Site Updates and News

There's a lot going on at ValueAverager.

Latest Release
We just released the most recent version of the site on Friday. Here are the updates:

1. You can now modify all aspects of your portfolio from the "Portfolio Dashboard" section. This was critical functionality that was missing until now. You can change your goals, assumptions, holdings and asset allocation on any existing portfolio from the Portfolio Dashboard.

2. Create a graphical representation of your Value Path. When you view the Value Path during setup or in the Portfolio Dashboard, you will see a "Graph It" button. This launches a graph of your Value Path showing how you will work towards your goal over time. (Click the thumbnail below for a preview.)


3. A free Value Path generator. From the homepage, you can now generate a Value Path for your own use outside of ValueAverager, or just to experiment without going through the portfolio setup process.

One Month Since the Beta Launch
We launched the ValueAverager Beta one month ago. Since, then we've been very happy to see how many people signed up and were willing to give Value Averaging with ValueAverager a try. Since Value Averaging is a process that is done on a monthly or quarterly basis, the first users who signed up for the beta are now just starting to get their email notices that it's time to put their portfolio back on the Value Path. This is a critical time, as we will begin to see how this process actually works for users!

As always, if you have any problems or questions, email us at support@valueaverager.com or post to the Forums.

Beta Extended
The ValueAverager free beta period has been to September 30. If you know somebody who may like ValueAverager, please do them a favor and tell them now, so they don't miss this opportunity. Remember anybody who signs up during the free beta period gets free ValueAverager for life!

Discuss this post here.

New Video Available - Period Analysis

I've posted a video of the Period Analysis process. This is process you do with ValueAverager on a monthly or quarterly basis to keep your portfolio on your Value Path. You will see how ValueAverager evaluates the portfolio to determine how far off the value path it has gotten. You also see how it uses trades (in the video they are buy trades) to tilt the portfolio a bit closer to its target asset allocation.

ValueAverager not only keeps track of how well your portfolio is staying on its Value Path. It also keeps track of how close your portfolio is to the target asset allocation, if you set one up. Each time you make trades to get back on your value path, ValueAverager optimizes those trades using your asset allocation as well.

Please watch the video, then take a moment to think about trying to do this on your own with a calculator or with Excel. Even if you enjoy working out problems like that, ValueAverager will still save you significant time.

The video is here.

Discuss this post here.

Is the Era of the Financial Advisor Coming to an End?

Is financial advising dead? Are investors ready to plan for their retirements and other life goals on their own? I believe we're entering a new post-advisor era. DIY investors have several things going for them:

• The creation of so many legal tax shelters for small-time investors. These include 401(k)s,IRAs, Roths, SIMPLE accounts, SEP Accounts, Health Savings Accounts, and 529 Plans. For many people it is possible to do all of their saving beyond the reach of the tax man. Most people don't appreciate what a wonderful opportunity this is.
• The shrinking expense fees on index mutual funds and the introduction of ETFs. These give the small-time investor access to the lower costs created by huge economies of scale.
• The internet and computer technology, which make it possible to track your portfolio and run the models that financial advisors used to do for you.

The demise of the financial advisor profession couldn't come soon enough. Commission-based financial advisors have a huge incentive to push their clients into investments that earn the advisor the biggest commissions. Those commissions are paid out of high fees, which are paid by the investor. Even if you ignore the fees, those investments are usually bad choices. Financial advisors have been known to tell their clients to open tax-deferred annuities inside their IRAs or purchase cash-value life insurance policies. This disastrous advice is given out quite frequently. Those products pay high commissions to financial advisors, but they are rarely in the client's best interest.*

Even fee-based financial advisors aren't worth the money. The problem is they are almost always going to offer you conventional advice. Since the advice is conventional, you can easily get it on your own just by doing a little research. Having a fee-based advisor is like having one-too-many cooks in the kitchen. Why be compelled to explain yourself to this person when you don't take his advice? You can do it on your own!

A new Golden Age of investing is here! Take charge of your financial future, now!

*Incidentally, this problem is similar to the situation that created the sub-prime mortgage crisis. Mortgage brokers are supposed to put their client's needs first, but they generally end up pushing products that pay the highest commissions. Today we are seeing the pain this causes as a lot of people are going to lose their homes and/or declare bankruptcy. The financial planning industry is also having a calamitous affect on people, but the result of this won't be clear until they are forced to delay retirement or reduce their standard of living.

Discuss this post here.

A Value Averaging One Pager and Example

Up to now, we've had very little information about Value Averaging on the ValueAverager website. We're working on that as we continue to work on the technology side as well. The first two articles are now available. Please come check them out and I invite your comments:

A Value Averaging One Pager
A Value Averaging Example

Discuss this post here.

ValueAverager Beta is Live

Today, I'm making two announcements:

1. ValueAverager Beta is live
2. Beta test users will get a lifetime free membership

The Offer:
Sign up for ValueAverager between now and September 15 and your lifetime membership is free. After September 15, memberships to ValueAverager will only be sold on a lifetime basis and will cost $200. Please come and register today because it would be a shame to miss out on this offer

When you're ready to sign up, you'll need to come prepared. The following is needed to get set up with ValueAverager:

* Information about your investment accounts and holdings
* Your goal. You need to decide how much you are trying to save and on what date you want to achieve that goal. There are many online retirement calculators that can help you figure this out. Here's a helpful list
* OPTIONAL: Information about your target asset allocation and the expected returns of the asset classes you use.

I'm hoping you all will provide your feedback, thoughts and ideas. I've set up a forum on the site for discussion about ValueAverager, what it should do and other topics. I encourage you all to use that as a resource as well.

Discuss this post here.

Video Demonstration

It's getting down to the wire here at ValueAverager. There's still a lot to do and only two weeks left if we're going to keep our commitment to launch in July. I'm not sure we're going to make it, but we're driving hard.

For those of you eager to get a look at what ValueAverager is going to look like, I've created a video demonstration of the setup process. While the setup process probably isn't the most interesting thing I could have shown you, at this point it is the part of the site that is the most polished, so that's what I chose.

Go To Video

I welcome your feedback. Drop me a line at jaymuntz@valueaverager.com

For you, the "Rules of Thumb" are Useless.

If you're not 100% confident about reaching your savings goals, you have a lot of company. I think a big part of the problem is the silly advice given out by so many "experts." Many of these "rules of thumb" will sound familiar to you:

• Save 10% (or 15%, or 20%) of your gross income.


• Set the percentage of stocks in your portfolio to 100 minus your age.


• (Your Age) X (Your Income/10) = Your Ideal Net Worth.


• Just keep buying the S&P 500, and hold it forever.


• A house is always a safe investment. Paying rent is throwing money away.


• Strive to have zero debt.


• Always carry a mortgage.


• Save (don't spend) your raise.

How good is this type of advice? It's terrible! You know it's terrible. That's why following this type of advice does not reduce your financial worries. The main problem is that these rules are not customized to fit your unique situation.

The two most important factors affecting investment strategy are:

1. How much do you have?
2. How much do you need to realize your dreams?

The answers to these questions should be the basis of your financial planning. ValueAverager has a single-minded focus on getting you from here to there. We do this by helping you implement the Value Averaging investment strategy.

Value Averaging was developed by Michael Edleson and described in his book. It is a strategy with a lot of merit, but it is too complicated for most investors to do on their own.

Value Averaging - Briefly
With Value Averaging, a Value Path is created that specifies exactly how much your portfolio should be worth at every period between your start date and the date you will reach your goal. Each period, you invest the amount of money that is necessary to get your portfolio back to the specified total value for that date. As each period goes by, you get closer to your goal, no matter how your investments are doing.

Example - College Fund
Here is an example Value Path for an investor who wants to plan for his eight-year-old son's college education. He would like to have $100,000 in the fund in ten years' time. In order to execute this plan, the investor needs to contribute about $339.95, per month*. However, the amount the investor contributes in any given month depends on how the portfolio did. If it went up substantially, he may not need to contribute (or he might even sell shares to get back on the Value Path). If it went down, then he will need to contribute more.
Since Value Averaging causes you to invest more money when share prices have dropped, and less money when prices have risen, you will get a higher overall rate of return. Edleson provides extensive documentation of this boost in returns in his book.

If you're new to Value Averaging, this probably sounds complicated. ValueAverager will make it simple. You will plug in your current investments and your goals and the website will do the rest. It will tell you where you are on the Value Path and when to buy and when to sell.

Each Value Path is a concrete plan that is tailored specifically for your situation and your goals.

Check back here for more details about ValueAverager, coming soon!

* This Value Path was created with the following assumptions: Yearly rate of return is 12.68%. Inflation is .5% per month. The $339.95 monthly contribution gets indexed to the inflation rate, meaning that the nominal amount contributed goes up gradually over time. When ValueAverager goes live, it will allow you to control all of these assumptions.