Are investment returns what you expect?
Is history a reliable guide to future investment returns? When doing long term cash flow projections for clients, it is necessary to make some “guesses” of future investment returns. Unfortunately, for the 50 year cash flow projections we do, the results are very sensitive to these guesses. If they prove too high, without any adjustments…
How does an active investor capitalise on changing times?
Fundamental analysts spend an inordinate amount of time with Microsoft Excel software trying to gauge the magnitude and direction of the future cash flow evolution of a company with detailed projections around revenue, margin and earnings trajectory. Yet over time, the lesson one learns is that, more often than not, it is what is not…
What are some of the advantages – and risks – of trading CFDs instead of shares?
Unlike traditional shares, CFDs are traded on leverage. Leverage lets you trade the markets using a small fraction of the total trade value. For a smaller initial investment you can take the opportunity to profit from market movements and diversify your trading strategy and portfolio. Potential gains can be magnified, as you only deposit a…
How much do I need to retire? (revisited)
The “Rule of 25” sets a daunting target, for many When we talk to prospective clients who are at or close to retirement, one of their inevitable questions is “Have I saved enough to retire?”. We explain that while we need to understand their situation in greater detail, our rule of thumb is that they…
How do you give financial help to your adult children?
As many of our clients approach or exceed their version of financial independence, it’s not unusual that they turn their attention to whether and how they can provide some financial assistance to their adult children. In Sydney, in particular, many believe that the only way their children will be able to enter the property market…
How to invest without forecasting
The dangers of letting both your emotions and predictions/forecasts influence investment decisions are real. Often, your feelings will provide exactly the wrong guide to appropriate action. But if you aren’t to rely on feelings and/or forecasts, how do you make investment decisions? One approach, that we favour, is to determine an appropriate risk exposure or…
How To Build A Trading Plan From Scratch
How do you go about building a trading plan? What do you need to consider, and what type of trader should you be? The last question is a logical place to start – deciding the type of trader you want to be, and understanding why. Type of Trader When creating a trading plan, a trader…
How To Calculate Your Net Wealth
“Living for today” has future consequences We often hear people say that they don’t plan too much for the future. They’d rather live for today, as they argue you don’t know what’s going to happen tomorrow. And many of these people spend today as if there isn’t going to be a tomorrow. Also, it’s not…
What are straddles and strangles in options trading?
Question: What are straddles and strangles? Response: The straddle and strangle are popular option strategies that involve a simultaneous buying or selling of an equal number of call and put options with the same expiration date. The only difference between the strategies is that the strangle has two different strike prices, while the straddle has…
Do I get dividends from CFDs? And how does the process work?
Question: Do I get dividends from CFDs? And how does the process work? Answer: One of the attractive things about CFD share trading is that, by holding a CFD, you are eligible for many of the benefits that you would receive if you held the shares outright through a traditional means of trading. This includes…
