Glossary – Asset Management
and Retirement Planning Terms
Monitoring
At Wharton Wealth Planning, we carefully design portfolios to strike a balance between risk and return, aligned with our clients’ specific financial objectives. Once a portfolio is constructed, we will provide continuous supervision of the portfolio and may periodically rebalance or adjust client accounts under our management as changes in market conditions and client circumstances…
Detailed Reporting
We prioritize efficiency and convenience for our clients. Our goal is to streamline and simplify your financial life and investment accounts. We have software and tools to consolidate reporting to provide an easily accessible overview of your financial performance and status. Clients receive direct custodian reporting containing a description of all transactions and all account…
Beneficiary Designations
One of the easiest ways to make sure your assets go to the people you intend is to list them as beneficiaries. We recommend reviewing all account beneficiaries and contingent beneficiaries. These are important as your will or trust does not necessarily govern how your investment accounts will be distributed. If you die without naming…
Cost-Effectiveness
This involves costs associated with being a shareholder of a mutual fund, exchange-traded fund (“ETF”), closed end fund, or other investment that is managed by a third-party. For example, mutual fund costs can include: management fees, sales loads, and redemption fees. As an independent fee-only fiduciary financial advisor, we have a tremendous advantage in helping…
Risk-Reward
This involves understanding the valuation and return potential of an investment. There are many good businesses to invest in but if their stocks are priced too high they may not make good investments.
Tax Efficiency
Investment turnover in individual stocks or mutual funds can lead to short-term and long- term capital gains. Mutual funds may have significant embedded gains and in some instances you can pay taxes for economic gains you never realized based on the timing of your purchase and the structure of mutual funds. Tax Reduction strategies may…
Rebalancing
Portfolio rebalancing is a reallocation of the weight of portfolio assets. It includes buying and selling existing assets either fully or partially from time to time to maintain the desired level of return and diversification. Rebalancing can be industry or sector-specific or in combination. The portfolio assets can be a mix of bonds, equity, and…
Alternative Investments
Alternative investments are all assets outside the traditional portfolio mix of stocks, bonds, mutual funds, exchange-traded funds (ETFs) and cash. These investments have advantages and disadvantages that are important to analyze and understand. These kinds of investments differ from traditional investment types because they aren’t easily sold or converted into cash. It’s also common for…
Concentrated Positions
A single holding that makes up more than 5% to 10% of your portfolio can create risk because if that stock (or the respective sector that stock is in) experiences a significant decline, your portfolio may suffer much greater volatility than if you held a diversified asset mix. A disproportionately large single stock holding can…
Diversification
The goal of diversification is to improve the probability of success for your investments, regardless of economic and market conditions. Choosing the right mix of investments and then periodically rebalancing and monitoring your choices can make a big difference in your outcome. We believe that you should have a diversified mix of stocks, bonds, and…
Social Security Analysis
Maximizing your Social Security income is an important building block for retirement. United Income, a financial-planning advisory service, released an important study in 2019 called, “The Retirement Solution Hiding In Plain Sight.” Using government data and proprietary software, it calculates how much money retirees have lost, and are losing, by making mistakes about when to…
Retirement Account Distributions Analysis
Required minimum distributions (RMDs) can be an important part of your retirement-income plan. It’s important to understand that RMDs come with some specific rules about the timing of when distributions are taken and a formula based on your age for the amount you have to take. Your withdrawal strategy should accomplish 2 goals: (1) Having…
Retirement Account Contributions Analysis
Just as we focus on allocating our investments between stocks, bonds, real estate, etc., to reduce volatility, it’s also important to think about the tax consequences of where we locate our funds. Asset location means that you want to hold your assets in different types of accounts from a tax perspective. Asset location can make…
Income and Expense Budgeting Analysis
It’s important to consider how your income and expenses will change in retirement. Every person who plans to retire should use a retirement calculator in order to determine just how much money they will need in order to retire while maintaining a comfortable standard of living. Some expenses like health care and travel are likely…
Investment Goals and Risk Tolerance
We employ a disciplined investment philosophy backed by academic and scientifically validated principles and processes. Securities might be recommended for the client’s portfolio for the purpose of generating income, capital appreciation, or providing a mix of price appreciation and current income. We evaluate investments in a broad and holistic view, and each client’s investment portfolio…