Looking for the Right Alternative Investments? Be Sure You're Dipping Your Toes in the Right Place!

Even for those of us who see the market as a mostly cyclical, reliable environment, the past decade or so has been quite a wake-up call.

While many portfolios have seen a recovery since 2008, most investors still get the jitters whenever the market dips. The logical response for investors and advisors alike is to seek out new investment vehicles that produce yield and help protect assets—even in the face of another bear market. But where can you find that yield? The Fed is expected to raise interest rates in 2016, but even if they do, the jump won’t be enough to significantly improve yields for most income-oriented investors.

Seeking yield is a tricky business in today’s environment, which is why more advisors than ever are exploring alternative investments. If you’ve been exploring alternatives in an effort to find some level of reliable yield for your clients, it’s important to understand the complexity of correlation—especially when considering “non-correlated” alternatives. The desire for investments that don’t fluctuate with traditional financial markets (stocks, bonds, and real estate) is understandable, but the reality isn’t always what it seems at first glance.

The interesting thing about correlation is that it tends to hide when things are good, and becomes really visible (at the very worst time) when things are bad. 2008 was an all-too-painful reminder of how this works. Anyone invested in “non-correlated alternatives” like REITs, BDCs, and energy stocks at the time were under the illusion that these investments were providing diversification in their portfolios. But when the stock market crashed, all of these vehicles began to exhibit frighteningly high correlations—and returns suffered, to say the least. The same thing happened as recently as this past December and January when correlations of “non-correlated” assets spiked. The lesson learned? Correlation can be surprisingly relative, and so-called non-correlated assets only live up to their name if you look at them at the right time.

This puts advisors in a tough position. A recent survey by WealthManagement.com of 755 advisors revealed that most advisors (43% of those surveyed) use alternatives to provide greater diversification and uncorrelated return. But what if the alternatives being used aren’t truly uncorrelated? To achieve their goals, advisors need to find a new alternative—one that has no market correlation, yet has the potential to generate significant returns.

That new alternative is investments in life insurance.

If you’ve never considered life insurance as an alternative investment, you’re not alone. Just five years ago, they made up a very small niche market, which today is still small. Few advisors even knew they existed, and even fewer knew enough to take advantage of their benefits. But the confluence of unfavorable market conditions and an aging Baby Boomer population is opening the floodgates, and more advisors than ever are using life insurance as a tool to help generate non-correlated returns with low volatility.

Another plus: it’s easy to explain to clients. Most everyone holds at least one life insurance policy. They understand death benefits, and they understand premiums (perhaps all too well since those premiums are increasing every year). With a life insurance settlement, the policyholder sells a life insurance contract to a third-party investor and receives an immediate cash payment from the buyer (one that is typically much greater than the payment received if a policy is surrendered to the life insurance carrier). The buyer continues to pay the premium and then receives the death benefit.

The benefit to the seller is clear, especially if the policy is no longer wanted or needed. The benefit to the investor is just as clear. Unlike other alternatives, the factor that drives the return on this investment is inevitable. Whether a death benefit is collected depends on one thing: the policyholder’s longevity. No other factors are involved. Not the strength of the market. Not energy or commodity prices. Not global economics. It’s a truly uncorrelated alternative that’s growing in popularity every day. And for good reason. Retiring baby boomers—all 75 million of them—are looking for new ways to fund their retirements and pay for the long-term care that comes hand in hand with longer life spans. If this weren’t enough, the purchase and sale of life insurance policies is a highly regulated transaction providing transparency and safety to buyers and sellers alike.

The market is more volatile today than it’s ever been, which means we’re all looking for ways to hedge market risk. Whether you’re just now starting to dip your toes into alternative investments or have already taken the plunge, be sure to consider life insurance as the one option that offers all of the benefits of alternatives—with none of the potential market correlation (no matter when you look at the numbers). Even better, life insurance is easy to understand, which just may it the fresh, new alternative that finally gets your clients excited about investing in something they’ve never heard of…until now. - iris.xyz

Investors Could Lose Billions on 'Mind-numbingly Complex' Deal

Arbitration claims against Merrill Lynch highlights a potential hazard for other banks selling structured product investments.

Wall Street has been selling what one lawyer calls a "mind-numbingly complex" deal to retail investors for years, but now, it may come back to bite big banks.

Bank of America's brokerage arm, operated by Merrill Lynch, has a growing number of investors suing it for a volatility-focused structured product which charged double-digit fees as it lost retail buyers millions, one lawyer said. Now, according to a report in The Wall Street Journal, Merrill's Strategic Return Notes, which it sold to retail investors years ago, has also earned the bank a potential Securities and Exchange Commission civil enforcement action after whistleblowers turned on their former employer.

The whistleblowers, a pair of Merrill Lynch brokers who sold the volatility structured product beginning in 2010, taped conversations with other bank staffers before tipping off investigators. All in all, Merrill clients lost most of their investments in a $150 million fund.

The majority of the complaints about Merrill Lynch's volatility structured product came from customers of the brokers who went on to leave the bank and later act as whistleblowers, according to a spokesman for the firm.

The bank says it adequately disclosed risks to structured product investors and that it aims to defend itself from allegations and arbitration proceedings. Further, the product, by design, aimed to capture returns on market losses, which means that in a scenario where stocks outperformed, the investment would incur losses, the spokesman said.

The structured product Merrill Lynch sold is just a drop in the bucket, say industry observers.

A late 2015 JPMorgan analyst note tracked the asset class' enormous growth. From 2007 through last year, roughly $500 billion to $600 billion worth of structured products were sold by banks every year, with Asia Pacific investing in a growing portion of the deals. That compares to the 2000-2005 time frame, in which the report showed structured product sales rising from less than $100 billion to more than $200 billion annually.

"The sales of structured products have dramatically increased in the last five to seven years," said Andrew Stoltmann, the attorney representing dozens of Merrill Lynch clients who filed claims against it with the Financial Industry Regulatory Authority.
"These used to be sold to hedge funds and high net worth individuals," he said. "Now, brokerages firms target retail investors."

Officials at the SEC declined to comment.

Stoltmann, whom The Wall Street Journal quoted as having had 44 Finra complaints against Merrill for its volatility structured product, said he received more than a dozen additional investor inquiries as of Wednesday morning. He called the structured product his clients and others invested in "mind-numbingly complex." 

Next, other investors in unrelated structured products could push for arbitration if they allege they were misled and incurred losses.

"Some products are inappropriate for 99 percent of retail investors, even with full disclosure of their risks," said Erik Gordon, clinical assistant professor at the University of Michigan's Ross School of Business.

"Some risks are difficult to disclose in a way that puts retail investors in a position to make informed decisions," he said. "Houses that reach for commissions or that move their inventory by selling inappropriate products to retail investors should expect to end up in front of the SEC and a judge."

— By Jon Marino, Wall Street reporter

Related:

SEC will use whistleblower tip to sue Merrill Lynch for investment that lost 95%

‘Alternative’ Investments Require Extra Diligence, Caution

It is no secret the U.S. economy is performing poorly.

First-quarter 2016 gross domestic product, the broadest measure of economic output, advanced at a dismal 0.5 percent seasonally adjusted annual rate, according to the Commerce Department. It is the worst performance in two years. Both top and bottom lines for major U.S. corporations are being pressured, according to the Wall Street Journal. Apple Inc., Norfolk Southern Corp, 3M Co., Pepsi Co., and Procter & Gamble Co. all took hits.

With interest rates currently near zero, CDs, bonds and banks aren’t providing attractive yields. This is problematic for individual investors. Therefore, many investors are increasingly looking at “alternative” investments in search of higher returns or yields.

I believe that diligent homework and extreme caution are required. Truly, “the devil is in the details.” Anyone considering “alternative” investments should obtain the advice of trusted accountant, investment, legal and other professional advisers before making any investment decision.

What are “alternative” investments? Opinions vary to an exact definition but, to me, they are potential uses of funds other than for “traditional” investments, such as publicly traded stocks, bonds, ETFs and mutual funds.

“Alternative” investments include, among others, private real estate funds, nontraded REITs, oil and gas programs, startup companies, private equity and venture capital funds. They are extremely complex. Some of these “alternative” investments are legally available only to “accredited investors” defined by the U.S. securities laws.

A “private placement” is one type of an “alternative” investment. Under federal and state securities laws, “private placements” can fall within an exemption from SEC and/or state securities registration as a sale of securities “by an issuer not involving any public offering.”

“Alternative” investments require detailed scrutiny. Three overarching considerations are: 1) Each “alternative” investment must be evaluated individually; 2) The documents, disclosures and agreements for each must be received, read carefully and completely, and understood fully before moving forward (this will be time consuming; don’t rely only on presentations and representations provided by management); and 3) If you are asked to invest or commit any money without being provided with proper and complete legal documentation, walk away. Investing your hard-earned money is not a “handshake” deal!

The documents and agreements for a typical private placement generally include: 1) A “private placement memorandum” or “offering document” that contains important details and disclosures about the company, its business, its prospects, the applicable risks (internal and external to the company), use of funds, and the costs and expenses of the transaction; 2) A “subscription agreement” that contains the terms and conditions of the securities sale and purchase; and 3) information regarding the accredited or nonaccredited status of the investor.

The “securities” being sold can bear many names, including stock, shares, membership interests, limited partnership interests, convertible debt, warrants and options.

Below are eight considerations you should incorporate when doing your “homework” – your own due diligence. Remember, as a passive investor, you will have little or no say in the management of the entity in which you invest.

First, examine the management team’s professional qualifications, experience and past track record of investment performance. Determine if management is putting its own funds in the transaction. Be wary if management has no skin in the game. Check to make sure that management has no criminal or other disciplinary history.

Second, examine the risk factors of the product/service. Is the product/service new to the marketplace or is it a modification of an existing product/service? Would the product/service involve new or significant change in sales practices?

Third, does the entity have enough funds to execute its strategy? If not, the venture could fail quickly. In some transactions, you may be contractually required to invest additional capital in the future if capital calls are made by management.

Fourth, examine the anticipated internal rate of return in the context of the entity’s investment strategy. Is it realistic or is it pie in the sky?

Fifth, understand the duration of the investment. Many investments do not have redemption or “put” rights and are illiquid. Your money could be tied up for years.

Sixth, examine all management fees, costs and other expenses paid to management and others. Review the “use of funds.” A company must describe how it will use the net proceeds raised from the offering and the approximate amount intended for each purpose. Beware of vague statements like “the proceeds will be used for general working capital purposes.”

Seventh, closely examine the securities being sold. Understand the rights, restrictions and class of securities being offered, and management’s ability to change the capitalization structure. Sometimes, the founder or existing shareholders retain(s) full voting control of an entity.

Finally, if you can afford to invest, determine if you can afford to lose all of your investment should the investment crater.

A quote attributed to Will Rogers applies: “Be not so much concerned with the return on capital as with the return of capital.” - abqjournal

Alternatives Gain Bigger Share in Investor Portfolios

While alternatives are inarguably set to continue gaining a bigger share in investor portfolios in the current low interest-rate environment, institutional investors are also becoming increasingly selective when it comes to capital deployment, cautions Frank La Salla, chief executive officer of alternative investment services and structured products at BNY Mellon.

Mr. La Salla, in driving home his point, cites the demand by institutional investors for greater transparency and growing levels of data to support decision-making when it comes to alternative investments.

A recent BNY Mellon study entitled Split Decisions: Institutional Investment in Alternative Assets found that institutional investors are seeking to allocate more capital to alternative strategies, in their quest for higher returns.

The study surveyed 400 senior executives from institutional investors around the world including pension funds, investment managers and insurance funds, as well as 50 hedge fund executives.

The report also found that among the various alternative asset classes, private equity (PE) is the most favoured by institutional clients, taking up to 37% of their portfolios. This is followed by infrastructure (25%), real estate (24%) and hedge funds (14%).

However, a separate study by Invesco entitled the Global Sovereign Asset Management Study 2016 found real estate to be the primary driver of increasing allocations to alternatives in recent times; allocations to real estate have increased faster than that of both PE and infrastructure combined, rising from 3% to 6.5% over a three-year period, which represents a 29% compound annual growth rate.

According to the BNY Mellon report, nearly two-thirds of those surveyed said alternatives had delivered returns of at least 12% last year, whereas more than a quarter had achieved returns of 15% or more from their allocations to alternatives. Additionally, while 39% of those surveyed plan to increase their allocations to alternatives, only 6% say they will moderately reduce their exposures.

The report also found that emerging markets (EMs), on average, made up 31% of institutional investors’ allocations to alternatives. For Asia Pacific-based investors, EM-based investments accounted for 54% of their alternative portfolios, followed by investors in EMEA (Europe, Middle East and Africa) at 29%, and the Americas at only 16%.

When it comes to PE investments, 62% of those surveyed said they would look for lower management fees, whereas 55% would request for more transparency as they look to optimise value.

Downward fee pressures have also been experienced by hedge fund managers, with 78% of those surveyed saying that they would consider reducing their management fees over the next 12 months.

Jamie Lewin, head of product strategy and performance management at BNY Mellon Investment Management, opines that a steady stream of new products and strategies would support the continued growth in allocations to alternatives.

“Innovation and adaptability will be two key differentiators that determine which firms succeed in capturing what’s become an integral part of institutional portfolios,” he says. - asiaasset

An alternative View: Why It’s the Asset Class of the Future

In today’s era of low interest rates, stock market fluctuation, and economic uncertainty, most people are faced with either low returns or high risk on their investments. For this reason, interest in alternatives - with their ability to diversify investments, reduce risk and provide uncorrelated returns - has grown significantly in recent years, according to Ophir Gertner, founder of invest.com. 

In fact, McKinsey predicts that flows from retail investors will grow by more than 10% annually over the next five years, while PwC expects alternative assets to grow to $15.3trn (£10.8trn, €13.6trn) by 2020.

Increased risk aversion

In the wake of the financial crisis and with so much uncertainty still remaining (2016 is proving to be the ‘perfect storm’ for uncertainty with the EU referendum, US election, a number of elections in South America…), investors are more risk averse than they were a decade ago and seek investments that will provide long-term, sustainable returns.

Alternatives offer three key benefits: higher return potential – they seek to outperform traditional markets by being continuously active; market protection – unlike traditional ‘buy and hold’ investments, they can profit even when markets go down; and true diversification – alternatives can help lessen the correlation of a traditional portfolio to the stock market which can in turn, help protect it from market volatility.

Diversification conundrum

This point on diversification is key; in the past, when one part of the market went down, generally another would go up. For decades, investors could diversify portfolios across a number of investments to reduce risk and improve returns in the long run.

In recent years however, different parts of the market have started to move together and therefore become correlated with one another. Ideally, an investor wants to avoid this correlation, or at least keep it as low as possible, because if investments are all moving in the same direction, there’s little true diversification.

"Of course certain alternatives – namely hedge funds and commodities – have faced some difficulties in the current market environment."

A lack of diversification increases risk and can lower return, and this erosion in the risk-reducing power of traditional diversification has left many investors with much riskier portfolios than they think. The benefit of alternatives is their ability to create true diversification due to their uncorrelated nature.

Alternatives vs equities

If you need further convincing, the table below paints a clear picture as to the diversification benefits of including alternatives in an investment portfolio. During the fifteen worst quarters of the S&P 500 Index’s performance in the last 30 years, alternatives outperformed equities in all cases.

On average, alternative investments, as measured by the Barclay CTA Index (an index which analyses the performance of managed futures), performed 18.8% better, and in one quarter, this figure was as high as 39%.

Risks remain 

Of course certain alternatives – namely hedge funds and commodities – have faced some difficulties in the current market environment which is why we always recommend that only a portion of any portfolio be invested in them – typically between 10% and 40% – and that each alternative option be evaluated on its own merits. 

Our portfolio management service, for example, offers seven alternative investment strategies with next-day liquidity, which use computerised algorithms to trade automatically and aim to continually optimise the strategies and take advantage of changing market conditions. 

So while this asset class has historically only been available to very wealthy investors and as a result, has meant that some retail investors are still weary of it, we’re in no doubt as to the central role it will play in the investment universe and the global economy in the future. - international-adviser

Private Equity the Key Alternative

BNY Mellon's survey shows private equity is gaining traction as an alternative investment strategy

Private equity is the most sought after alternative investment strategy, accounting for 37% of investors’ alternative exposure, according to a survey by BNY Mellon.

This comes as the asset class delivered strong performance with 97% of investors telling BNY Mellon that private equity had met or exceeded expectations. Private equity is currently running record Assets under Management (AuM), according to Preqin, standing at $2.4 trillion at June 2015. 

The BNY Mellon paper acknowledged that by year-end 2014, seven of the year’s largest buyout funds raised $5 billion each, while smaller, niche or specialist funds had also witnessed a surge in popularity. Fifty-three per-cent of allocators confirmed they would increase their private equity exposure over the next 12 months, added the BNY Mellon paper.

“It is clear from our research that institutional investors are either looking for absolute returns, diversification and non-correlated returns. Private equity has been one of the best performing alternative asset classes over the last few years,” said Mark Mannion, head of EMEA relationship management for Alternative Investment Services at BNY Mellon, speaking at Fund Forum International 2016 in Berlin.

Despite the strong fundraising environment, private equity is facing some pressure, particularly around fees. Sixty-two per-cent of respondents to the BNY Mellon study they were looking to lower private equity fees over the next 12 months. Fees have been a contentious issue of late with investors complaining about the fee structures and expenses charged by their private equity managers. Californian pension fund CALPERS recently demanded greater transparency from private equity managers about their performance fees while a handful of US state legislatures are looking to introduce rules forcing fund managers to disclose their fee structures to external investors such as state pension funds.

“Fees are an increasingly important issue for institutional investors as they want value for money. Investors only want to pay for good performance, and there is a push from some investors to make fees more palatable than the traditional 2% and 20% model,” said Mannion.

National regulators including the Securities and Exchange Commission (SEC) have also criticised the lack of transparency and potential conflicts of interest that can arise in private equity fee structures. A much cited speech by Andrew Bowden, former director of the OCIE (Office of Compliance Inspections and Examinations) at the SEC said expense allocations and law violations around fees at private equity were endemic. It was inevitable that high-profile settlements would follow suit. Major private equity houses including KKR and Blackstone have settled with the US regulator over misaligned interests around fees.

In terms of other alternative strategies, infrastructure and real estate are the second and third most popular among investors. However, hedge funds account for just 14% of institutional investor allocations. Forty-five per-cent told BNY Mellon that they did not have any money invested in hedge funds. Hedge funds have incurred bad press of late with several major institutions criticising their disappointing performance relative to their high fee structure.  Indeed, CALPERS and Dutch pension fund PFZW have both confirmed they will no longer include hedge funds in their portfolios.

“A handful of high-profile US pension funds have publicly dropped hedge funds from their portfolios, but overall these are the exception rather than the rule. Most investors are sticking with alternatives, and increasingly deploying managed account or liquid alternative structures,” said Mannion.

Interestingly, the BNY Mellon study found 94% of investors are satisfied or very satisfied with their hedge funds. Nonetheless, the study concede that hedge funds have struggled to recover following the financial crisis. “To overcome this relative reticence, the hedge fund industry is developing a range of solutions to make it easier and cheaper for institutional investors to access the strategies that they offer,” read the BNY Mellon paper. 

Nonetheless, a sizeable portion of investors do see hedge funds as useful risk diversifiers away from stocks and bonds, particularly when markets are volatile. “Most investors are adopting a long term approach towards their alternative investments. While some hedge fund strategies underperformed last year, most investors are happy with their long term performance and that is encouraging,” said Mannion.

The BNY Mellon paper acknowledged that liquid alternatives were growing as hedge funds convert their strategies into UCITS or ’40 Act products giving them access to retail money. Data from Cerulli Associates indicates liquid alternatives are the fastest growing segments in the fund market, and could run 14% of industry assets by 2023. Others, however, are not so sure and feel that liquid alternatives may be running out of stream amid disappointing performance. They have also faced pressure from far cheaper index tracking funds. - globalcustodian

7 Important Financial Steps to Take in Your 30s

When you hit your 30s, you may start thinking about your major life goals, both personal and financial. Although you may be able to defer some of your personal life decisions, such as career changes, starting a family or moving to a new place, some major financial decisions should not wait any longer.

Many financial decisions can have a gradual, yet enormous, impact on your life. Making them at the right time ensures that you can meet your goals and achieve financial security. Here are seven key financial steps people in their 30s should take.


1. Build an emergency fund

Whatever your current income is, you need to establish an emergency fund. Think about how you would pay next month’s rent if you lost your job. Or, if your car broke down, would you have enough money to repair it? Having a financial buffer means you don’t have to hit the panic button — or go into debt — when faced with an unforeseen expense.

Start by aiming to save enough to cover up to three months of your household expenses and gradually grow your emergency fund to cover at least six months of expenses. If money is tight, building an emergency fund can be overwhelming, so start small. Contribute an hour’s worth of wages each workday and gradually increase it to two hours’ worth of wages per workday. If that’s unrealistic, save $50 per week ($200 per month) and increase it to $75 a week or more as you are able. Use automatic deposits to your savings account to ensure regular contributions.

2. Make a plan to pay off debt

As you turn 30, it’s smart to think about setting a strong financial foundation for your future, and that starts with paying off your debt. Not all debt is bad. Good debt includes your home mortgage or education loan, but if you have high-interest credit card debt or personal loan debt, it’s time to take these financial matters seriously.

The best strategy is to start paying off debt with the highest interest rate first. For instance, clearing credit card debt with a 22% interest rate would yield a better return on your money than paying off your home loan with a 4% interest rate. If you need help, work with a debt management professional to figure out how best to tackle your debt.

3. Start (or keep) maxing out your Retirement Scheme 

Unlike maxing out your credit cards, maxing out your retirement scheme or other retirement plans is a good thing — and now is the time to start.

The Private Retirement Scheme (PRS) is a voluntary long-term contribution scheme designed to help individuals accumulate savings for retirement. There are wide range of PRS funds that you may choose to contribute to based on your contribution time horizon, risk appetite and age.

PRS provides an additional savings option for all individuals to build up their retirement nest egg over the long term. As a member, you will get to enjoy tax relief when you contribute to any of the PRS funds offered by financial institutions. 

4. Start investing now

One of the biggest advantages you have in your 30s is time, so it pays to start investing early. Consider this example of two investors. At 30, Steve started investing $1,000 a month and did so until age 40. Even though he stopped, he didn’t withdraw his investment and let it grow until his retirement at age 60. On the other hand, Bob started investing at 40, contributing $1,000 a month until age 60.

Assuming an average rate of return of 5% compounded annually, Steve accumulated $154,992 at the end of the 10 years, but since he didn’t withdraw this money, it grew to $411,240 by age 60. Bob ended up with $407,460 with the same investment terms. This is the magic of time — and compound interest — working in Steve’s favor. With compound interest, your return is added to your principal each year, so your savings grow much faster than with a simple interest rate, when the return amount is the same each year, based on the original principal amount.

For newer investors with a limited understanding of the investment landscape, it’s a good idea to stick with passive investing, strategies that try to capture the overall movement of the market rather than predict which sectors or assets will outperform. You can invest passively through mutual funds or exchange-traded funds that are based on a broad-market index. I recommend starting with ETFs because of their lower fees and transaction costs.

5. Figure out the right investment strategy for you

If asset allocation is a foreign concept to you, now is the time to demystify it. Asset allocation is about picking the right proportion of different investment types (or asset classes) to match your portfolio with your risk appetite, investment time frame and financial goals. Some investments, like stocks, are more risky — and tend to yield higher returns — than others, like bonds. For instance, if you wanted a more aggressive investment strategy, you would want to create a portfolio with more exposure to stocks, and if you wanted less risk, you’d dial up your exposure to bonds.

Your asset allocation will have a huge impact on your net wealth over time. A portfolio that is too conservative may leave you with an insufficient nest egg, whereas a risky allocation could yield higher returns, but might keep you up at night when the market is volatile. It may be best to consult with a financial expert to come up with an investment strategy that fits with your goals and your tolerance for risk.

6. Diversify your investments

The other important part of building a portfolio is diversifying your investments. For example if you are invested in stocks, you would want to diversify your equity holdings by including stocks from companies of various sizes (such as large-, mid- and small capitalization stocks), categories (like growth or value stocks) and parts of the world. By holding a diverse selection of investments, you are able to spread around your risk and reduce overall volatility.

You may also want to start considering alternative investment options that can help you further diversify your portfolio to weather stock market fluctuations. The goal is to add investments that tend to not move in the same direction as the stock market and can offer stable returns over a longer period. Some of the most popular alternative investments include real estate, precious metals, life settlements, private debt placement or private stock. However, keep in mind that alternative investments require deep understanding, so make sure you are comfortable with how these investments work before you jump in.

7. Start saving for college

You should begin saving for college expenses as soon as you have a child. It may seem a bit early to get started, but college costs are going up, and the sooner you start saving and investing for this major expense, the better off you’ll be. A systematic investment plan in mutual funds can help you come up with the necessary funds to support your child’s college education. Considering the long time horizon, you may want to follow a relatively aggressive investment strategy for the plan.

Take the long view

“Setting goals is the first step in turning the invisible into the visible,” says author, entrepreneur and motivational speaker Tony Robbins. When it comes to your financial life, this couldn’t be more true. While working on a financial plan, you must consider the long-term perspective — the far-off personal and financial goals you want to achieve — to determine the best steps to take today.

Though it may not always feel like it, you have control over your financial life. Making educated decisions and taking action early can help set you on the path to financial security and achieving your goals. - nasdaq