By Ken Faulkenberry

Build a buy list, or wish list of companies to invest in at lower prices, gives the prepared investor an advantage when bargains become available.  One of the lessons we should have learned from stock market volatility is bargains can emerge very quickly. They can also disappear as quickly as they appeared.

I keep a list of the best companies and ETFs of specific industries or countries that I would like to own for long term growth. This gives me several important benefits.  First, I’m ready to act when something causes the market, or that specific investment, to fall. Investors have a hard time putting into practice the principle of buying low and selling high.  Having a buy list helps you stay disciplined to purchase bargains because you are prepared and looking for opportunities to buy low.

Another advantage of keeping a buy list is that it keeps you involved in the market. Market research and research of individual investments requires a great deal of time and should be done on a consistent basis.

Are you having trouble finding the time to do the necessary research to self direct your portfolio?  The Arbor Investment Planner provides the information you need to manage your portfolio, including the Arbor Asset Allocation Model Portfolio (AAAMP), trade alerts, and updates. For more information please contact me directly at KFinvest@aol.com,  281-719-8904, or visit our website at www.AAAMP.com.

Additional investment articles by Ken Faulkenberry available at: www.AAAMPblog.com. 

By Ken Faulkenberry

One of the best investment strategies is to pay yourself first with automatic investing. Set up automatic deposits from your savings or checking to your investment accounts. Your first priority for investment is a 401K plan matched by your company. Always invest enough to get your company match.  This is even better than free money, because this is free money that can grow and take advantage of compounding.  It’s the equivalent of a 100% gain the first day. Once you have set up deposits sufficient to receive your “free money”, set up automatic investments to your Roth or Traditional IRA (Traditional IRA, Roth IRA, or Both: http://tinyurl.com/y9ndg8w). These retirement vehicles offer substantial tax and growth advantages.

Automatic investing has several benefits including simplicity, convenience, time savings, and keeping you disciplined. It’s too easy to find an excuse to skip an investment deposit when you have the option. Maybe you are busy or on a tight budget this month; or choose not to invest because of a market that is down or falling. Emotions, including fear and our desires for immediate gratification, can cause us to do exactly the opposite of what we should do.

Another benefit of systematic investing is that dollar cost averaging is a powerful investment strategy. Because your investment buys more shares when prices are low and less shares when prices are high; your returns can be optimized over time. By investing the same dollar amount each month the average cost of the asset being purchased is lower than buying an equal number of shares each time. In addition, investing in small regular increments removes the chance of making a large investment allocation just as the market is peaking.

Simplicity, convenience, time savings, discipline, and dollar cost averaging make paying yourself first with automatic deposits one of best strategies to grow your investment portfolio. The Arbor Investment Planner provides subscribers the information they need to successfully self direct their investments. If I can help you please feel free to call me at 281-719-8904.

More of Ken Faulkenberry’s Investment Articles and Posts can be found at: www.AAAMPblog.com. 

By Ken Faulkenberry

The BP oil spill and BP dividend cut highlight the importance of the portfolio risk management principle that company specific risk can be nearly eliminated through diversification. Before the oil spill disaster BP might have appeared to be a safe investment even for the conservative dividend investor. Yet in one day it became a high risk stock to own. This demonstrates how critical it is to limit company specific risk by limiting the percentage of any one stock within a diversified portfolio because it is impossible to predict when, where, or to what company a calamity will hit.

Every few years we witness the collapse, or near collapse, of major corporations.  And yet with each collapse we find investors who have placed a large portion of their investment portfolio in one stock; leaving them vulnerable to risk that can affect any company. Regardless of perceived safety or prospects of any individual company, an investor should always limit the percentage of their portfolio in any one stock.  This is particularly true for employees who frequently make the mistake of having too much invested in the company they work for.  In 2000, Enron employees not only lost their jobs, but many lost their retirement plans and life savings because they were not properly diversified.

The Arbor Asset Allocation Model Portfolio (AAAMP) never invests more than 5% of its portfolio in any one stock.  The portfolio’s average dividend growth holding is 2.5% of the portfolio, greatly reducing the risk of owning any one stock. The BP oil spill has once again demonstrated that asset allocation and diversification are critical risk management principles of investment management.

More of Ken Faulkenberry’s Investment Articles and Posts can be found at: www.blog.ArborInvestmentPlanner.com