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Portfolio Turnover, What It Is and Why It Matters

I learned a harsh lesson about portfolio turnover during a recession. I was forced to pay capital gains taxes on distributions of a long-term mutual fund holding, even though I didn’t sell any fund shares and even though the fund value had dropped more than 20% that year.

This experience taught me about portfolio turnover and related expenses, including taxes (along with the generally wise and tax-efficient approach of purchasing mutual funds for tax-advantaged accounts, not taxable ones). Since then, I have paid more attention to this notion, not in fear of turnover but recognition of its potential costs and benefits.

So, what is portfolio turnover and why does turnover matter?

5 Ways to Identify Your Bucket List Items

When contemplating saving and investing money (rather than spending immediately), typically, I’ll consider a specific purpose and timeline. If unsure exactly what my future life will look like, I can use these financial goals as a basic guide.

While doing the sometimes dull work of financial goal setting, I might also create a bucket list, a process that is generally more fun. I haven’t always kept such a list. But now that I have the time, money, and desire to pursue bigger projects and trips, here are ways I’ve learned to identify items for my bucket list:

Dogs of the Dow, Investing Strategy Explained

Investors are often involved in a quest to beat the market. That is, they want to make investing decisions that deliver performance results better than a passive investing strategy, such as one involving the purchase of market-index funds.

The Dogs of the Dow represents an investing strategy developed with the goal of outperforming the Dow, a market index. It involves using a simple formula to identify the top 10 undervalued stocks among the Dow holdings, which consist of 30 blue-chip stocks. There are derivatives of this strategy, also designed in hopes of outperforming the market.

5 Myths About Financial Planning (and How to Recognize the Right Path)

Getting financial guidance should be straightforward. But, in my experience, the process of seeking expertise can take me down the wrong path if I’m not careful. Here’s how to recognize the right path.

In a meeting with a financial professional, I may freeze up when quizzed about financial goals, fret that I haven’t accumulated a fair amount of money based on my age and income, or fear being judged for past mistakes. Worse, I may get frustrated if a professional establishes financial targets that are out of sync with my capabilities or recommends products that seem pricey or not aligned with my expressed needs.

I have written about what shouldn’t happen in a financial advisory relationship. But knowing how things should proceed is equally useful. Recently, I spoke with Peter J. Creedon, CFP (Certified Financial Planner), ChFC (Chartered Financial Consultant), CLU (Chartered Life Underwriter), and founder/CEO of Crystal Brooks Advisors, a Registered Investment Advisor (RIA) in regard to common misperceptions about financial planning.

He dispelled common myths and explained how the planning process ought to proceed. Here are five myths and truths about financial planning and planners: