{"id":7214,"date":"2013-12-02T14:24:20","date_gmt":"2013-12-02T22:24:20","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=7214"},"modified":"2016-12-21T07:28:17","modified_gmt":"2016-12-21T15:28:17","slug":"investment-management-serious-savers","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/investment-management-serious-savers\/","title":{"rendered":"Investment Management For Serious Savers"},"content":{"rendered":"

There are two kinds of investors in the world: Hands-on and hands-off.\u00a0Investment\u00a0management<\/a>\u00a0either requires daily attention from an experienced manager \u2014 or it doesn’t.<\/p>\n

Most of us would vastly prefer the latter approach. The attraction of\u00a0passive investing<\/a>\u00a0is that it doesn’t require one to delve too deeply into the “why” of the market. Why one stock rises and another falls. Why a headline that seems positive provokes a decline in the indexes.<\/p>\n

That’s an important distinction. Investment\u00a0management\u00a0isn’t about stock picking. Rather, investors should focus on\u00a0asset classes<\/a>.<\/p>\n

Let me explain a bit. Owning an oil company, say, Exxon, is an investment. Once you buy shares in a company like that (or any blue chip), you own a piece of the company.<\/p>\n

\"investment<\/p>\n

Like any owner, you have the right to sell your investment later at a profit. Or hang on to it and earn periodic payments in the form of\u00a0dividends<\/a>. At this writing, for instance, Exxon yields 2.67%.<\/p>\n

Add up the cumulative effect of those dividends, quarter after quarter, year after year, and either add or subtract the change in the share price from the moment you buy to the moment you sell. That number is the total return on the investment you made.<\/p>\n

If you decide to go that route, then you have to make sure you\u00a0buy stocks<\/a>\u00a0that are 1) likely to rise in value and 2) either pay a dividend or have\u00a0managements\u00a0that can intelligently reinvest into opportunities that will increase earnings.<\/p>\n

That’s what potential future buyers of your shares will be looking for. Time and again, data show that rising earnings feeds investor interest, often translating into higher share prices.<\/p>\n

Simple enough. But you have to be right about a number of things here: That a stock is not already overpriced. That the dividend is reliable or that\u00a0management\u00a0is reinvesting well. That a given company is not nearly bankrupt or about to be overtaken by competitors.<\/p>\n

If you use the asset class perspective, you don’t care about Exxon or any single energy company at all. You own all of them, using\u00a0index funds<\/a>\u00a0or\u00a0index\u00a0ETFs<\/a>. Currently, that’s 43 energy companies in just the S&P 500 Index.<\/p>\n

You still get the aggregate dividend payment. But now it matters much less which are winners and which are, in time, losers. What matters is that a portion of your investments are in stocks at a\u00a0reasonable fee<\/a>.<\/p>\n

Investment\u00a0management\u00a0simplicity<\/h2>\n

Now repeat the strategy with bonds, also using\u00a0ETFs. Now\u00a0real estate<\/a>, commodities and foreign stocks and bonds. From there, you build a\u00a0balanced portfolio<\/a>\u00a0of these investments and\u00a0rebalance<\/a>\u00a0them as the markets churn higher or lower.<\/p>\n

It doesn’t matter which direction.\u00a0Over time, true investment\u00a0management\u00a0helps you smooth out those highs and lows and dial back risk as your\u00a0retirement<\/a>\u00a0nears.<\/p>\n

That’s exactly how big\u00a0pension funds and universities<\/a>\u00a0do it, and it’s how serious savers should approach retirement as well: Always seeking balance, safety and prudent growth.<\/p>\n","protected":false},"excerpt":{"rendered":"

There are two kinds of investors in the world: Hands-on and hands-off.\u00a0Investment\u00a0management\u00a0either requires daily attention from an experienced manager \u2014 or it doesn’t. Most of us would vastly prefer the … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":7215,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[3],"tags":[],"yoast_head":"\nInvestment Management For Serious Savers | MarketRiders<\/title>\n<meta name=\"description\" content=\"Investment management either requires daily attention from an experienced manager \u2014 or it doesn't.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.marketriders.com\/investing\/investment-management-serious-savers\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Investment Management For Serious Savers | MarketRiders\" \/>\n<meta name=\"twitter:description\" content=\"Investment management either requires daily 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