qualifications? It is important to find someone who has documented experience in all aspects of investing and financial planning. Make sure they are up to date on the latest information and check them out with the Certified Financial Planner Board if they are certified.

- Find out what services the firm offers their clients.

- Get a feel for the investment advisor’s style. How do they like to do things? Are they aggressive and opinionated? Are they too passive and indecisive? Find a style that matches well with what you find calming and secure for you. Also find out if they are the ones who do all the work on your portfolio or if it’s given to others to do and they just oversee it.

Independent investment advisors are a real value to those who are ready to take hold of their future with both hands and make sure their families and themselves are safe and secure. When you find a good one, you should be sure to develop a good relationship with them, because they could be in your life for a long time to come.

Located on Houston, Texas Paul Comstock Partners is a fee only, private, independent, fiduciary and investment advisory firm. For more information call now 713-977-2694 or visit our website http://www.paulcomstockpartners.com/.

How do you protect your investments with stops? This is a good question. Should you sell your mutual funds, ETFs or stocks only when a strategy says so, even if it is a strategy updated weekly or monthly? Or should you set stops with your broker following the same stop rules as in your strategy, but letting them activate whenever necessary?

I usually set the stops with my online broker and if they execute mid-week on my weekly strategies, I simply wait until the weekend to get the signal of what action to take from my investment analysis software This way I am protected from major losses. This doesn’t work well, however if you set stops that are really tight, like one or two percent, because a fund, ETF or stock can rebound that amount when the markets are topsy turvey.

Let me give you an example: let’s say that my investment program recommended buying EWD and VALU. The ETF, EWD (ishares Sweden) has a stop of 4% and the stock, VALU (Value Line) also had a stop of 4%. With these somewhat tight stops set with an online broker the positions easily stopped out and were sold with the recent market gyrations. Both tickers began a recovery within about 10days and were climbing steeply in the few weeks afterwards. If the stops had been set to 6% they would have still been sold because the recent market drop was so extreme.

However the loss would have been minimal because the stops were used mid-week.

In other situations where the markets do not have extreme movements on an almost daily or every other day basis, stops can move you out of a position one day and then the same position recovers and soars ahead in the following days. Again, the solution depends upon the stop percentage.

In any case, as a “weekly” trader, if my stops with the broker close me out of a position mid-week I wait until the end of the week for my software to tell me what to do next. I don’t try and second guess what the program will recommend.

The hard part of this process is remaining positive. When you are stopped out, it means you took a loss, but the positive point of view is that your loss was minimized. The even more important factor to keep in mind is that if your strategy of buy-sell rules with stops is based on a thorough back test analysis and the history of this strategy has produced excellent returns, strong gains, then yes, a few losses should be expected, but the long term outlook is for further gains and more money in the bank or portfolio.

I said I usually set stops with my online broker, but I don’t set them for every position. If I knowingly have purchased a stock or fund for the long term, I won’t set the stops with the brokerage, but will follow the recommendations of my investment software if it says to sell, even if I have only owned the position a short time. In these situations my buy-sell rules have settings designed to hold a position a long time extreme situations where the market or the position is taking a dive.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana. View his software at: http://www.dynamicinvestorpro.com

In an age where environmentalism and social responsibility have become a part of the mainstream consciousness, there has been a change within financial markets. The bottom line is no longer the sole decision making factor that investors typically take into account. A recent trend has been to invest in companies that align with your own personal set of beliefs. This phenomenon is known as ethical investing.

Investors who subscribe to this theory have to take into account a number of additional factors when deciding on companies within which to invest their capital. How they make this decision depends entirely on that individuals own ethos, but this typically includes concerns such as the sustainable practices of the company and the relative moral value of the products they produce.

Ethical investors will look to buy stock in companies that strive for positive change over pure profiteering. In other words, ethical investors partner up with ethical firms; like attracts like. Whether this means investing in firms who specialise in the research and development of new technologies, or companies who simply carry out their day to day business in an ethical fashion, these investors will choose stock upon what best represents their world view.

Just as they will be attracted to firms that share common goals with them, ethical investors will be repelled by those that don’t. This could be in the form of a geographical bias, by refusing to invest in firms from certain countries because of a poor environmental record. Perhaps the government in that nation is undemocratic, corrupt, or simply ineffectual from a humanitarian standpoint; if they fail to meet the ethical standards of this particular person they will refuse to invest, no matter the potential payoff.

In a similar fashion, ethical investors will shy away from individual firms with similarly unscrupulous track records. This will also tend to include various well known brands with a questionable history of underpaying their overseas labour, and any other business practices judged to be unsavoury in the eyes of the ethical investor.

The fact that life is not a simple question of “good versus evil”, especially not in the business world, only serves to complicate matters. Some firms which have previously been deemed to have acted in an unethical way have begun to clean up their act. Does a recent change of heart make up for a history of success built on an immoral foundation? For the ethical investor as a whole, there is no clear cut answer. Just as our own personal code of ethics is largely subjective, some investors will have stricter rules than others about who they will do business with. When talking about the “ethical investor”, it is less a case of membership and more an indication of a general movement away from purely financial based decision making.

This is a modified article from Mark Lister. To read the complete article visit www.craigsip.com. Craigs Investment Partners Limited (formerly ABN Amro Craigs.) is an NZX Firm that was established in 1984. It is one of New Zealand’s largest and most established investment advisory firms. View investment options here.

Prosper.com and The Lending Club make it possible for individuals to invest in private, unsecured loans taken out by individual borrowers. An unsecured loan is, by its very nature risky. Prosper investing and Lending Club investing take some of the risk out of the equation by allowing the investor to choose loans and risk levels. The purpose of this article is to address the exact nature of those risks.

If a borrower stops making payments on a loan in which you are invested, the bank will take action. If the borrower actually defaults, the bank will pursue collection action. This might or might not result in you recovering some or all of your investment. The smart money says that your investment will not be recovered. Your job, if you have done it well, is to make sure that this default is a bump in the road rather than a disaster.

Avoiding a disaster begins with taking a close look at the loans and borrowers you can choose from. A borrower’s loan will have a letter grade issued by Prosper or The Lending Company. Prosper investments are graded A-E, and then HR for high risk. The Lending Club investments have over 25 subgrades, namely A1-G5. Different interest rates are attached to each grade, and they range from 7% all the way up to over 30%. So why not just invest in the high interest loans?

The reason why that is a bad idea is because the higher interest rate loans carry much higher risks. Prosper, whose loans creep into the high ranges more readily than The Lending Club’s, attracts more borrowers who present a risk of default. This is especially true given that Lending Club fees and Prosper fees, as well as a 1% commission charged to investors, are not included in the face amount you are getting from the loan. The borrower is actually paying more than what you are being paid.

The truth is, though, very few Prosper and Lending Club loans can truly be said to be low interest. There is some default risk no matter what the interest rate. The only sure way to protect oneself from default risk is to diversify the loan portfolio.

This means spreading your money across as many different loans as possible. Even a single loan at a relatively low rate can pose a risk. What if the borrower loses his job? He may default and you will have lost not only future interest, but your investment as well. This could be avoided by spreading the same money across many other loans. Recall that the minimum Lending Company investment or Prosper investment is only $25.00. Both Prosper investing and Lending Club investing can be made easy by investing in the pooled noted above

Unless you can truly afford to lose money, it is very important to diversify. The real world risk of default can be drastic. Even as few as 15% of loans going into default can drop the return on an investment you thought would pay 25%, to one that might only pay 7%. Both companies publish projected default rates for any grade of loan, which can reduce expected performance rates anywhere from 2% to 10%. Check these figures carefully and read the prospectus before investing.

Lending Club investing and Prosper investing are excellent vehicles for a potentially high rate of return. However, a Lending Club investment or a Prosper investment can carry significant risks, especially when the investor is chasing higher returns. Always check with an investment advisor before deciding.

Tom Zheiner has years of experience in evaluating borrowing and lending. He is an expert in peer to peer lending, which presents somewhat risky, but potentially rewarding, income investment opportunities. Please check his website, http://peerlendingtoday.com for more information.

A recent article in a noted financial magazine discussed the folly of market timing versus buying and holding good stocks. The author pointed out how a ten year investment in a strong stock could produce substantial gains, while admitting that buying and selling the same stock a few times during the 10 years produced almost twice the results…but only if you timed the purchase-sale correctly. In essence, with many examples and reasons, he shot down the concept of market timing while making his case for buy & hold.

The true folly of anti-market timing arguments is that they always focus on tracking particular tickers symbols and questioning the ability to buy or sell at the right time. You could argue that all programs that give buy-sell recommendations are market timing programs, but that would be stretching the argument way out. The advantage with some software is that they can tell you when a ticker is going down and when another ticker is outperforming your current holding, even if your current holding is still going up. This power means that losses are limited by your sell rules and gains become cumulative so as to far surpass results from simply holding an individual ticker.

The folly with taking a buy/hold approach has been fully illustrated with our recent recession and again with the recent turmoil and drops in the markets. News headlines during the recession pointed out how retirees had lost 40-60% of the value of their portfolios. The latest market swings have been almost as dramatic.

While many portfolios recouped a lot of their value when the markets swung up from the recession lows few, if any, fully recovered and then surpassed their pre-recession level to the same degree as the markets climbed out of the recession if they were still holding the same positions.

I know the recession hit my portfolio – but not nearly as bad as most because the software I was using told me to sell and move to cash. The same software then told me to buy just as the markets were swinging up so my gains were based on about the same value as before the crash.

The recent decline in the markets also triggered the software I use to sell and I moved 80% of my portfolio value into cash, placing me in an excellent position to obtain future gains as the market rebounds.
In other words, buy and hold means your stocks and your portfolio are going to jump upon a roller coaster ride. While I like riding the Space Mountain roller coaster at Disney World, I would rather my portfolio traced a route more like going on a scenic drive along a valley floor that has a few ups and down but is basically moving on a constant upward path – kind of like following the Missouri up river to its high mountain peak origins.

The key is not simply market timing, but rather to picking positions that are moving ahead better than others, even better than what your current holding is doing. This is accomplished by implementing:

• Relative strength analysis using alpha or relative strength momentum
• Implementing sell signals based on stops, ranking level and market movement – just to mention a few.

By selling to strength, limiting losses and exiting the market when risk becomes too great, your portfolio has a better chance for substantial gains with minimum losses.

Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana. View his software at: http://www.dynamicinvestorpro.com

Reading the recent business headlines, confidence surveys and economic strategy reports regarding the market volatility in Greece and the US, it is apparent that we are all concerned about things continuing to head downhill. This market volatility, including the insolvency issues in Greece and high unemployment rates in the US, will continue as governments reluctantly accept this outcome and in the aftermath global economic growth (and consequently investment returns) will remain below average for years to come. However, there are still some positive areas to be encouraged by, amongst the long list of worrisome points.

1. Share valuations are reasonable.
The price-to-earnings ratios in New Zealand, Australia and the US indicate good value for investors. The NZ market is currently trading at an average PE ratio of 13.5 (slightly less than its long-term average of 13.7) and the AU market is at 11.7 (some way below its long-term average of 14.3). The US market PE is currently 12.2, not quite as cheap as the lows reached in the financial crisis, but also much lower than the highs of over 16 that were reached in 2007.

2. Dividend Yields Above Long-Term Average
Dividend yields are (in a lot of cases) higher than those available in term deposits and fixed interest may provide some share price support as income-seeking investors have limited choice.

NZ Shares & Property Trusts – generating an annual dividend yield of 7%
AU Shares – yielding around 5% are achievable
US Share – yield on 10yr treasury bonds being outpaced by share markets average dividend yield (rare occurrence).

3. Interest Rates Likely To Remain Low For some time
Official Cash Rate expectations have taken a turn from the expectation that they would be raised by 0.5%, with local interest rates on hold for now and any move in the AU rates likely to be down rather than up. The vast majority of us are sitting on floating mortgage rates – keeping costs low for borrowers, assisting consumer and business sentiment and also helping yield the gap between shares and other forms of investment.

4. Oil Prices Have Fallen From Their High
Oil is a key component for most sectors of industry, and oil prices have a large impact on consumer confidence. The West Texas oil is 25% lower than its May high and Brent crude is 12% off its highs.

5. Corporate balance sheets are much stronger than they were in 2008.
The corporate world is on a much more secure footing than it has been in the past. Average debt levels in Australia are now at 27% (compared with the long term average of 50%). Corporate debt levels in New Zealand and the US have fallen by a similar amount.

This is a modified article from Mark Lister. To read the complete article visit www.craigsip.com. Craigs Investment Partners Limited (formerly ABN Amro Craigs.) is an NZX Firm that was established in 1984. It is one of New Zealand’s largest and most established investment advisory firms.

Online share dealing accounts can offer a quick and easy way of starting out in stock market investment if you’re looking for a more hands on approach investing and are prepared to put up with a degree of risk.

How do I trade online?

Online share dealing for the individual involves setting up an account and buying and selling shares through it. When you set up an online share dealing account you will usually be required to pay a flat rate of between £6.00 and £20.00 per trade. Some accounts will also charge a quarterly membership fee too. You should make sure that you are aware of all the costs involved before committing to one particular account.

There are many online share dealing accounts available from a range of providers and you can often open an account simply by registering a debit card and providing a few personal banking details.

What do I do next?

1) Decide your limits. Before you begin you should decide on a maximum amount you would like to invest with. Trading can be exciting and fast paced, but you should be completely clear about your limits and the risk involved to your capital before you begin.

2) Do your research. It’s always best to invest in a company you already know something about, and research can help you to gauge risk involved in a particular company. Many share dealing account providers will offer a short trading history on individual companies, use this to your advantage

3) Diversify. Rather than buying many shares in a single company try to spread your investments across several companies. That way if one company goes down it will have less damage on your overall share portfolio.

Your shares will be held in an online portfolio which will also hold information about current share prices and any profit or loss you may have incurred. It’s best not to trade your shares too often as you will probably be charged per trade and these charges can add up and eat into any profit margins.

Is it right for me?

Share dealing online is most suitable for those will small sums to invest and feel comfortable with the processes and risks of investing in shares. It’s certainly not everyone’s cup of tea and you may want to speak to an investment advisor if you have a large sum of money to invest or if you are unsure about any aspect of investing in shares.

John T Hughes writes for Share Dealing Account, a leading online source of information on share dealing accounts in the UK.

The Thrift Savings Plan currently offers ten investment funds. Five are U.S. and international stock and bond index funds: they replicate the performance of broad market indexes. The other five TSP funds, the Lifecycle Funds, are professionally managed portfolios which consist of a specific target allocation of the 5 individual TSP index funds.

The TSP Funds contain a diversified portfolio of thousands of individual stocks and bonds. Investing passively in index funds such as these is generally considered to be a good retirement savings strategy. The alternative is for you or an investment manager to actively pick individual stocks and bonds to buy and sell. Apart from being impractical for individual investors, this latter strategy usually also leads to inferior investment results: research has shown that most professional active fund managers under-perform a passively managed portfolio of index funds such as the TSP funds.

Here’s a summary of the five primary TSP Funds:

The G Fund is invested in U.S. Treasury securities which are guaranteed by the U.S. government. The nice thing about this fund is that it’s practically risk free (your investment is guaranteed not to lose any money), and yet the interest rate is substantially higher than what you would earn in other safe investments like bank savings accounts, certificates of deposit, or money market funds. If you are very risk-averse, this is definitely the place to park your savings.
The F Fund is a bond index fund, invested in high-grade U.S. government and corporate bonds. Its performance is very similar to the private sector iShares Barclays Aggregate Bond ETF.
The C Fund is a U.S. stock index fund that mirrors the returns of the S&P 500 Index, which consists of large U.S. corporations. Its returns are essentially the same as the SPDR S&P 500 ETF.
The S Fund is invested in the stocks of small to medium-sized U.S. companies. It’s designed to complement the C Fund, so if you invest in both, you basically own shares in almost all U.S. stocks. There aren’t a lot of index funds that track these companies, but if you own both the TSP S Fund and C Fund, then your investment returns will correlate closely to a broad U.S. stock market index fund like the Vanguard Total Stock Market ETF.
The I Fund is allocated to international stocks. It allows you to diversify your portfolio by investing in the stocks of companies in more than 20 developed countries in Europe, Australia, and Asia. There are several private sector equivalents to the I Fund, including the iShares MSCI EAFE Index Fund.

The other five funds, the TSP Lifecycle Funds, consist of professionally managed investment portfolios designed to meet investment objectives for a specific target date (the date on which you plan to begin withdrawing your money). The L Fund assets are invested in the individual TSP funds (the G, F, C, I, and S Fund) according to a target portfolio allocation which is adjusted every 3 months. The target allocation starts out risky, with a large percentage of stock funds such as the C, S, and I Fund. As the target date approaches, each L Fund becomes gradually more conservative, by shifting a larger portion of your assets into bonds such as the F Fund and G Fund. This investment strategy assumes that, while you’re still a long time away from retirement, you’re willing to take on greater risks in order to increase your potential investment returns. Also, while you’re still at the start of your career, you have a longer period to recover from potential investment losses, considering that you’ll continue to make monthly contributions to your account for many years.

Depending on your personal circumstances and target retirement date, you choose one of the five L Funds: L Income, L 2020, L 2030, L 2040 or L 2050 Fund. The L Income Fund is the most conservative asset mix and assumes that you’ve already started withdrawing your savings. The L 2050 Fund is the most aggressive allocation, currently 90% stocks and 10% bonds.

Benefits and Disadvantages of Investing in the TSP Funds

Many investment advisors recommend that for long-term retirement savings, you buy and hold a low-cost, broadly diversified portfolio of domestic and international stock and bond index funds. With the available TSP investment funds, you can do an OK job at this. By investing in all five individual TSP funds, or in one of the Lifecycle Funds, you’ll have a decent portfolio, with an ownership share in thousands of U.S. and international stocks and U.S. bonds. And the TSP funds have extremely low annual expense ratios, several times lower than comparable private sector mutual funds and ETFs, keeping more of your money working for you.

So what’s wrong with the list of currently available TSP investment choices? Some investors want to own Emerging Markets stocks (in addition to the Developed Markets international stocks in the TSP I Fund). Or an allocation to real estate (REITs), or inflation-protected securities (such as TIPS). And some would even like access to more exotic investments like international bonds, high-yield bonds, and other hedges against inflation (commodities and precious metals like gold and silver). Professional advisors would differ on how suitable these investments are. Most would agree that TIPS are a good idea, and for more risk-tolerant investors, perhaps a small allocation to REITs and Emerging Markets stocks.

One great benefit of investing in an L Fund is simplicity: it’s a “set it and forget it” investment plan. You choose an L Fund, determine your monthly contributions, and the fund administrators take care of everything else: regular portfolio rebalancing, and gradually adjusting the asset allocation as you approach retirement. But there are also a few downsides. First, the L Funds with the longer time horizons are fairly risky allocations (for example, currently 90% stocks and 10% bonds for the L 2050 fund), and you should make sure that you can stomach the inevitable volatility as a result of owning a portfolio dominated by stocks. If you’ve owned stocks for the past decade then you already know this: it can be quite a bumpy ride. Also, some investors want more control over their exact portfolio components, when to rebalance, and how soon to start shifting the allocation to a more conservative asset mix as they approach their planned retirement date. Some investors also prefer a tactical asset allocation, shifting their mix based on asset class trends, economic circumstances or other criteria. Owning a portfolio of the individual TSP funds will work better for these investors.

Learn more about the TSP Funds and get daily price and performance updates at http://www.tspfolio.com/tspfunds