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THE ACA FOUNDATION

9 Ways to Pursue a Better Investment Experience

9/13/2018

Embrace Market Pricing:
- The market is an effective information-processing machine
- Real-time information help set prices
Don't try to outguess the market:
- Only 14% of US equity mutual funds and 13$ of fixed income funds have survived and outperformed their benchmarks over the past 15 years
Resist chasing past performance:
- Past performance offers little insight into a fund's future returns
Let markets work for you:
- Financial markets have rewarded long-term investors
Practice smart diversification:
- Holding securities across many market segments can help manage overall risk
Avoid market timing:
- By holding a globally diversified portfolio, investors are well positioned to seek returns wherever they occur
Manage your emotions:
- Reacting to current market conditions may lead to making poor investment decisions
Look beyond the headlines:
- Daily market news and commentary can challenge your investment discipline
Focus on what you can control:
- Create an investment plan to fit your needs and risk tolerance
- Structure a portfolio along the dimensions of expected return
- Diversify globally
- Manage expenses, turnover and taxes
- Stay disciplined through market dips and swings

Compass Financial Advisors

The Uncertainty Paradox

9/13/2018

"Doubt is not a pleasant condition, but certainty is an absurd one." -Voltaire
The market hates uncertainty
Uncertainty:
- An unchangeable condition of existence
Investors are often willing to make the trade off of bearing some increased uncertainty for potentially higher returns
When markets go up and down, many investors struggle to separate their emotions from their investments
Long-term investor:
- “People often ask the question, ‘How long do I have to wait for an investment strategy to pay off? How long do I have to wait so I’m confident that stocks will have a higher return than money market funds, or have a positive return?’ And my answer is it’s at least one year longer than you’re willing to give. There is no magic number. Risk is always there.”

Compass Financial Advisors

The Power of Markets

9/13/2018

No single individual possesses enough ability to know-how to create a pencil on their own. Rather, the mundane pencil and the ability to purchase it for a sum is the result of an extraordinary process driven by the knowledge of market participants and the power of market prices
Workers with specific knowledge about costs, constraints and efforts use market prices to leverage knowledge of others to decide how to direct resources and make a living
The market is smarter than we are and no matter how smart we get, the market will always be smarter than we are

Compass Financial Advisors

4 Frequently Asked Questions About Money

9/4/2018

What’s a credit score?
1. A numeric rating creditors use to assess borrower risk in making lending decisions.
2. FICO score: a rating defined by how much debt you have, whether you pay your bills on time, how many credit cards you have and other factors.
3. Your credit score affects most financial decisions like buying a car or house
What is a 401(k)?
1. A company-backed retirement account that takes a percentage of your paycheck and puts it aside for your retirement
2. The money goes into your 401(k) and is taken from your paycheck before taxes reducing your taxable income
3. Companies vary with their 401(k) packages, but many of them offer “matching” meaning that they will match your contribution up to a certain percent
What is an IRA?
1. Individual Retirement Account: a place to put money away for retirement that will be then invested for you
2. IRAs have contribution limits of $5,500 a year or $6,500 if you’re 50 or older
3. Two types of IRAs:
  1. Traditional IRAs:
    1. The money you put in is tax deferred (you pay the taxes on it when you withdraw the money)
  2. Roth IRAs:
    1. Contributions are not tax deductible, but any money you withdraw is always tax free
What is investing?
1. Using your money in a way that your money can make more money
  1. Invest when you are in a good place with your personal savings, have paid off your debts and understand what you’re investing in

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May 3, 2020
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