The Best Post-Work Hangouts on the Central Coast
The Central Coast offers plenty of relaxing post-work options for discounted foor or dranks, or the beautiful outdoors. Here are a few of our favorites… READ MORE
(Aug 6) – 5-Cities, Nipomo Real Estate Update
(Jul 18) – Mid-Year Market Update
(May 29) – Do you Need Long-Term Care Insurance?
Editor in Chief, Columnist: Rylan Stewart ([email protected])
We deal in housing, but it takes more than a building to call a place home… it is the people, events, and businesses. So we started the SLO County Locals Blog to explore the spirit of the Central Coast.
It’s important to remember that investing is not a sprint, it’s a marathon. Many investors strive to get “too good to believe” returns without considering what happens when that star investment has just a single bad year in four.
It’s not uncommon that investments that really overachieve have taken more risks than you might realize. They’re shooting for strong single year returns; as opposed to more consistent long term annual returns. In doing so, you’ll typically find they have more volatility than other more balanced long term investments which can have less risk and volatility.
Here’s an example of the mathematics of loss and what it can mean to your portfolio:
If you make 10% per year, three years in a row, you’re average annual rate of return is 10%. What happens to your annualized rate of return when you lose ten percent (-10%) in year four?
Take a look at the following chart to see what happens when you lose money in year four. Note what you’ll need to make in year five to get back to an average annualized rate of return of 10% for all five years.
- 1st Year 10%
- 2nd Year 10%
- 3rd Year 10%
- 4th Year -10%
Annualized rate of return after four years is 4.6%.
The fifth year return needed to get back to 10% per year is 34.4%.
The moral of today’s story is to strive for consistent returns keeping the mathematics of loss to a minimum. This doesn’t mean you should hide your money somewhere with no risk. It just says, less volatility can be a real positive.
David Cryden is Co-Owner, Vice President, Certified Financial Planner™ at Blakeslee & Blakeslee, a financial planning and investment company based in San Luis Obispo. Reach him by email ([email protected]) or phone (805.544.PLAN). David works out of the home office in San Luis Obispo. Member FINRA. Member SIPC.
I have a client whose parents had put a reverse mortgage on their home. I have no idea the circumstances of how they decided to put the reverse mortgage on their home. They were trying to provide for themselves as they came into illness. I’m sure their needs were real and the motivations well intended.
Normal Federal Reserve Bank (the Fed) policy is almost here. That’s a great thing for us all. It means that the Fed thinks we’ve recovered enough to move forward with slowly eliminating all of their vastly accommodative monetary policy.
As you know, I feel that without what the Fed did, we simply would not be in the good economic shape we’re in today as a country, and the world for that matter. In many respects, we’re still the world’s economic leaders.
Which interest rates are likely to rise?
Many of you love travel. I know I sure do. We all work hard and want to enjoy our time off comfortably. In fact, why not pamper yourself?
During the past year, I’ve booked two special trips in very beautiful places. They had great food, accommodations, and wonderful services. I paid about half of the brochure price each time, and would gladly do it again.
Who did I use?
In late January, I wrote a weekly tip about the possibility of the stock market having a ten percent correction. The month of January ended up being the first down month for the markets for some time. The month of July was the first down month for the three major US stock markets since January. Though, they were not down by much whatsoever. If you reflect back, we’ve not really had a mildly difficult or even choppy period in the markets in many years. That’s quite unusual.
San Luis Obispo County is a beautiful place to live and work. The County’s economy is growing. The unemployment rate is sixth lowest in the state (of 58 counties) and the burgeoning local tech and engineering industries are booming.
The pace of South County home sales has slowed into 2014’s summer months year-over-year, as fewer homes are on the market. Potential buyers are moving aggressively on the remaining properties, but low supply has kept many people on the sidelines.
Through June of 2014, home prices on the “Coast” (Morro Bay, Los Osos, Cayucos, Cambria) region of San Luis Obispo County have jumped about 20% year-over-year. Prices have increased in all areas of the County, but here most of all.
It’s been such an incredible five years. Here we are in the middle of 2014. This year, the markets have essentially flat. I’m not surprised by this as we’ve had such a big run up over the past five years. Markets don’t just point in one direction – up or down.
Here’s one long term money manager’s take on the markets and world economy as of mid-year.