Amid Losses, 12 Financial Truths Persist

June 18, 2006

Get a grip.

Spend a few days following the markets, researching investments and watching business television, and you are likely to find yourself overwhelmed by the uncertainty of it all. Will stocks rise or fall? Which mutual funds will shine? What's next for interest rates?

But take a step back and you will discover that there is, in fact, a surprising amount of certainty. True, you will never know which way stocks are headed in the days and weeks ahead. But when it comes to managing money, there are some undeniable truths -- including the dozen listed below.

1. It's hard to cut back.
As your salary has climbed, your standard of living likely also has risen. You probably eat out more and purchase pricier cars, and you might have traded up to a bigger home.

Within reason, there's nothing wrong with this. Constantly deferring gratification isn't a great strategy for getting the most out of life. Still, there is a price to be paid for this ever-rising standard of living. As your lifestyle grows more costly, it becomes more difficult to retire, because you need a bigger nest egg to sustain your standard of living. Sure, to make retirement affordable, you could slash your expenses. But once you get used to a certain standard of living, it's extraordinarily difficult to cut back.

2. You'll never be satisfied.
Instead of cutting back, most people constantly strive to raise their standard of living. They are forever aiming for the better car, the bigger house or the larger paycheck, only to become quickly dissatisfied once they get what they want.

Academics refer to this as 'hedonic adaptation' or the 'hedonic treadmill.' As the thrill fades from our latest promotion or purchase, we start hankering after something else -- and so the cycle goes on.

3. Borrowings have to be repaid. This might seem obvious. Yet I wonder what people think as they rack up huge credit-card balances, take out auto loans and borrow against their homes' value. How exactly do they plan to repay all this money? Or do they intend to bequeath these debts to heirs?

4. Fancy cars and expensive clothes aren't a sign of wealth.
Rather, they are a sign that somebody once had money or chose to borrow it. The money has since been spent, and the folks are poorer for it.

5. Your family could prove to be your greatest liability.
You are no doubt well aware of the expense of raising children and putting them through college. Often, however, family costs don't end there. If your adult children or your retired parents get into financial trouble, you'll probably end up bailing them out.

The lesson: Teach your children to save diligently and invest intelligently before they leave home, and don't be coy about talking to your parents about their finances.

6. Investors face three enemies.
And their names are inflation, taxes and investment costs. Indeed, once you factor in these three financial hits, you may find your portfolio isn't making any money.

Let's say you buy a mutual fund that owns bonds yielding 5%. If the fund charges 1% in annual expenses, your yield will be 4%. If you are in the 25% tax bracket, Uncle Sam will take a quarter of that yield, leaving you with 3%. What if inflation comes in at 3%? Put it this way: At least the tax man and your fund manager made money.

7. Adding risky investments can lower risk.
You can figure out your portfolio's performance by simply looking at the results for each investment you own. A portfolio's risk level, by contrast, isn't a straightforward reflection of the investments held.

Consider gold stocks. Yes, they can be wildly erratic performers. But because gold stocks often gain when other investments are suffering, adding them to an investment mix can actually lower the portfolio's overall risk level.

8. Diversification is a mixed bag.
By diversifying broadly, you reduce risk and ensure you will always have a little money in the market's hottest sectors.

But inevitably, if you hold a diversified portfolio, some of your investments will badly lag behind the market averages each year. Find that disturbing? The investments that struggle this year may salvage your portfolio's performance in the years that follow.

9. Not all risk is rewarded.
Both stock funds and individual stocks can post nasty short-term losses. But that's where the similarity ends. If your well-diversified stock funds take a tumble, you can be almost certain that they will eventually bounce back and deliver respectable returns over the long run. But if your individual stocks take a dive, you can't be confident of ever recouping the loss, no matter how long you wait.

10. Most investors fail to beat the market.
You don't need statistics to prove this. Simple logic will do.

Before costs, investors collectively earn the market's performance. After costs, investors collectively lag behind the market. In fact, investors -- as a group -- will lag behind the market by the extent of their investment costs. That doesn't mean you won't earn market-beating results. To do so, however, not only do you have to outwit your fellow investors, but also you need to overcome the drag from your own investment costs. That's no easy feat -- and very few folks manage it over the long haul.

11. Change is costly.
When you sell one investment and buy another, there is no guarantee you will boost your returns. But the change will almost always cost you. To be sure, if you buy and sell no-load mutual funds inside a retirement account, the trade will be cost- and tax-free. But with most other transactions, there's likely to be a fee or tax involved, and possibly both, so think long and hard before you make that next trade.

12. Your best investment strategy is saving.
Even if you're brilliant at picking stocks and funds, you won't pile up a whole lot of dollars unless you have a decent amount invested in the market. The bottom line: If you want to be a successful investor, you first need to be a committed saver.

-By JONATHAN CLEMENTS


理財箴言12條
2006年06月27日18:33

如果你花上幾天的時間跟蹤一下市場﹐研究研究投資﹐再看看財經電視頻道﹐你也許就會發現自己的身邊充滿了各種不確定性。股市是漲還是跌?哪只共同基金會成為閃亮之星?利率下一步將走向何處?

然而﹐當你退後一步時﹐你又會驚奇地發現﹐實際上能夠確定的東西也有很多。當然﹐你永遠也無法準確知道未來數日、數週的股市走勢。但是當談到理財時﹐有許多真理是你無法辯駁的。其中就包括以下12條。

1. 由簡入奢易﹐由奢入簡難
隨著工資不斷提高﹐你的生活水準可能也會水漲船高﹐外出吃飯的次數增加了﹐換了更好的車﹐甚至還會買更大的房子。

這些都是情有可原的。總是壓制自己的欲望也不利於充分享受生活。不過﹐生活水準的不斷提高也是要付出代價的。由於你的生活方式變得越來越費錢﹐要想退休就會變得沒那麼容易﹐因為你需要賺更多的錢來維持高水準的生活方式。當然﹐為了能夠退休﹐你也可以削減各類開銷。不過﹐一旦你習慣了某種生活標準﹐要想再降低下來就十分困難了。

2. 欲壑難填
在削減開支和努力提高現有生活水準之間﹐多數人會選擇後者。他們永遠都想要更好的車、更大的房子、更高的薪水。而一旦得償所願﹐他們很快就又變得不滿足。

學術界將之稱為“享樂適應”(hedonic adaptation)或是“快樂水車”。當升職或是新房新車帶給我們的興奮逐漸消退時﹐我們又會開始去追求別的東西﹐如此周而復始。

3. 欠債還錢
欠債還錢是天經地義的事情。不過我依然很想知道那些大量透支信用卡、欠下大筆車貸、房貸的人是怎麼想的。他們究竟打算如何償還這些欠款?或者說他們是否就打算把債務留給後代﹐來個父債子償呢?

4. 靚車、高檔時裝並非財富的象徵。相反﹐這些東西表明一個人曾經很有錢﹐或者說選擇了借錢消費。花了這些錢後﹐這些人變得更窮了。

5. 你的家人也許是你最大的財務負擔。
毫無疑問﹐你很清楚養育孩子、供他們念書要花多少錢。但家庭開支往往不止於此。如果你的成年孩子或者你退休的父母財務上出現了問題﹐你可能還要向他們伸出援手。

因此﹐在孩子離開家獨自開始生活前﹐你要教會孩子多存錢、理智地進行投資。同時也不要害怕和父母討論他們財務問題。

6. 投資者的三大敵人。
他們是:通貨膨脹、稅和投資成本。實際上﹐如果將這三個因素都考慮進來﹐你會發現自己的投資組合根本就不賺錢。

比如﹐你購買了一個投資債券的共同基金﹐收益率為5%﹐如果基金的年費是1%﹐你的收益率就會降到4%﹔如果你適用的所得稅率為25%﹐美國政府還要從這些收益中提走1/4﹐這樣收益率就降到了3%﹔要是通貨膨脹率恰好又是3%呢?可以這麼說﹐至少稅務機關和你的基金經理是賺錢的。

7. 增加高風險的投資能夠降低總體風險水平。
只要研究一下投資組合中每項投資的回報情況﹐你就會知道整個投資組合的總體回報。但是﹐投資組合的總體風險水平卻不能這樣簡單地累加。

想想黃金類股。是的﹐它們的走勢十分不穩定。但是由於黃金類股在其他投資遭遇重挫時往往會逆市上揚﹐因此﹐把該類股加入投資組合中能夠降低投資組合的總體風險。

8. 多元化大雜燴。
進行廣泛的分散投資﹐不僅能降低投資風險﹐還能保證你總能持有一些市場上最熱門的投資。

然而﹐如果你進行了分散投資﹐投資組合中不可避免地會有一些投資的表現達不到市場的平均水平。可別因此討厭它們﹐今年表現不好的投資很有可能會在下一年成為你的大救星。

9. 並非所有的高風險都有高回報。
不論是股票基金還是個股﹐短期內都會出現大幅地下跌。但它們兩者的相似之處也就僅限於此。如果你有一只投資極為分散的股票基金﹐如果它出現了下跌﹐你幾乎可以肯定它總有一天會反彈回來﹐並在長期內給你帶來可觀的回報。但如果你持有的一只個股大幅下挫﹐無論你等多長時間﹐都不敢肯定它哪天會出現反彈。

10. 多數投資者都無法跑贏大盤。
這一點不需要統計數據來證明。簡單的邏輯分析就能讓人一目瞭然。

在計入成本之前﹐投資者總體的回報率與大盤一致﹔在計入成本之後﹐投資者總體的回報率就要遜於大盤了。實際上﹐投資者作為一個整體﹐它們的投資回報率落後於大盤的部分就是他們的投資成本。這並不意味著你就沒有機會跑贏大盤。但是﹐要想做到這一點﹐你不但要智力超群﹐而且還要成功克服投資成本的影響。這並不是一件容易的事情﹐很少有人能在長期內持續跑贏大盤。

11. 改變是要付出代價的。
當你賣出一種投資﹐而買進另一種投資時﹐你的回報率不一定就會因此提高。但是﹐改變卻一定會帶來成本。當然﹐如果你在一個退休帳戶中買進和賣出免傭金的共同基金﹐那就另當別論了。而其他多數交易可能都會涉及傭金或是稅金﹐甚至有可能兩者都涉及。因此﹐在你下一次進行交易前﹐一定要仔細、認真地考慮考慮。

12. 最好的投資策略就是存錢。
即便你是挑選股票、基金的高手﹐如果你不在市場上投入大量的資金﹐也不會有機會賺大錢。因此﹐如果你想成為成功的投資者﹐首先就要成為一個勤勤懇懇的儲蓄者。

Jonathan Clements

(編者按﹕本文作者Jonathan Clements是《華爾街日報》個人理財專欄“Getting Going”的專欄作家)

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