The following article discusses three more tips for a better retirement. These tips apply for this year, 2013. Read on to see how these tips can best help you and your financial situation.

The 3 Best Retirement Tips Of 2013

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Retirement planning should be on everyone’s mind, whether you are a baby boomer reaching the end of your working life or a 20-something just starting out. One of the smartest financial advisors gives us her take on how to do this: Manisha Thakor is the CEO and founder of Money Zen Management in Santa Fe, N.M. – an independent boutique advisory firm focusing on the needs of high net worth women and families. Her suggestions:

As we ease into the New Year, we also welcome some changes that make it easier to retire with a solid nest egg.

Here are three simple steps that you can take in 2013 to maximize your retirement savings.

1) Take advantage of higher workplace retirement plan contribution limits.

In 2013, you are allowed to contribute $500 more to 401(k) and 403(b) plans than in 2012, bringing your total maximum possible annual contribution to $17,500, if you are under 50 years old.

Doesn’t sound like a big deal? If you are 25 and you save an extra $500 annually until you are 70, that extra $500 a year is worth $142,000, assuming an average annual return of 7% over that time.

If you are over 50, the government allows you to contribute even more. You can save an extra $5,500 on top of the new $17,500 limits, bringing your maximum annual workplace contribution to $23,000. The over-50 limit stays the same for 2013. This extra contribution applies to federal employees’ Thrift Savings Plans – as well as to private-sector 401(k)s, which are for profit-oriented companies, and 403(b)s, for nonprofits.

Despite their less-than-friendly sounding names, referring to sections of the U.S. tax code, these programs are your friends. Payroll deduction helps you save because, when a recurring sum automatically comes right out of your paycheck, you don’t have to consciously put the money away.

These programs also have two turbo-powered functions that can work in your favor: matching contributions from your employer (although not all companies make them) and the tax-deferral on your contribution – the money gets withdrawn from your salary before taxes, and you are taxed only when you take it out later.

2) Enjoy higher IRA contribution limits.

Limits for individual retirement account contributions also increase in 2013. If you earn income from work and are younger than 50, you can contribute up to $5,500 to an IRA. If you are over 50, you can contribute an extra $1,000, bringing the total to $6,500.

If you want to save more than the limit in your IRA or 401(k), you can go right ahead and do so, but you don’t get the benefit of a tax deduction for it. Higher contribution limits means more tax savings.

Stay-at-home parents can also contribute to their own IRA based on a spouse’s earnings from work.

3) If you qualify, use the Saver’s Credit to minimize taxes.

This is a little-known tax credit for low and middle-income workers that no qualified person should pass up. Depending upon your tax filing status and adjusted gross income, you may be eligible for a tax credit of $1,000 to $2,000 for saving for retirement with an IRA or other plan.

For example, if your tax filing status is single, and your income is $29,500 or less, you might be able to get a $1,000 tax credit. A tax credit is much more valuable than a tax deduction, as it represents a dollar-for-dollar reduction in your income taxes A dollar deduction, for someone with a 25% marginal tax rate, results in only 25 cents of savings.

Transamerica’s Center for Retirement Research found this valuable benefit to be quite underutilized. Only 21% of workers earning less than $50,000 a year even know that the Saver’s Credit exists.

It’s easy to get caught up with the gloom and doom in the headlines and worry about things that you can’t do anything about, like the fate of the euro or U.S. budget problems. So this year, focus on what you can control and take these powerful steps to increase your retirement savings.

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.

With yesterday’s presidential debate, one has to wonder how this year’s election will affect their portfolio. Read on about the about the market trends with different presidents.

Can You Build A Politics-Proof Portfolio?

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Who will make you richer, dear investor? Mitt Romney, or Barack Obama?

Ideology aside, if you just put a measly $10,000 on Bill Clinton‘s first day in office and took it out on his last day, you would have done much better than if you put it in the market on Bush’s first day and took it out on his last.

This year’s election is all about the economy, the markets.  Sure Monday night’s debate will be about foreign policy. But this isn’t the “islamofascists under your bed” years of the Bush administration.  The Iraq War is over.  Afghanistan is winding down. Osama bin Laden is dead. Americans aren’t been flown in to Libya to aid in regime change.  These are different times, and Americans are by and large not that interested in foreign policy. Only political junkies and conspiracy theorists have a stake in this debate.

What we are interested in however, is money!

Homeland security?

No. Job security is much harder by comparison, and more home grown. We also do not want to lose anymore in the 401k than we already did back in 2008.

“I think when it comes to investing, this a wonderful moment in time to be a coward,” says Eric Singer, fund manager of the small Congressional Effect Investor mutual fund (CEFFX).

Market pros constantly try to ascertain how external events, from wars to famine, but also legislation, affects stock market performance. Presidential election cycles are no exception.  Right now, the Republican voters on the streets will tell you that the reason the economy is so bad is because companies are afraid of Obamacare. However, that theory can easily be debunked.  The predecessor of Obamacare is happening in Massachusetts.  It’s unemployment is below the national average.  Companies are not fleeing the state because of healthcare reform.  Nor, obviously, have they stopped hiring.

So the other issue is regulatory uncertainty.  That is a fact.  A Republican controlled Washington will be deregulatory.  But a Republican White House with a Democratic Congress will likely be just as confusing as things have sort of been under Obama.

Economists, historians, and stock market analysts have crunched copious amounts of data over the years to predict market movements, and the results hold promising news for investors. Since World War II, the S&P 500 Index has risen in 12 of the 16 election years, delivering an average annual return of 8 percent, according to Ned Davis Research.

Looked at over a long period of time, as in decades, clear patterns begin to emerge between elections and market cycles. Twelve of the 16 bear markets between 1942 and 2002 happened in the second year of a presidential term, according to research by Marshall Nickles of Pepperdine University. Bull markets, on the other hand, typically run during the last two years of a president’s term.

The highest gains are generally posted during the third year of every president’s term, which average an annual bounce of 12 percent, when the market is more accustomed to the macro trends.

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.

It can be risky to base your investment philosophy off of which political party may or may not win the upcoming election. Read the following article for sounds tips on staying grounded during election time.

Real World Politics Meet Real World Investing

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This is the time of year when you start to see investment ideas based on predictions of the US Presidential Election. There are lists of stocks that should or could go up under a Republican administration and a companion list of companies that are predicted to rise under a Democratic administration.

Personally, I don’t think selecting specific stocks tied to the outcome of an election is a very good idea.  While investors could select the right stock for the right reasons, there’s too much company specific risk in any given stock:  loss of a key supplier, scandal, management changes, unfavorable currency fluctuations. And many election issues are not simply resolved by who ends up occupying the White House—far more complex analysis is required.

The free market, in theory, can do some of this homework for you. These same election issues are already being voted on daily, ahead of November 6, in Benjamin Graham’s “voting machine” across many companies.  Motif Investing recently published 21 thematic indexes—called motifs—to “poll the votes” ahead of the election: everything from Obamacare to Cleantech. This policy-tracking isn’t completely scientific, not yet at least, but politically-oriented motifs offer a window into how each Party’s policy positions are playing out in real economic terms, which for self direct investors, could prove to be a useful tool.

The top performing Republican issue motif index for the last month was Guns, Guards and Gates, up 2.5% for the month and 15.9% for the year. This index includes companies such as Smith & Wesson (SWHC), Tyco International (TYC), Alliant Techsystems Inc. (ATK) and other security companies.   Although the President has not done much to affect relevant laws, guns is always a safe get-out-the-vote issue for the Republican base.

Likewise, the top performing Democrat issue motif index for the last month was Senior Care that includes companies such Medtronic Inc. (MDT), Fresenius Medical Care AG & Co. (FMS), and DaVita Inc. (DVA). It is up 2.9% this month and 27.7% for the year. With Obamacare front and central in this election, this index tracks the companies that benefit from a growing insured ranks and an aging America.

In addition to the specific issues, this is an election about big money donors. President Obama and Governor Romney could end up spending over $1B each on this election. Just as some polls show President Obama with a slight edge, the Democratic Donors motif index is ahead of the Republican Donorsmotif index. Specifically, Democratic Donors that includes stocks like Time Warner (TWC), Google (GOOG) and Microsoft (MSFT), is up 2.6% for the month, up nearly 33.5% in the past year.  While the companies in Republican Donors which includes Goldman Sachs (GS), Exxon Mobil (XOM) and Sheldon Adelson’s Las Vegas Sands (LVS) —increased 1.3% over the past month and 25.3% over the past year.

Unfortunately, no matter who wins the election, many Americans believe that the country is going to remain polarized into haves and have nots, with neither the Republican or Democratic agenda dictating the business climate. For that the Income Inequality motif index tracks stocks that caters to the 1% and the 99%.  This index consists of luxury retailers like Saks (SKS), Tiffany (TIF) and Ralph Lauren (RL) as well as deep discount retailers like Big Lots (BIG) and Dollar General (DG).  It is down 0.1% for the month, but up 20.3% for the year.

Tonight many of these issues will be on display in the vice presidential debate between Paul Ryan and Joe Biden.  There will be lots of chatter and noise the next day from pundits, with the somewhat ironic result that real clarity may be hard to come by.  I will instead be watching how investors vote with their buys and sells. Especially until the real votes come in on November 6.

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.

With the next presidential election quickly approaching, many investors are concerned about the impact the election will have on their investments. This article reminds investors to keep an overall long term strategy versus focusing on the immediate political impact to the economy.

This Year’s Election Proves Politics And Investing Don’t Mix

visit Business Insider to view the complete article

The battle for the White House is beginning to heat up, and no one feels the burn more than investors, who plan to move assets in the next six months.

That’s according to a survey released on Thursday by financial services firm Edward Jones, who found that 90 percent of investors are wary of what the next president will do to their nest egg.

“We didn’t expect 90 percent to say they’re making changes,” Kate Warner, investment strategist at Edward Jones, told Your Money. “But economics drives investment decisions, so if you tie politics to this, it makes sense.”

We asked Warner to elaborate on the survey and explain the fear that’s been driving investors’ decisions around this time.

Tax concerns. Though Warner believes most investors “aren’t paying close attention” to what either candidate is saying, both Obama and Romney have warned that if the other guy is elected, voters will see higher taxes. “I think that’s registered (with voters) and reinforced this fear among higher income respondents,” says Warner.

The recession. Both candidates play up the sluggish economy in their rhetoric, using imagery that’s sure to elicit fear and raise tempers—think unemployed factory workers, struggling families, and spoiled rich kids. “It’s making people feel worse,” says Warner, so “they want to be more conservative in their portfolio,” putting more of their assets in bonds than in stocks. “However bad you think the economy is, listening to the campaigns makes it worse,” Warner notes.

Sweeping changes. The notion that whoever wins the election will push the country in a different direction is a prevalent one, says Warner, and it’s enough to scare investors into making some drastic changes.

Regardless of who gets elected, however, Warner urges investors to “think long-term” and “not mix politics with investing.” As we’ve noted before, making an investment decision that’s based on emotion, and particularly fear, could lead to loss and regret later on. It’s better to ground decisions in rational thought, or as personal finance guru Carl Richards would put it, to focus on the process and not the outcome.

“Some people might respond by thinking they need to do something different, when in fact, that may be a mistake,” Warner says. “It’s important to remember that while the election will be in the history books, people’s portfolio’s need to last a lifetime.”

The long-term growth of the economy and your earnings will matter more over time.

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.

The following article provides a good explanation on the risks inherent with owning US Treasuries at this time.

Treasuries & The Retirement Crisis

visit Seeking Alpha to view the complete article

I’m shocked to see how many average individual investors are still clinging to bonds. For many older investors, 50%-plus of their assets are in low-yielding US Treasuries. My jaw hit the floor when I heard this.

The common rationale goes something like this:

“Yes, government bonds provide very low yields but at least my capital is safe.”

Unfortunately, nothing could be further from the truth and this way of thinking is going to lead to a retirement crisis. Let me explain:

1. Income is at risk: First of all, it is wrong to simply dismiss the impact low yields can have on an investor’s portfolio and lifestyle. Today, if an investor wishes to live off coupons from 10-year US Treasuries, he’ll need a $3-million-plus portfolio to generate about $50,000 in annual income. This is simply not realistic, considering the average portfolio size.

2. Capital is at risk: While 30-year Treasuries could rally to a sub-2% yield (perhaps when EU crisis 4.0 hits), the risk-return profile doesn’t justify the opportunity. The ‘rallying room’ - that is the gap between current yields and the theoretical floor of 0% - is the smallest it has been over much of history. So to place so much faith in the continued flight to safety is to make an ill-balanced bet. The upside to yields is far greater than the downside.

True, investors holding US Treasuries to maturity will get their principal back. But you have to remember that when you’re dealing with a super-low yield to maturity the real return is often negative to begin with. Buy-and-hold Treasury investors are facing major headwinds even if yields don’t change.

But someday yields will normalize. That day may not happen in the next couple years, but it could. The markets are unpredictable. Did anyone five years ago forecast that US Treasury yields would be as low as they are today?

If yields continue to drop, Treasuries would rally, but I think investors should save the rate squeezing for the speculators. And that’s okay. In fact, for the more sophisticated Seeking Alpha readers, this might be a viable trade. But it takes a lot of time, effort and intestinal fortitude to profit from the last 100 basis points of a 30-year bond bull market. So be warned.

However, for the average retiree looking to preserve their nest egg, it’s time to dial down the exposure to US Treasuries. This doesn’t necessarily mean reducing the allocation to 0%. But it is imperative that investors evaluate their vulnerability to a single market factor - interest rate risk - and diversify accordingly.

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.

Understanding and Managing Political Risk

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International investing can be a powerful way to boost the performance of your portfolio. But investing in foreign markets also involves risks that can sometimes be much greater, or at least more complex, than the risks that investors normally face when investing at home. Political risk is one important example.

What is Political Risk?

For investors, political risk can simply be defined as the risk of losing money due to changes that occur in a country’s government or regulatory environment. Acts of war, terrorism, and military coups are all extreme examples of political risk. Expropriation of assets by the government – or merely the threat – can also have a devastating effect on share prices.

In early 2007, Venezuelan President Hugo Chavez abruptly announced plans to nationalize CANTV, the local phone company. CANTV’s shares plunged almost 50% before the details of Chavez’s plans emerged. Investors sold first and asked questions later.

But political risk comes in many other forms. Other examples include: a new president or prime minister, a change in the country’s ruling party, or an important piece of new legislation. All of these changes can have a big impact on a country’s economic environment and investor perceptions about a country’s prospects.

Managing Political Risk

Unlike economic or financial variables, political risk is more difficult to quantify. While it is possible to calculate political risk “scores” or other quantitative-looking benchmarks, it’s important to remember that these are ultimately based on qualitative judgments. There’s no substitute for doing your own research and coming to your own conclusions.

The Economist’s Country Briefings are a great place to start. These reports contain a wealth of background information a country’s government, politics, and economy. Some questions to keep in mind: Are there any important elections coming up soon? If so, who are the candidates/parties and what are their economic policies?

The name of the game here isn’t to avoid political risk completely. Even if you keep all of your investments in the U.S., you are still exposed to decisions in Washington DC. One of the keys to success in international investing is understanding political risk so you can make better decisions.

As with other kinds of risk, the only tried and true method for mitigating political risk is diversification. Be sure to spread your international investments around in a variety of countries and regions so that you won’t get hurt too badly even if your political risk calculations turn out to be off the mark.

chart courtesy of CNNMoney

The effects of the European debt crisis on the U.S. stock market are undeniable. The following article outlines what you need to know and what the outlook is for investors. 

Market’s biggest risk? Duh. It’s Europe.

by Hibah Yousuf
visit CNNMoney to view the article

NEW YORK (CNNMoney) — It’s been on and off the back burner for a year and a half, but the European debt crisis is finally nearing a boiling point.

In fact, more than 80% of the experts surveyed by CNNMoney agree that the money problems across the Atlantic are the most challenging hurdle for stocks, which have been struggling to claw back from the lows they hit earlier this month.

“Europe’s debt crisis is the No. 1 risk facing the market right now,” said Fred Dickson, chief market strategist at D.A. Davidson & Co. “Each step made toward solving the sovereign debt or bank reserve issues seem to raise new question, and the news suddenly changes from being very negative to very positive and vice versa.”

Investors first became troubled by the eurozone’s fiscal woes in early 2010, as worries about Greece defaulting on its debt spread to the other so-called PIIGS, including Portugal, Ireland, Italy, and Spain.

Policymakers were able to ease those concerns with bandages of bailouts and austerity measures, and events like the Arab Spring helped distract investors, at least temporarily. But the crisis continued to escalate and has gripped investors’ attention for months.

Europe’s debt crisis: 5 things you need to know

Lately, every time any incremental progress has been made toward solving Greece’s debt problems or the spreading European crisis, investors react with a surge of optimism and stocks rally.

But when political conflict or rating downgrades take over the headlines, it’s like splashing cold water on that optimism and stocks tumble.

Amid all the mood swinging, the S&P 500 has mostly been moving choppily sideways between 1100 and 1200.

“If we see some sort of plan or deal that settles Europe’s issues, that will relieve a lot of the uncertainty that markets hate [and] stocks will be able to break out of the range to the upside,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research.

But that may still be a ways off. Late Tuesday, Slovakian lawmakers rejected a plan to overhaul the European stability fund. Slovakia was the last of the 17 eurozone countries to vote on changes to the fund, and the only country to reject those changes.

Even a Greek default, which is now widely expected, would help ease tensions, he added.

“With all the negative priced into the market, a default by Greece wouldn’t be the end of the world,” Detrick said. “In fact, it could be a potential positive to get some uncertainty out of the way.”

CNNMoney survey: Where the markets are headed

Investors would breathe an even bigger sigh of relief if European leaders announce a plan to recapitalize the banks that have exposure to Greece and other debt-laden countries.

“What we want to see is essentially what would be a TARP fund to finance and isolate the bad assets at banks, like Belgium is doing with Dexia,” said D.A. Davidson’s Dickson.

Last weekend, the leaders of Germany and France, Europe’s two largest economies, said they’ve agreed on a “comprehensive package” of measures to address the eurozone sovereign debt and banking crisis, but were tight-lipped about the details. The plan is expected to unveil at the G20 meeting in Cannes Nov. 3 and 4.

Meanwhile, European Commission president Jose Manuel Barroso is expected to announce his own recapitalization plan Wednesday afternoon.

As long as the risks of a contagion are contained, Europe’s debt crisis should move out of the limelight, allowing investors to focus on the U.S. economy and earnings. But that doesn’t mean it won’t creep back in later.

“We’ll be talking about Europe for the next five years probably,” said Dickson. “For the situation to really abate, there need to be signs of better economic growth in southern Europe — Greece, Spain, Italy and Portugal.” 

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.

Today’s market activity with early losses followed by a late rally, are evidence of what a volatile environment investors are faced with. While concerns about conditions in Europe and Greece are factors, there are many influences on stock prices. The following article outlines some of those influencing factors on the market.

Three Main Influences on Stock Prices

by Ken Little
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There are three main areas of influence that move a stock’s price up or down. If you understand these influences, it will help you decide whether the price movement is a buy, sell or sit tight signal.

Fundamentals

Clearly, the most direct influence on a stock’s price is a change in the economic fundamentals of the business.

If revenues and profits are on a steep upward trend with no indication of leveling off, you can expect to see the stock price rise as investors bid up this attractive company.

On the other hand, if the profit picture is flat or, worse, declining with no change in sight, look for investors to abandon the stock and the price to fall.

These are simple examples of changes in fundamentals. Other, more complex and subtle changes can occur that may not dramatically affect the stock price immediately (increased debt, a poor acquisition and so on can also trigger price changes).

The point is that changes in the underlying business have a direct impact on the stock’s price. Smart investors spot the subtle changes before they become price-movers and take the appropriate action.

Sector Changes

Changes in the stock’s sector can have positive or negative affects on price too. Some sectors or industries are cyclical in nature and you should know that would affect price.

However, when whole sectors catch of fire (think dot.com stocks) or burn up (think dot.com stocks, again), even those companies that have solid fundamentals are pulled along with the rest of the sector.

You may hold a stock that is a victim of “guilt by association” when an industry falls out of favor. Likewise, stocks can see prices artificially inflated if they find themselves in the right industry at the right time.

Market Swings

The market goes up and the market goes down. That’s about all you can say with certainty concerning the stock market.

As the market moves up and down, your stock may move with or against it. Most large-cap stocks will follow the market to some degree, but smaller companies may not get the same push every time.

In general, a strong market move either up or down will carry more stocks with it than not, so your stock may be up or down for no other reason than the market was up or down.

Conclusion

How do you use this information? A change in fundamentals may be an opportunity to buy more shares of a growing company or it may signal the time to sell if the changes are for the worse.

A change in the sector is usually temporary so most long-term investors will ride out dips due to these factors. However, if something drastically changes in the stock’s industry due to regulation or a new technology, for example, you may want to reevaluate your position. Is the company capable of adapting or do you own a dinosaur?

Market swings that move your stock’s price can be opportunities to buy additional shares (assuming all the company’s fundamentals still checkout). If the rising market pushes up your stock’s price, it may be time to take a profit on part of your holdings and wait for the price to come back down to earth to reinvest.

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.

With the market continuing its record moves and volatility, and testing the recent lows, an investor may wonder what will happen next. In the short-term, the market is extremely oversold and sentiment is extremely negative. It can be very hazardous to sell into this condition. The following article provides pointers to protect your investments during the current market conditions.

How to React to Stock Market Panic

by Wojciech Kulicki on August 9, 2011

visit Fiscal Fizzle to view the original article

Unless you religiously avoid the news, you’ve no doubt heard that the stock market took an absolute beating in the last 2 weeks, and the road is shaky going forward.

The Dow Jones (a good measure of the market’s largest players) closed at 12,724 on July 21st, and finished at 10,813 as of Monday, representing a drop of more than 15% in a little less than 3 weeks.

In dollar terms, if you had $100,000 in your 401(k) and were fully invested in the general market, you could expect to have about $85,000 in the account today. That’s a painful reality to face for anyone, even long-term investors.

The reasons for the most recent drop are many:

• The fight in Washington, D.C. over raising the U.S. debt ceiling.
• S&P’s downgrade of U.S. debt for the first time in history.
• Traders taking profits.
• Fear.

I’ve broken my own rule (don’t pay attention to the markets) and have followed the story with some interest, though I have not executed any trades. I’m staying put because that’s the plan I’ve committed to. My advice for riding out this rough patch remains steady and simple:

Understand your portfolio. What kinds of instruments are you invested in? If you’re holding cash, money market, treasuries, bonds, and even some types of stocks, a market crash will affect you very differently than a person who owns only stocks. In fact, if the majority of your money is in “low-risk” investments, your panic is probably unnecessary.

Maintain perspective. This is a chart showing the Dow Jones from roughly 2005 through today (from Google Finance):

Although this month’s drop is eerily reminiscent of the plummeting markets in 2008, it’s important to understand how far we’ve come since the lows of 2009. If you want a larger perspective, look at the Dow from 1980 to today.

Exit carefully. If you’re planning your escape from the markets, be wary-most of your losses may already be on paper, and getting out could spell missing out on a short-term recovery. Researchers have long understood that a down market is more painful to the investor than an up market is pleasurable, but working through the emotions is what will set you apart.

But do cut your losses. If you have a stop price you’ve pre-determined before the crash and that price is reached, don’t think twice about cutting investments loose. The important thing is to follow the strategy you’ve outlined for yourself and not get caught up in the moment.

Enter aggressively. If you have cash on the sidelines, downward spikes may be the best opportunity you’ll have to get into stocks at cheap price. If most of your portfolio is in liquid assets, seriously consider this as the time to buy, and use the rebound to give your portfolio a lift.

All of this should work, unless of course, it turns out that we’ve barely scratched the surface on this crash and the worst is yet to come. Let’s hope not…

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.

Photo from Wall Street Journal online

 The following article was taken from the Wall Street Journal online article on August 16, 2011. This article discusses some investing strategies that are used by one of the richest families in America: The Walton’s.

 Smart investing tips from Sam Walton

To view full article, please visit Wall Street Journal online.

After the stock market lost 20% of its value in October 1987, Sam Walton, then one of America’s richest men, was unfazed.

In less than a week, the value of his Wal-Mart stores stock had dropped almost $3 billion, reducing his wealth to a mere $4.8 billion. It’s paper anyway,” he told the Associated Press. “It was paper when we started and it’s paper afterward.”

Given the wrenching swings of the past two weeks, many of us may wish we could be so sanguine about our own losses. But even without a few extra billion dollars in the bank, there are useful lessons to be gleaned from the way the Waltons and other ultrarich families cope with investments and market volatility.

Just like us, the rich want to maintain their lifestyle, preserve wealth and hyave money for their heirs or philanthropy. And when it comes to investing, there are several ways the rest of us should take a cue from them:

The very wealthy have a plan. Sam Walton’s plan started in the early 1950s, when, on the advice of his father-in-law, he set up a family partnership, made up of him, his wife, Helen, and their four children, to own his two variety stores. By doing that, he began planning his estate and building family wealth years before he opened the first Wal-Mart in 1962.

Nowadays, most very wealthy people have a team of advisers and an investing strategy in place that should work even when the worst imaginary case becomes real. Small investors, too, should have a comfortable investment process that works in good times and bad.

A financial adviser can be invaluable in helping you with this, but so can a trusted family member or friend who will help you stick to your plan when you start to doubt it.

The very wealthy live below their means. Walton, who died in 1992, was famously frugal, driving an old pickup truck and flying coach. Many very wealthy people spend much more extravagantly, but even so, “most of our ultrawealthy clients have a lifestyle that is well below their means,” says Craig Rawlins, president of Harris myCFO Investment Advisory Services, which serves wealthy families.

When you don’t spend everything, he says, “you have a better opportunity to weather this volatility because you know there’s a cushion there.”

The very wealthy focus on risk, not return. Larry Palmer, managing director, private wealth management, at Morgan Stanley Smith Barney, said he has never had a client says, “My objective is to have my family wealth beat the S&P 500.” Rather, he says, clients focus on what kinds of risks they are taking with their portfolio.

The Walton family weatlh long has been tied to its Wal-Mart stock, now valued at $83.6 billion. But Sam also bought the tiny Bank of Bentonville in 1961, and it is now part of the family-owned Arvest Bank, an $11.5 billion banking company. Walton Enterprises also owns a chain of small newspapers that, along with other interests, offer diversification and push the family’s estimated combined wealth close to $100 billion.

Small investors need to similarly manage their portfolios, making sure that their holdings of stock and other volatile investments aren’t so great that they are putting more at risk than they intended to.

The very wealthy hang on. The super-rich don’t sell because they are fearful-though some may be selling right now for investment reasons, such as cutting the tax bite on holdings with big gains. The Walton family ownerships of Wal-Mart stock hasn’t changed since late 2002, when some shares were transferred to charitable funds.

In that sense, Sam was spot on. Though the Walton family’s Wal-Mart shares have dropped by more than $10 billion since mid-May, until the stock is actually sold, the losses really are nothing more than paper.

 Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.