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Risk

Risk. Long Term – lose everything Short Term – Investments are down and we need cash now, forced to take losses. Liquidity – Where?. T-bills: minimum $1,000 face value maturities of 4 weeks, 3,6,12 months. Exempt from state and fed taxes

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Risk

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  1. Risk • Long Term – lose everything • Short Term – Investments are down and we need cash now, forced to take losses

  2. Liquidity – Where? • T-bills: minimum $1,000 face value maturities of 4 weeks, 3,6,12 months. Exempt from state and fed taxes • www.treasurydirect.gov --- don’t buy in secondary market • Pimco Total Return Fund or BOND

  3. Preferred Stock* ETF: iShares S & P U.S. Preferred Stock Index (PFF) 246 Preferred Stocks Preferred stock is like a bond that never matures. Well not quite, since many have call provisions. • REITs* • Vanguard VNQ (ETF) • iShares IYR (ETF) • Schwab SCHH (ETF)

  4. Bond Index Funds • Aggregated Funds* • Government* • TIPs* – for tax advantaged accounts – inflation hedge, diversifies the portfolio with real return

  5. Bonds – Indexes, sort of • High-Yield (Junk) • Foreign • Emerging Market • Real-Estate

  6. Close Ended Funds • Trades like a stock on a market exchange • Holdings are selected by the fund manager • The price of a unit is determined by the market and is seldom = NAV • May be leveraged

  7. How to Rebalance • Set a fixed date a year or two in advance. • Calculate your current expected allocations using the tool. • Sell those asset classes that are over your percent allocation to bring them in line. • Buy those that have fallen and are below your intended allocation.

  8. If you can keep your head when all about you are losing theirs… Yours is the Earth and everything that’s in it… --Rudyard Kipling, If

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