One of the characters, Chidi, is incapable of making decisions. He’ll torture himself for hours over the minutiae of life, such as choosing between a blueberry or banana nut muffin. More important decisions take even longer.

Though it’s not named in the show, this type of indecision can be called “analysis paralysis.” It’s when you spend too much time going over the data and you end up frozen, fearing the consequences of making the wrong decision.

This happens to investors all the time.

Even trying to decide between a few mutual funds or ETFs can cause emotional agony for an investor.

Here are a few tips to help you get unparalyzed when it comes to making investment decisions.

1. Remember That You Won’t Be Right All the Time

You’re going to make a lot of investment choices in your lifetime. They won’t all be right.

I always tell my Oxford Income Letter subscribers that in any stock portfolio, most stocks will perform roughly in line with the market (give or take a few percentage points), a small number will be dogs, and a small number will be home runs.

You don’t have to be right all the time. And you won’t be. No one is. The key here is money management. If you keep a lid on the losses of the dogs and let the big winners run, your portfolio will be just fine. In fact, it will be better than fine.

2. Don’t Try to Call the Top or Bottom of the Market

Many people find reasons not to invest. In a bull market, it’s “the market is too expensive.” In a bear market, it’s “I’ll wait until the bottom.”

No one is capable of consistently calling market tops or bottoms. A few people have made amazing market calls, where they did in fact warn investors about impending bear markets or tell folks to load up because the bear market was over. But no one has done so twice.

So don’t try.

Bull markets often go up for much longer than you expect, and bear markets – while they can be nauseating – tend to be much shorter than you think they will be.

The average bear market lasts less than a year, and it takes an average of 2 1/2 years for the market to get back to its peak.

If your time horizon is only three years, you shouldn’t be in the stock market anyway.

If it’s longer than three years, then don’t worry about bear markets.

Invest at regular intervals – whether it’s monthly, quarterly, on your family members’ birthdays, etc. – set reminders on your calendar, and stick to your plan no matter what. I don’t care if the market is up or down 1,000 points that day. Don’t try to time the market.

The factor that has the greatest effect on investing success is time – not stock picking and certainly not market timing. It’s the amount of time you stay invested. Do everything necessary to keep your money invested for as long as possible, and ignore all of the outside influences that could scare you out of doing so.

3. Make It Fun

Investing should be taken seriously. Your money and financial future are at stake.

That said, you’ll be a better investor if you’re enjoying it.

Keep a small amount of money on the side to speculate and invest in things you’re interested in. It really can be a tiny amount. Since there are little to no fees these days, you can literally buy one share if you choose.

My stock market journey started when I bought $600 worth of stock many years ago. Today, you can buy much less and still have exposure to the market.

Whether it’s a sector like technology, an individual stock, or an asset class like crypto, if you’re enthusiastic about it and have some money at risk (even a tiny amount), you’re going to start learning more about investing and trading and get better at it.

One of the worst things someone can do when it comes to investing is to do nothing at all. Instead, do whatever it takes to make the decision to invest (and keep investing) easier.

Chidi struggled all of his life to make decisions and paid dearly for it. Action is better than inaction. Take the necessary steps to get your portfolio to “a good place.”

The post 3 Tips for Making Wise Investment Decisions appeared first on Wealthy Retirement.

This is an interesting ETF in that it pays weekly dividends. I’ll get into how the YieldMax ETFs work in a minute, but as is the case with all the YieldMax ETFs, this dividend is variable, so you can’t count on a specific amount of income in any year, month, or week.

Here’s a chart showing the last three months’ worth of weekly dividends.

It’s a pretty sure bet that the dividend will go up and down again during the year (and month).

A variable dividend will always get an “F” rating for dividend safety because of the frequent declines in the payout. This ETF is no different.

But this question sparks a broader discussion of the YieldMax ETFs. These ETFs offer enormous yields on some of the most popular stocks in the market, including Tesla (Nasdaq: TSLA), Apple (Nasdaq: AAPL), Super Micro Computer (Nasdaq: SMCI), MicroStrategy (Nasdaq: MSTR), and practically any other stock that becomes trendy.

However, they don’t buy shares of their underlying stocks. They buy a call and sell a put on the stock and then sell a call, creating a synthetic covered call. Then they buy Treasurys to generate more income and boost their gigantic yields.

And when I say gigantic, I mean it.

The YieldMax TSLA Option Income Strategy ETF (NYSE: TSLY) has a current yield of 118%.

That’s not a typo.

The YieldMax NVDA Option Income Strategy ETF (NYSE: NVDY) yields 53%.

Tame by comparison is the YieldMax MSFT Option Income Strategy ETF (NYSE: MSFO), with “only” a 26% yield.

But even when you include the lofty payouts, you’d make more money by simply owning the stocks rather than buying these ETFs.

Before we get into their performance, there are a couple of things to remember.

1. The more complicated the product, the more expensive it is.

Buying, selling, and holding a stock costs nothing with most brokerages.

But trading options, managing positions, and paying everyone from traders to portfolio managers to lawyers all costs money. As a result, there is an expense to owning these ETFs – generally 1%. That’s not terribly high, but it does reduce your return.

2. Wall Street doesn’t just give away money.

If you could really make 26%, 53%, or 118% owning these positions, hedge funds and large institutions would gobble them up faster than you can click your mouse. There’d be nothing left for retail investors.

When you come across any investment with a sky-high yield, beware. The risk will be much greater than usual. Very high yields are there for one of two reasons: to draw you into a risky investment or to collect fees from you (or both).

In November, I looked at all of YieldMax’s single-stock option income ETFs. Almost all of them underperformed their respective stocks, even when you included the giant yields.

Here are a few updated examples for the full year 2024, with dividends included.

Even with the Tesla ETF’s 100%-plus dividend yield, it trailed Tesla’s stock by more than 30 percentage points. Nvidia’s ETF underperformed by 53 percentage points. Microsoft’s lagged the stock by more than 1.5 percentage points. (Again, the ETFs’ returns do include the giant yields they paid.)

How about when the stock goes down? Surely the big yield offsets some of the losses, right?

Nope.

Moderna (Nasdaq: MRNA) was one of the few stocks that YieldMax covers that fell in 2024. It lost 57.9%. The YieldMax MRNA Option Income Strategy ETF (NYSE: MRNY) lost 59.3% despite paying out $9.39 per share in dividends, which would have equaled a 39% yield on the closing price on December 29, 2023. So even with a 39% yield, you would’ve lost more money owning the ETF.

I can’t say it more plainly than this…

Do not chase those yields.

Don’t buy the YieldMax ETFs or others that are like them.

They are not good investments.

The post Avoid These Popular ETFs With Triple-Digit Yields appeared first on Wealthy Retirement.

Since I follow the financial markets every day, you may think I regularly review my financial statements, constantly tweaking here and adjusting there.

But I actually only make big overhauls once a year – in October.

The month holds no significance other than being my birth month, which makes it a good time to review financial accounts, change passwords, and handle a variety of other housekeeping items in the modern world that need to be looked at periodically.

My family has had some big changes over the past few years. My wife and I have become empty nesters, and we’re almost at the finish line as far as paying for our kids’ education. As a result, our financial picture has shifted drastically.

So this year, I may be doing more rejiggering than normal.

Everyone should take a 100-foot view of their portfolio once a year and think about whether their investments are lined up with their goals and concerns. If they aren’t, then there will be some decisions to make.

When markets are down, some people won’t even look at their statements, as they don’t want to be reminded of how much they’ve lost or how far away they are from their goals.

This year, however, with the market at all-time highs, it should be a pleasure.

Use the strong market as an excuse to open up your statement and take a hard look at whether you need to take some risk off or add to your stock holdings. Being underinvested in stocks is just as big of a mistake as being overinvested.

Not sure how to tell if you’re underinvested or overinvested? The Oxford Club’s asset allocation model recommends the following allocations:

• 30% to U.S. stocks
• 30% to international stocks
• 10% to high-yield bonds
• 10% to investment-grade bonds
• 10% to inflation-adjusted Treasurys
• 5% to real estate investment trusts
• 5% to gold or other precious metals.

Depending on your objectives, your ability to tolerate risk, and when you’ll need the money, your allocation may be more conservative or aggressive than the model above. But it’s a pretty solid road map for many investors.

Once you’re set up with this type of portfolio, check it once a year and move assets around so you stay within those parameters. (Keep in mind that there will be tax consequences for selling investments if the portfolio is in a taxable account.)

However, that’s only the tip of the iceberg.

Below is The Oxford Club’s Wealth Pyramid. The allocation I mentioned above would be your Core Portfolio at the bottom of the pyramid, representing your largest holdings. After you have your long-term portfolio taken care of, you can expand into one or more trading strategies – depending on your risk profile and interest – to maximize your ability to accumulate more wealth and generate income.

The most important thing is to know what you have and whether your assets are allocated properly before you start employing these strategies.

I’ve mentioned the word “risk” several times. The last thing you want is to not be able to sleep at night because you’re overexposed to stocks and worried about a market downturn. But you also don’t want to end up kicking yourself because you didn’t own enough stocks in a big bull market, like the one we’re in now.

Use the recent highs to treat yourself to a peek at your portfolio so you can create the proper balance. And continue to do so every year as a birthday present to yourself.

The post The Best Way to Reduce Risk in Your Portfolio appeared first on Wealthy Retirement.

Should investors buy ETFs… or individual stocks?

With apologies to William Shakespeare, that is the question.

And in this episode of State of the Market, Chief Income Strategist Marc Lichtenfeld provides the answer.

As Marc explains in the video, it may not necessarily be a “one size fits all” solution. Some assets may suit your needs better than others. (However, there is one particular type of fund that Marc says investors should run far away from.)

If you like videos that include impromptu kazoo celebrations, allusions to Monty Python and the Holy Grail, and debates on the merits of pickled mango ice cream, this episode is for you!

To tune in, simply click the image above.

The post ETFs vs. Individual Stocks: Which Should You Buy? appeared first on Wealthy Retirement.

So today, I’ve invited him to share some of his findings on how seasonal trends affect certain sectors.

I’m sure you’ll find them as informative as I did!

– James Ogletree, Managing Editor

There’s a season for everything… especially stocks.

Seasonality and cyclicality in trading and investing are not merely trends or passing fads…

They are the heartbeat of the markets, pulsing with predictable opportunities for smart investors.

Cyclical investing reflects the ebb and flow of economic cycles. Investors who understand these cycles rotate into sectors poised for growth during specific phases. That gives them an opportunity to maximize their portfolio returns over time.

As a 40-year market veteran, I’ve witnessed firsthand how these patterns can unlock substantial profits.

You can find these seasonal surges and cyclical upturns in many sectors.

Nature’s Rhythm

Seasonality is huge in the commodities sector.

The prices of certain commodities correlate with specific times of the year. Those prices are driven by factors such as weather patterns, agricultural planting and harvesting cycles, and global demand shifts.

For instance, corn and soybean prices are influenced by planting and harvest seasons.

As spring approaches, farmers prepare their fields and plant crops, which in turn drives up prices as demand for these commodities spikes.

Then during harvest time in the fall, increased supply can lead to temporary price dips as markets adjust.

Knowing these cycles helps traders buy and sell at the right times. (And if you’re using leveraged futures or ETF trades, including with options, you can make a lot of money.)

Energy commodities like natural gas and heating oil have obvious seasonal patterns driven by weather extremes.

Winter brings demand for heating fuels, pushing prices higher as cold snaps grip northern regions. During the summer, demand for cooling fuels like natural gas for electricity generation rises.

While commodities follow seasonal patterns closely tied to nature, other sectors have their own rhythms.

Predictable Peaks

Consumer spending shows cyclical behavior too. There are several peaks throughout the year, including…

• Easter to Memorial Day
• The Fourth of July
• Back-to-school shopping in August
• The December holiday season.

By investing in retail giants ahead of these peaks, investors can capitalize on seasonal spending trends.

The tech sector thrives on a slightly different cycle – the cycle of innovation. Companies release new products and updates at regular intervals. Investors can get in ahead of product launches or major tech events.

During periods of economic expansion, real estate and construction sectors do well as infrastructure projects gain momentum.

Cyclical investments in construction materials, homebuilders, and REITs can yield substantial returns as economic indicators point toward growth.

Even precious metals like gold and silver are not immune to seasonal influences.

Gold historically experiences a surge in demand during certain seasons in different countries around the world.

• The price of gold rallies early in the year as we approach the Chinese New Year.
• It surges on massive gold-buying in India during the Diwali holiday in late October and early November.
• It ends the year at its highest point during the Indian wedding season, when demand is high.

By following these types of economic cycles, investors are able to optimize their portfolio performance across many sectors.

But there are a few things to keep in mind…

A Cycle of Profits

Cyclical investing needs careful research, strategic timing, and a keen understanding of market dynamics.

It’s important to diversify your portfolio across commodities, sectors, and asset classes to manage the risks associated with seasonal volatility and cyclical downturns.

You need patience and discipline as well. Don’t chase short-term trends… allow the cycles to play out.

Cyclical profits are not just possible… but are just about everywhere in the markets.

As long as you know where to look.

The post Seasonal Trends: the “Heartbeat of the Markets” appeared first on Wealthy Retirement.

Did you hear about the struggling actor who got hooked on investing while reading someone else’s mail, landed a job on Wall Street, and eventually became a successful investor, stock strategist, and author?

No?

Well, you receive his emails several times a week.

That’s right. That struggling actor was our very own Chief Income Strategist Marc Lichtenfeld. (Don’t worry – opening the mail was part of his job.)

Last week, Marc joined YouTube personality Ari Gutman for a wide-ranging interview on his backstory, his investing philosophy, his mission, and much more.

It’d be impossible to transcribe the entire interview in one email, but here are some of the highlights. You can click each link below to jump to that portion of the interview.

AG: What exactly is your story, and how’d you get to where you are today?

ML: “I moved to California, I was still a struggling actor, and I needed money. I mean, I wasn’t making very much. And I decided that the stock market seemed like a good place to try to make some. My first trade, I invested $600 in Harley-Davidson, made a $300 profit in about two months, and thought I was going to be – I’d say the next Warren Buffett, but I didn’t know who Warren Buffett was at that point. … I just became obsessed with the stock market.”

AG: Of all the areas of the market you could’ve specialized in, you landed on dividend stocks. Why?

ML: “Basically, because it works. … Over the long term, the overwhelming majority of the [market’s] total return can be pointed back at dividends. … If your sole focus is growth, you’ve got to watch those pretty carefully, because when stocks like those do reverse when there’s a bear market or the individual stocks turn around, it can get nasty really, really quickly. So you have to really be on top of it, whereas with dividend stocks, if the company’s paying and hopefully raising that dividend every year, you can really kind of sit back and just live your life and not be focused on it every day or even every week.”

AG: I want to ask you about your 10-11-12 System. Can you break that down?

ML: “What it comes down to is it’s a long-term strategy. I want to see the yield on any stock that I pick reach 11% within 10 years, and if I’m reinvesting the dividend, I want the average annual total return to be 12% over 10 years. If you have an 11% yield, you are beating inflation. We’ve had one period in the last 50 years where inflation got above that. Even two years ago, when inflation really spiked, the highest was 9%. So if you’re at 11%, you’re doing pretty well. And then 12% average annual total return is pretty darn good as well. You’re tripling your money every 10 years.”

AG: I get a lot of emails from people who are five to 10 years out from retirement saying they’ve really missed the boat on investing early. What would you say to them?

ML: “Invest as hard as you can for as long as you can. If you’re planning on retiring in five years, that means you have five years to put away some more money. Maybe when it gets to five years, maybe you can extend it for another year or get a part-time job or find a hobby that pays just so you’re not pulling more money out if you don’t have to. Every year that you can let that money grow – and compound, if you’re reinvesting the dividends – will just add to what you have in the future. … There’s no real shortcuts, but all you can do is what you can do today, which is invest as much as you can in quality companies that are raising their dividends every year and let it go for as long as you possibly can.”

AG: What was your mission in writing your book, Get Rich with Dividends?

ML: “It was to try to show people that they can have the financial future they want without it being scary, without having to invest in crazy strategies, [and] without having to try to find that next superstar stock. It can be as easy as they want it to be. … For the person that really just wants to make sure that their financial future is taken care of and not have that be a dominant part of their life, it’s really, really easy to do.”

I thoroughly enjoyed the interview, and I think you will too. Simply click the image at the top of the page to watch it in its entirety.

The post Marc’s Journey From Starving Actor to Renowned Investing Strategist appeared first on Wealthy Retirement.

Keep reading below to get the full story!

– Rachel Gearhart, Publisher

Plato said that necessity is the mother of invention.

I can’t argue with that… and I would say the necessity of finding better, easier, smarter and different ways of making money has spawned some of the greatest inventions ever.

Having been a trader and investor for over 40 years now, I can tell you that it’s never been faster, easier or cheaper to get into the markets… and that there have never been more ways to invest and trade.

I’ve never been more excited about what will come next than I am right now. And the truth is… the path we took to get here was filled with inventions aimed at making investing accessible to all.

First there were stock markets… commodities markets… and futures markets.

Then, in 1973, modern options trading was born at the Chicago Board Options Exchange.

The market’s moneymaking potential skyrocketed.

But exchanges were hard to join and expensive to trade through. Brokers charged “fixed” commissions – and I don’t mean “fixed” just as in set costs, I mean “fixed” as in rigged in an antitrust kind of way.

The SEC eventually got involved. It was pushed hard – not by Wall Street brokerages or exchanges, but by upstarts who wanted to introduce what would later be known as discount brokerages. It mandated that on May 1, 1975 – known on the Street as May Day – fixed commissions would have to be negotiated.

In other words, let there be competition.

Hard-charging, hard-competing discount brokerages opened markets and trading to everyone, giving retail investors easy access to stocks and mutual funds – and, eventually, just about everything.

Then, in 1993, thanks to product inventors at State Street Global Advisors, modern-day exchange-traded funds (ETFs) were launched when the SPDR (Standard & Poor’s Depositary Receipt) 500 Trust debuted.

SPY (the ETF’s trading symbol) is a portfolio of 500 large cap stocks and is designed to replicate the S&P 500 Index, the institutional U.S. stock market benchmark. But it can be traded like a single stock, all day, every day the market is open.

Now you can trade ETFs that track or hold portfolios of just about everything, in every asset class… and some you’ve never thought of. Anyone can now trade the Dow, the Nasdaq-100, oil, gas, gold, junk bonds, Treasury bills/notes/bonds, real estate, soft commodities or just about anything else you could think of… all thanks to the invention of modern ETFs.

In the mid to late 1990s, inventors challenged traditional exchanges like the NYSE and AMEX, and even the Nasdaq, by opening ECNs, or electronic communications networks. Retail traders could trade listed stocks on their platforms directly with other ECNs without having to pay exchange fees.

Those inventions made trading faster and cheaper for everyone, especially day traders.

A Dizzying Ride

Then, in 2001, in an effort to narrow bid-and-offer spreads, traders pushed the SEC to mandate “decimalization,” which did away with stocks being quoted in fractions and allowed one-penny increments.

We saw the invention of another tradable instrument in 2009. Bitcoin – the first cryptocurrency – made a lot of early adopters very, very rich. It was created out of necessity… the need to preserve wealth stored in dollars that had lost much of their value.

Now we have hundreds of alternative coins, or altcoins, to trade.

To give even more people access to even the priciest stocks (Berkshire Hathaway Class A shares, for instance, are currently trading at more than $620,000 per share), fractional shares were invented in 2017. Everyday investors can buy a fraction of a share of most stocks and ride the price higher… and can even collect fractional dividends.

It’s been a dizzying ride, full of lucrative inventions that have given us more products and instruments to trade and invest in. Building wealth has never been easier, cheaper or more accessible.

So it shouldn’t be a surprise that there’s a new kid on the block – a new way to own a piece of stocks, real estate, companies, technology, you name it.

I’m talking about tokenization. It’s the next big thing… and it’s created a brand-new market that could be worth an estimated $24 trillion by 2027.

And I’m proud to say Manward Press has been at the forefront of researching the immense innovation – and opportunity – tokenization presents.

Keep an eye out for more insights from us as this incredible asset class works its way into the mainstream.

The post A Brief History of the Markets appeared first on Wealthy Retirement.

Now that 0% interest rates are a thing of the past, bonds finally pay a decent amount of interest. And with the markets predicting rate cuts in 2024, you have a very good chance of earning a strong return on bonds, as their prices will rise if rates fall.

But I have a big problem with the bond industry.

It’s the way most investors buy bonds: bond funds. Since bond prices move in the opposite direction of interest rates, bond funds work well when rates are falling and the prices of the bonds in their portfolios are rising. But when rates rise, those same bonds fall in price and investors get crushed.

For example, the largest bond fund, the Vanguard Total Bond Market ETF (Nasdaq: BND), dropped from a high of $75 to $68 last year before bouncing in October as the markets began to believe rates had topped out. That’s a drop of more than 9%.

The iShares Core U.S. Aggregate Bond ETF (NYSE: AGG), another large bond fund, fell 9.5% from high to low last year.

Both of these exchange-traded funds (ETFs) are still below where they were a year ago.

The two funds have more than $200 billion in combined assets. That’s a lot of money that retail investors shelled out because they thought bonds were safe.

The thing is, bonds are safe… if you buy individual bonds rather than a fund or ETF.

When you buy a bond fund or ETF, you are at the mercy of the fund manager or the index that the bond is tied to. And if you want to withdraw some funds, you’d better pray that the price is higher than it was when you bought it. Otherwise, you’ll end up taking a loss.

But when you own individual bonds, you’re able to plan accordingly so you know when your cash will become available. If you needed your funds in October 2026, for example, you would buy an individual bond that matures before then.

Best of all, you know that at maturity, each bond is going to be worth par value (which is $1,000) no matter where it traded in the past. At maturity, you will receive $1,000 unless the company has gone bankrupt – which is extremely unlikely unless you’re buying the riskiest of bonds.

If you were to buy the iShares bond ETF I mentioned above, the price could be anywhere by October 2026. It could be at $98, which is where it’s at as I write, or it could be at $105 or $80. If you buy it at $98 and it’s at $80 when you need the money, you’ll collect only $800 for every $980 you invested.

Meanwhile, if you buy a bond that matures in October 2026 for $980 today, you will receive $1,000 in October 2026 – plus you’ll have collected interest along the way.

Wall Street makes it very easy to buy bond funds or ETFs. Buying them is just like buying stocks. It’s about as simple a process as there is.

Buying a bond is a little – but just a little – more complicated. Sometimes, there is no market for a particular bond, meaning your broker will have to work to find a buyer or seller for you. If they can’t, you won’t be able to make the transaction. For that reason, you should only buy bonds you intend to hold until maturity.

If the bond’s price climbs or you want to sell for another reason, you likely will be able to, but unlike with stocks, ETFs and mutual funds, there’s no guarantee there will be a buyer.

You can always call the fixed income desk at your broker if you ever get stuck or have questions. Most fixed income desks have very good customer service, as the representatives are usually bond specialists.

Individual bonds provide income and safety for your portfolio. Bond funds produce income only. There is no assurance that you will ever get your money back from a bond fund.

Stick with individual bonds for the fixed income part of your portfolio.

The post The Big Problem With the Bond Market appeared first on Wealthy Retirement.

I’m a believer in buying individual stocks and bonds, but for investors who don’t have the time or desire to research individual opportunities, exchange-traded funds (ETFs) and other funds are a decent – but often not amazing – alternative.

Many passively managed funds are tied to broad indexes. As a result, they will never outperform those indexes. But because the market goes up over the long term, investing in index funds is a safe, “set it and forget it” strategy. So if that’s what you prefer, index funds are one method you could use.

Most of the time, I don’t recommend investing in actively managed mutual funds or ETFs. They have a long history of underperforming their indexes. For example, if you’re interested in a biotech fund, stick with one that invests according to a biotech index, not one that’s run by a fund manager who’s trying to pick winners by “trusting their gut.”

According to the most recent data, over the past three years, 66% of mutual funds failed to beat their benchmark index. (Maybe you’ll get lucky and pick the 1 out of 3 that does, but the odds aren’t in your favor.)

Furthermore, you pay fees for that underperformance. In fact, the fees can be a reason for the underperformance. If you’re paying a mutual fund 1.5% per year, you’re starting out 1.5% behind the index.

Index funds and ETFs typically have very low fees, which is another reason to stick with them if you do choose to invest in some kind of fund.

But as I said, I believe owning individual stocks and bonds is the way to go.

You pay no fees for buying and selling stocks at most brokers. And with bonds, the fee is priced in. So if you want to buy a bond that’s quoted at $99, that’s what you’ll pay. Most brokers will not charge an additional fee, though there are exceptions, so be sure you understand what commissions your broker charges.

The main reason I prefer individual stocks and bonds to funds and ETFs is you have more control. If a stock is going against you, your stop can get you out before you suffer a big loss, and the decision to sell doesn’t involve any emotion.

But with an index fund, that stock will stay in the portfolio as long as it remains in the corresponding index. And with an actively managed fund, a Wharton-trained fund manager may believe they know more than the market and ride the stock down further – or worse, throw good money after bad.

When you own stocks, you can also take profits when it’s appropriate, whereas with a fund, you have no control or say over what the fund manager does.

I feel even more strongly about holding individual bonds than I do about holding individual stocks. There are some exceptions, such as a closed-end fund trading at a steep discount or an ETF that invests in convertible bonds, but these can be tough for individual investors to find.

For the most part, when it comes to regular corporate and government bonds, you should own them individually. That way, you can decide what maturities make sense for you and you will know exactly how much cash you’ll have available on the maturity dates.

(Bonds have become quite popular right now, and rightfully so. I recently told George Rayburn, our longtime event host here at The Oxford Club, that no matter what the Federal Reserve does next, it’ll be good for bondholders.)

With a bond fund, however, there is no maturity date and your capital is at the mercy of the markets. You may think investing in a bond fund is safe and conservative, but if rates spike, you’ll lose money. And if you withdraw your cash during a period of higher interest rates, you’re going to end up with less than you started with.

That’s the opposite of what we want to see when we invest in bonds.

We invest in bonds for safety. We know we’ll get our money back at maturity – or make a capital gain – because we know the bonds will mature at par value ($1,000) no matter which way the bond market or interest rates move. We’ll get $1,000 per bond at maturity regardless of whether we invested $1,000, $900 or $1,050.

Funds and ETFs serve their purpose, mostly for investors who don’t want to (or are afraid to) make their own investment decisions. But investors who feel comfortable making their own choices and investing in individual stocks and bonds are likely to be better off in the long run – as long as they don’t overtrade and don’t try to time the market.

The post The First Step to Achieving Financial Freedom appeared first on Wealthy Retirement.

– Rachel Gearhart, Franchise Publisher

Are you using artificial intelligence in your trading?

You’d better be.

If not, you’re competing against folks who have an unfair advantage.

Ask any market expert out there what makes the big boys so much more successful than the little guys, and they’ll tell you three things: The big boys have more money to hedge with… they have better data… and they use complicated computer systems to pull all that data together.

For decades, it has created an “unfair” advantage. The big boys have always had an edge.

But that’s changing.

Few folks know the full history of how AI came into the secretive world of trading, but most research points back to a project called ZagTrader. It comes from David Rumelhart and a team of researchers at Carnegie Mellon.

By today’s standards, the project was simple. ZagTrader was built to use historical market data to make predictions about future stock prices. (Now we use systems like this all the time.)

What was unique about the idea – and why the school’s computer department was so excited about it – was that the machine could learn from its mistakes.

That’s a trait that many (most?) humans think they have… but don’t. We think we learn from our losing trades. But often our logic is off. We mistake correlation for causation.

Computers are good at figuring these things out. Humans… not so much.

Because of its ability to learn, ZagTrader worked.

It beat the market.

Now Wall Street’s biggest firms look to hire folks who have Carnegie’s Tepper School of Business listed atop their gilded degrees. Graduates of its computational finance program have a job offer rate of 98%. Their average salary is $125,000, and signing bonuses stretch as high as $150,000.

Where are they going?

The latest list of firms includes all the usual suspects – JPMorgan Chase, Citi, Goldman Sachs, Bank of America and BlackRock.

Again… the big boys have been using AI for decades. It shows. That’s why they’re big.

But now, as you may have heard, their competitive edge is waning.

AI has had a bit of a breakout at the retail level this year. And the trend is only going to get hotter – and more profitable – from here.

Right now, there are many ways for the average investor to take advantage of AI. Some you have to put in a bit of work to use… others have already done the work for you.

For example, did you know that you have access to AI-focused exchange-traded funds (ETFs) – a combination of two of the great financial equalizers of our time?

The Global X Robotics & Artificial Intelligence ETF (Nasdaq: BOTZ) has $2.5 billion under its thumb. It invests in companies that use or create AI.

The ROBO Global Robotics & Automation Index ETF (NYSE: ROBO) has $1.5 billion in assets.

They’re both up by double digits this year.

Best of all, there’s no need to hire expensive computer geeks or shell out for customized programs. Both ETFs have an expense ratio under 1%.

Investing in them is a no-brainer.

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