We posted some deeper descriptions on benchmarks in a recent blog post.

A benchmark, as it pertains to investing, is a standard used for comparison in order to gauge performance of a stock, bond, or mutual fund.

Which benchmark is used is determined by what is an appropriate measure for the stock, bond, or mutual fund. For instance, if a mutual fund invested primarily in large, US corporations listed on the New York Stock Exchange, then the Dow Jones Industrial Average could be an appropriate benchmark for comparison.

If this mutual fund then returned 10% in a certain period of time, while the Dow Jones Industrial Average returned 5% in the same period of time, then the mutual fund is said to “outperform its benchmark.” Whether you’re investing for beginners or a seasoned pro, you need a comparison or a benchmark to compare your results against. Wall Streeters have long been accused of picking a benchmark that suits a particular performance, rather than always going up against the most common, and best known indexes.

There are lots of indexes, all of which produce a benchmark/average/index. Here is a partial List Of Financial Market Indexes, an excerpt from Ms Morrison’s Dictionary of Useful Financial Investment Terms

• Dow Jones Industrial Average – Although Charles Dow compiled the 30 stock index to gauge the performance of the industrial sector within the US economy, the index’s performance continues to be influenced by not only corporate and economic reports, but also by domestic and foreign political events. The Industrial portion of the name is largely historical, as many of the modern 30 components have little or nothing to do with traditional heavy industry. Its price-weighted average compensates for stock splits and other adjustments.
• S & P 500 Index – The S&P 500® has been widely regarded as the best single gauge of the large cap U.S. equities market since the index was first published in 1957. The index includes 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities. The S&P 500 is a market value weighted index – each stock’s weight is proportionate to its market value.
• S & P Mid-Cap 400 Index – This Standard & Poor’s index serves as a barometer for the U.S. mid-cap equities sector and is the most widely followed mid-cap index in existence. To be included in the index, a stock must have a total market capitalization that ranges from roughly $750 million to $3 billion dollars. S&P 400 MidCap Index is a value-weighted index, meaning that the stocks with the largest market capitalization have the most significant impact on the movement of the index. Similarly, smaller movements in the smallest companies in the index have virtually no effect on the overall movement of the index.
• NASDAQ Composite – The Nasdaq Composite is comprised of over 3,000 common stocks, limited partnerships, ADRs, of both US and non-US companies. It’s followed as an indicator of the technology and growth company stocks’ performance.
• Russell 1000 Growth – The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
• Russell 1000 Value – The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values.
• Russell 1000 Index – The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000® Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the Russell 3000 Index
• Russell 2000 Growth – The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.
• Russell 2000 Value – The Russell 2000 Value Index measures the performance of small-cap value segment of the U.S. equity universe. It includes those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.
• Russell 2000 Index – The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 8% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership.
• Russell 3000 Growth – The Russell 3000 Growth Index measures the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 3000 companies with higher price-to-book ratios and higher forecasted growth values.

Russell 3000 Value - The Russell 3000 Value Index measures the performance of the broad value segment of the U.S. equity universe. It includes those Russell 3000 companies with lower price-to-book ratios and lower forecasted growth values.

• Russell 3000 Index – The Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market.
• Russell MidCap Growth Index – The Russell Midcap Growth Index measures the performance of the mid-cap growth segment of the U.S. equity universe. It includes those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values.
• Russell MidCap Value Index – The Russell Midcap Value Index measures the performance of the mid-cap value segment of the U.S. equity universe. It includes those Russell Midcap Index companies with lower price-to-book ratios and lower forecasted growth values.
• Russell MidCap Index – The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell Midcap Index is a subset of the Russell 1000® Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership. The Russell Midcap Index represents approximately 27% of the total market capitalization of the Russell 1000 companies.
• Wilshire 5000 – Once 5000 stocks, this index now comprises over 6,700 stocks of publicly traded companies that are US headquartered, actively traded on the American Stock Exchange and are readily priced to the public. It’s a market capitalization-weighted index, which overweights higher firm value companies, and underweights those with a lower firm value.
• Wilshire REIT Index – A market-weighted index of real estate partnerships, Real Estate Operating Companies, otherwise known as REOCs, and publicly traded real estate trusts, otherwise known as REITs.
• EAFE – Europe, Australia & Far East Index, is an unmanaged market-value weighted index that measures the condition of overseas stock markets. Countries represented in the EAFE include France, Germany, UK, Japan and Hong Kong.
• MSCI World Index – An index consisting of a wide selection of stocks traded in 23 developed countries. It is market capitalized weighted and is considered an important benchmark of the state of global stock markets
• MSCI Europe – An index consisting of a wide selection of stocks traded in 23 developed countries- Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. It is market capitalization weighted and is considered an important benchmark of the state of global stock markets.
• MSCI Emerging Markets – a market capitalized idex that measures the stock market returns of 21 emerging countries– Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey
• Lehman Aggregate Bond Index – the best total market bond index used by more than 90% of all US investors, which includes government, mortgage-backed, asset-backed and corporate securities to simulate the entire universe of bonds whose maturities are over 1 year.
• Lehman Government Bond Index – This index tracks most all of the US Treasury Bonds and US Government Agency bonds in the US, including the 1-3 Year Government Index as well as the 20 plus year Treasury Index.

Obviously, we women want to be WISEinvestors (a recurring theme here on my blog and website), yet it’s all about balance. I often speak of a pants pocket analogy when explaining balance, as you’ll hear on this podcast. I also mention and define various risks and warn about the inevitability of losing money while on the road to gaining it. It’s what investments do – their prices gyrate up and down, yet over the long haul, most (not all) make money. People’s “mistakes” or perceived mistakes vary, yet most aren’t so critical they can’t be fixed. It’s how you plan first for the proper “mix” between stocks and bonds (dependent upon your goals) and then systematically re-balance your portfolio that position you to be a BIG winner in the end.How to make money in life is a blend of earned and unearned income and on the latter, we have a choice between active and passive investing. You’ll hear my formula for success, and my firmly held beliefs on the value of passive investing over active investing, based upon years of research.

Enjoy!

Recently, I saw a serious comment from a guy complaining about getting his financial advice from a woman. Presumably, he’s of the “the husband makes it:the wife spends it” school of thought. It’s not uncommon, but I can tell you that after 33+ years as a lone female financial planner, many of those as a CERTIFIED FINANCIAL PLANNER, that women are hard-wired with some special advantages to be very good financial planners. Men, while different, are very successful, too. There is no need for gender slighting.

You might want to know the difference? Here’s my recent comments from a recorded interview taped in December 2011.

Recently, I was interviewed on various aspects of financial advice, and of course, it all boiled down to how to make money in life. Doesn’t it always?

I was suddenly reminded of the Marshmallow Test, conducted by Stanford University, and shared my thoughts here. (Click the play button to start this audio snippet.)

Thanksgiving gathers us together to share various dishes of food that we’re each “known for”.  My mom is “known for” her homemade bread….yum!  She’s also known for her single crust apple pie, her pretzel salad, her coconut macaroon pie, her peanut butter with Hershey’s choco kisses cookies, and actually a whole lot more.

Mom once commented to me of someone who brought a new dish, “well that’s not what she’s KNOWN for”.  Was this a warning to me of a certain lacking on our part to not receive a “known quantity” from this person, or was it to establish a bar over which she would need to catapult with this “new-to-us” dish, in order for her to eventually become “known for” it?  I didn’t know, and I didn’t ask.

Over the last 100 blog posts, I’ve honed what I’m “known for” professionally speaking; in response to what I see as an ever increasing and glaring need for women to take control over their money.  I am “known for” my abilities to empathize with, and inject confidence into:

• mature women who have money, and have no idea of what that money can do for them,
• women who have money, yet they couldn’t tell me one single thing about it after forking over their account statements,
• women who have become suddenly single, who rue the day they didn’t sit with their significant other to review “the numbers”,
• women who may otherwise waste time “worrying” about their money,
• women who may not gift or donate monies out of fear they may run out.

My 33+ years of experience in dealing with such women puts me in a great position to help others who ‘suffer’ similar circumstances.   And I say suffer because the angst of these women is often debilitating.  Luckily I get great joy out of continuously creating new ways to align women with their money, using easy-to-understand analogies that ‘de-fang’ the otherwise painful process, and turn it into an empowering and fun endeavor.

Here’s why it’s important for women to control their money – millions of seconds are passing us by.  Millions of opportunities are presenting themselves, awaiting our response.  Millions of smiles are begging to be shared, millions of moments are in our grasp right now.  And to the extent that money is involved in any of these instances/choices, I want to arm women with the exact tools necessary to understand what they still need to know, and which steps to take next.

Many of us know firsthand due to the loss of a loved one, that life is a gift, and one to be cherished.  So, I’m advocating that we all take an inventory of our lives and our money, and determine exactly what it is that we don’t yet know, financially speaking, and to push through whatever fear may be halting our progress thereon.

So, what are YOU “known for”?   Are you known for assessing a situation and making the most of it?  Are you known for your imaginative and perhaps redemptive actions that you have taken in the past when things “happened differently than what you had planned”?   (Remember, experience is what we get when we don’t get what we wanted.)

Are you known for choosing to focus on positive responses; making every effort to capitalize on situations, and turn them into opportunities?   If you find yourself facing a completely new situation, ask yourself, “CAN I become known for this”?  How can I lead in a situation where I’ve been a follower or even sat on the sidelines up until now?  How can I move up to my own A team?

How in the past, have I surprised myself?  When everyone else said it couldn’t be done, what gave me the courage to forge ahead anyway?  Achieving as much as I’ve achieved, how can I possibly say that “I can’t do it” now, whatever the challenge, yes even money challenges?

I agree with Henry Ford who apparently said, “whether we say we can or cannot do something, either way, we are right”.  So how much more exciting will our lives be, how much more possibility can we expect to savor, how much more confidence will we build by going ahead and doing that very thing that heretofore stymied and/or paralyzed us.  And why wouldn’t we want to jam every possible experience into our ever-so-short lives?

If you have had kids and/or maintained a relationship, these are skill sets that are acquired; people aren’t born with all the answers of how to relate, or how to raise kids.  We didn’t get a handbook about how to build confidence in our kids or nieces and nephews…yet we did it circumstance by circumstance, day by day.  We didn’t enjoy perfect experiences each and every time, of course.  There were mistakes and then there were stupid mistakes.  Yet, haven’t we all learned to somehow frame those mistakes with perspective?

Why do we birth or adopt children then; do we think it will be easy?  Or is it instead that we are interested in, and committed to, building families and fostering relationships that will last years and decades, if we are lucky.

Most women don’t even think of the pain of natural childbirth when they get pregnant.  If young women went into the hospital ward as teenagers and heard the screams of women during childbirth, many would swear that they wouldn’t willingly participate in anything that could even remotely cause that kind of pain; yet so many of us do.  Why?  I guess, we look past that initial pain to the arrival of the baby, and the overwhelming joy that babies inevitably bring.  In other words, we choose to focus on the long-term rather than get caught up and paralyzed with what, in perspective, is VERY minimal–time and energy wise.

One component of everyone’s, and every family’s, life then, is how much money will be required to survive and to thrive?   Of course, each of us defines “thriving” differently.  So it’s helpful to write down what we want to buy, what we want to achieve or experience, and approximate and itemize each of those costs.  Then we can prioritize exactly what are “necessities” and what are “luxuries”, depending on how much money we have at our disposal.

Especially at this time of year, many children make voluminous lists of what they want Santa to bring them.  Secretly many adults make those same lists as well.  And then, reality sets in and someone looks at those long lists and asks the all important question, “of all these things, circle 3 things that you really want” or “of all these things, select whatever you want that costs less than $100.” for example.  So, now people can choose, and take responsibility for their choices, and ultimately the happiness that comes with having those “things” or “experiences”.

So, what choices will we make each and every day about money?  What amount will we spend and what amount will we choose NOT to spend right now, so that we have that amount of money, or what it will grow into, at some point in the future?

When we are paid a paycheck every two weeks, for example, we have the choice to spend it all in the first hour, or to plan out what expenses we’ll encounter in the next two weeks.  Further, we will ponder what amount we want to put aside for the future; i.e., for something we will want next week, next month, next year, or in 2 years, or in 3 years or in 7 years, or in 10 years?

We don’t need to look further than at squirrels and bears, for example, to notice that each of these animal species collects nuts and food in the summer for the upcoming winter.  They plan ahead for their survival.  We clearly need to similarly plan ahead for what we want to buy or experience in the future.

Ok, no problem, you say.  Or IS there a problem, if we either DON’T pay attention to or “aren’t inclined to care about” our money.  I still wince when I hear women say this.

If money wasn’t important, we could well afford to dismiss it, like a seasonal outfit or an out of style pair of jeans.  Yet money and the consistent stream of incoming money allows us to make choices—choices of how we’ll spend or invest that money or a part of it, as well as choices as to how we’ll give it away in order to empower others who may NOT have the money they need.

I continue to hone how I can best serve women who have pursued other passions other than finance or money management.  How can I introduce myself as a “safe” professional woman who indeed has both the empathy and skills to help?  How can I impress upon women that how we ‘deal’ with our money is in fact, very telling to our overall success as mature women?  I start with building on women’s achievements in all areas of their lives, and then build their confidence to believe that money is logical and can be understood and managed effectively, with great results.

We CAN manage these choices.

We CAN shape our future.

We CAN parent our children or nieces and nephews.

We CAN do things we aren’t particularly trained to do.

We CAN and will make mistakes with our money and we CAN admit and talk about them.

We CAN separate our emotions from our money.

We CAN recover from what we ‘deem’ mistakes, which are often NOT mistakes at all.

Finally, what decision are we inevitably making if we don’t make money decisions?  We’re subjecting our future to risk, perhaps the very 4 letter word we’re most afraid of.  We’re making the decision to allow the control of, and happiness associated with, our futures to be in someone else’s hands, instead of our own.

Why do we think that financial mistakes are more important (or damning) than mistakes in raising kids?  What can’t be recovered from, financially speaking?  I’ve not experienced any circumstances in any clients’ lives over the past 33 years that has taken them down; i.e., that they couldn’t recover from, and thrive.

I’ve shared stories with many of you, whom thought/feared you couldn’t understand the first thing about money, only to see you hurling financial terms around now, like you own them, which of course, you do.  I’ve witnessed the glimmer of hope in some of your eyes as you began to believe you would be ok, financially speaking.

I’ve appreciated your gratitude for my many analogies which are intended to integrate money into our lives, much like every other major facet of our lives.  While you may have been programmed and/or socialized to eschew money or any mention of it, you are now gaining an appreciation for your own ability to integrate common sense strategies about money into your everyday lives.  Congratulations!

You realize that you buy groceries with cash or credit; you also buy experiences with cash or credit. IF you don’t have cash or credit, your life shrinks in myriad ways, the effects of which are either short-term or long-term, or both.  Yet that slope is a gradual one, and one that can be managed, IF we keep our eyes on the road.

If you are in a traffic situation that appears dangerous, you often have options to avoid or lessen the potential calamity.  If you see danger up ahead, you take your foot off the gas.  You slow down.  You put your foot on the brake.   You steer away from the perceived danger.  You notice/analyze the situation, getting peripheral input.

I’m “known for” coaching women to be WISE:

•  W atchful
•  I nquisitive
•  S trategic
•  E mpower

As a WISE women parenting a child, you Watch the child’s behavior, you are Inquisitive about the situation, you Strategize how to direct your child to act in order to propel them forward/out of danger/into a new exiting opportunity, and then you Empower your child by showing or telling them what and/or how to do that particular thing.

Finally to those who lament they weren’t taught these things, many of us once believed in Santa Claus, did we not?  Later however, we graduated from that belief into another belief, that, in fact, there IS no Santa Claus.

Once we may have been programmed—by our family or by society–that money was bad, filthy, the root of all evil, and that we should have no involvement with money, whatsoever; that someone else would handle it for us.   Later, we may have found ourselves suddenly single—widowed or divorced—where there ISN’T another person who can handle our money for us.  So, what to do?  Grow into the adults we are, and find the best tools for the money management job–assume it ourselves, share the work with a professional, or choose to delegate the work fully to a professional.  Any of these choices is perfectly acceptable, of course, yet we do need to make one of these choices, period.  Entirely too much is riding on our financial tires for us to become (or stay) paralyzed, frozen, and inactive with our money.

There are two principles in investing—accumulating and distributing.  It is just as important to diversify while we are accumulating assets as it is to carefully select which assets we will sell when we need cash.

With my Master’s Degree in Retirement Planning, I am “known for” advising women to be judicious in not only how we “cash out” our investments,  yet also selecting the appropriate amounts in order to provide ongoing cash for however long we’ll need it.

So, join me in this most important and rewarding money tour; one which you’ll too, soon be “known for”.  We Can Do It Women!™

Many family budgets are still under extreme pressure. Yet for those who did tighten their belts and have continued to live cautiously as [a small] recovery takes hold, where is a safe place to put money? Should you put that little extra towards paying down your mortgage a bit? Are there not more important financial goals that need to be accomplished with your money than paying off low-rate, tax-deductible debt?

I am often asked this question, by reporters more than the 99% of us in the trenches admittedly, yet I think it is a valuable line of thinking:-

The interest up to $1,000,000 of mortgages and an extra $100,000 of Home Equity Debt is still tax deductible on most taxpayers’ income tax return. Here’s how you calculate how much you’re saving: take the interest paid on that mortgage and multiply it by your income tax bracket and the total is what you can can write off your taxes. (Assuming you itemize deductions.) So, that mortgage or home equity payment remains a good write-off opportunity.

Let’s put real numbers in here — if your mortgage rate is 5%, and your income tax bracket is 30%, you will be able to save 1.5% interest. This makes the true cost to the homeowner for that mortgage a mere 3.5%. Where else can you get a roof over your head and all the benefits of home ownership for 3.5%? In other words, because of the income tax deduction, mortgage money is ‘cheap’ debt, and it gets ‘cheaper’ the higher your tax bracket. So, instead of paying EXTRA each month for example, re-route that extra cash flow into your long-term investment portfolio, thereby effectively using ‘cheap’ debt to your advantage.

Debt in and of itself is neither good or bad; it’s all in how your manage it.

I hope you will indulge me in some shameless name dropping, as I share with you such a fun evening.

Gloria Steinem spoke. Stephanie March (‘Law and Order: SVU’, and Mrs Bobby Flay) emceed the evening. Audra McDonald sang. Beautifully. Incredibly accomplished, impressively active women were honored. It was an inspiring evening, in a rather fun, downtown posh hotel. A great girls’ night out – and to think that two years from now, Christine Quinn might just be the Mayor of New York.

Christine Quinn is, from all I can see, a genuinely good politician, who works hard for the citizens of New York, fighting violence and gun laws, and supporting and nourishing those “that have come from nothing” with equality and zeal. She has been instrumental in the legalization of same-sex marriage in New York, and scored a “real legislative victory” when the new city budget was approved, at a mere $66 billion! Writes Crains’ Jeremy Smerd,

“She earned praise from the business community for not raising taxes and from organized labor for brokering a deal to avoid teacher layoffs and spare 20 fire companies from closing. And Ms. Quinn largely evaded criticism from public-sector unions for allowing attrition to shrink the city workforce by 3.7% next year.”

I tell you, I was pumped by the energy in the room. Women getting behind women for change is good. Women rallying around another quality woman is refreshing. What we can do when we work together…

I say it all the time, because I so believe it –
We Can Do It Women!

“I will only invest my money not just spend it!” That means you buy a good pair of black slacks that will last a long time, as opposed to just being cheap and getting any old pair.

Here’s a link to her book.

“Whether it’s their budget, buying insurance, dealing with bad credit, you name it…it’s to help people to get ahold of their money, what they have and manage it the best they can,” Mr. Fitzgerald said.

Fitzgerald says the conference has focused on women because of some of the financial challenges they face. He says women have different problems, such as living longer than men and needing to stretch their money, and he says on average women get paid less than men. Fitzgerald says the conference is not restricted to women, and men can attend too.

The down economy has presented more challenges for everyone when it comes to handling money. Fitzgerald says there are a lot of questions today about investing money with interest rates so low and the stock market being so volatile. He says there are other challenges too.

Fitzgerald says identity theft is a big problem people face and it can ruin your credit, and he says you have to know how much money you have and how to manage and protect it.

Source: Radio Iowa

The conference at the Polk County Convention Center was free.  Iowa state government just felt it should be done!  How’s that for responsible state government?

Can we have 49 other versions?