Frequently Asked Questions
According to academic studies, timing the market reliably is pretty much impossible for human beings. There are just too many variables to analyze.
And our emotions get in the way. Too often, people will want to sell when the market is low and buy when the market is high. That's a recipe for losing money.
In our opinion, the best way to handle uncertainty in the market is to have a financial plan that establishes your goals and your risk tolerance and to invest accordingly.
According to the National Association of Personal Financial Advisors there are three main ways for a financial advisor to be paid:
Commissioned and fee-based advisors receive a compensation based on the specific financial products they sell to you. This creates an inherent conflict of interest for the advisors. Fee-Only planners are compensated directly by their clients for advice, plan implementation and for the ongoing management of assets. By definition, fee-only planners do not accept commissions for their work. As a result, a significant source of conflict of interest is neutralized.
Fee-only financial advisors may be paid hourly, as a retainer, as a percentage of assets (AUM), or as a flat fee, depending upon the planner you choose and the nature of your needs. At Insight Financial Strategists, we are fee-only planners.
Simply put, asset allocation refers to the strategy of dividing your investments across different asset classes such as bonds, stocks, real estate and others. The aim of asset allocation is to control risk by diversifying a portfolio. Depending on the goals of an investor, a portfolio can be allocated for more or less risk.
In everyday financial life, we think of risk as the possibility of losing money in our investments, especially of losing it all.
In academic finance, "risk" refers to the probability that the returns of an investment will be different than expected. In finance, risk is often measured by "standard deviation", a statistical measure of the volatility of a value compared to its historical average. it is possible to dial the risk in a portfolio to achieve specific goals.