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Entries Tagged as 'compounding'

Interest Compounding Versus Dividend Growth Compounding

May 16th, 2010 · 3 Comments · Investment Planning, Portfolio Management

By Ken Faulkenberry
Interest compounding is a powerful investment principle, but dividend growth compounding multiplies the benefits of exponential growth.  Compounding begins when interest or dividends are added to the principal, so that from that point on, the interest or dividends that are added also begin to earn interest or dividends.
 
Compounding is not linear growth [...]

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Asset Allocation Management – Dividend Growth

April 28th, 2010 · 2 Comments · Investment Planning, Portfolio Management, Risk Management

Dividend Growth is a major asset allocation category in the Arbor Asset Allocation Model Portfolio (AAAMP). Every investment portfolio should include stocks of companies who have the ability to pay and grow their dividends. In general these stocks will be more mature companies with stable business models.
 
There are important advantages to dividend growth investing.  Substantial [...]

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How Early Should Retirement Planning Start?

March 5th, 2010 · No Comments · General Advice, Investment Planning

By Ken Faulkenberry
Financial experts estimate you will need 70 – 90% of your current income to maintain your current standard of living when you stop working. The three most common sources of retirement income are social security, employer-sponsored retirement plans, and personal savings and investments. Besides the fact that social security benefits will almost certainly [...]

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Always Re-Invest Your Dividends

January 27th, 2010 · 2 Comments · AIP Money Management Tips, Portfolio Management

AIP Money Management Tip
 
By re-investing your dividends you are always dollar cost averaging back into your investment.  When prices are low you buy more shares, and when prices are high you buy fewer shares. Your dividend will continue to grow because with each dividend payout you have more shares than the last. In addition, if [...]

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Why Investors Should Make IRA Contributions Early

January 14th, 2010 · No Comments · Individual Retirement Accounts (IRAs), Investment Planning

Twin brothers, Peter and Paul, start contributing to their IRA at age 25; each put $5,000 per year in their IRA; each earns 10% per year.  The only difference is Peter makes his contribution at the beginning of each year, but Paul procrastinates and doesn’t make his contribution until the end of each year.   How [...]

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Consider Risk When Allocating Your Portfolio

November 30th, 2009 · 2 Comments · AIP Money Management Tips

AIP Money Managment Tip
 
Even if you’re able to generate considerable income, you have to know how to protect and preserve your capital. Investors who have employed a buy and hold strategy have lost a decade worth of growth. When the market just kept going up, it was easy to think it would continue and not [...]

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Is Buy And Hold A Viable Strategy?

November 14th, 2009 · 3 Comments · Investment Planning, Online Investing For Dummies, Portfolio Management, Risk Management

By Ken Faulkenberry
The purpose of asset allocation is to reduce volatility of the overall portfolio by holding different asset classes that are not correlated. Holding multiple uncorrelated assets means assets will be performing differently by rising and falling at different times. This helps smooth out returns; reducing volatility (risk) of the total portfolio.
 
A buy and [...]

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