Broker Check

Practical Planning Tip: Investing is Like Birthday Cake - The Sprinkles

February 26, 2024

Today we will discuss theSprinkles portion of an investors birthday cake:  Sprinkles add a little pizazz to the cake. They don’t add much flavor, but some folks get excited by them. The sprinkles in your portfolio are akin to stock “factors”. This is really getting into the weeds on a topic that can get quite nuanced and is also not super important.

Many stocks can be categorized by different characteristics known as factors. Factors involve targeting specific drivers of return across asset classes. These categories include value, momentum, low volatility, and quality, to name just a few. I’d spend time discussing each of these factors if they were important, but they are not… just like the sprinkles. If you’ve mastered the first two sections, which I spoke about last week, then adding some factors to your portfolio can be harmless fun.

You can WATCH the full video here.