Artifex Financial Group
Doug Kinsey is a partner in Artifex Financial Group, a fee-only financial planning and investment management firm based in Dayton, Ohio.
Doug has over 25 years experience in financial services, and has been a CFP Certificant since 1999. Additionally, he holds the Accredited Investment Fiduciary and Accredited Investment Fiduciary Analyst certifications as well as Certified Investment Management Analyst. He is a graduate of The Ohio State University and has also completed the University of Chicago Booth School of Business Investment Management Education Program.
Doug’s passion for financial planning is rooted in investments. As a child, he read books on investing and has always found the idea of learning about companies, discovering new ideas, and finding hidden values to be extremely exciting. He does not believe in the abuses of Modern Portfolio Theory or an over-reliance on statistics and indexing. Active management is not dead, but the way it is approached should be. In his opinion, common sense and careful investing are what is required to be a successful investor.
Artifex Financial Group was founded in 2007 by Doug and his business partner, Darren Harp. Artifex currently advises almost $100,000,000 in assets and serves 180 client households and corporate pension plans. In addition to personal financial advice, AFG provides active investment management, back office solutions, process improvement strategies and employee development consulting to financial advisory firms.
BA, Political Science and Finance, The Ohio State University
HBX CORe, Harvard Business School
HBX Disruptive Strategy, Harvard Business School
Investment Management Education Program, University of Chicago Booth School of Business
Assets Under Management:
Doug Kinsey Investopedia Video1
Unrealized gains and losses are simply those amounts that are the result of what a position is worth versus what you paid for it.
For example, if you bought a share of stock at $50 per share, and it's now worth $100, your unrealized gain is $50 per share. If the stock was now worth $10 per share, your unrealized loss is $40 per share.
Realized gains and losses are what get reported to the IRS in a taxable account(versus a tax-deferred or qualified account, like an IRA) when you actually sell the shares. If you sold the shares in our example above, you would REALIZE a gain of $50 per share, or a loss of $40 per share.
The answer to this question can be complicated by geographic locale, type of property (i.e. specific-use such as health care, technology, self-storage, residential, etc.), and timeframe. However, the average rate of appreciation for existing homes increased around 5.4% per year from 1968 to 2009 (Natl. Assoc. of Realtors). Adjusted by the trends in size increases, the increase is closer to 3.7% and the rate of inflation was around 4.5% on average during this time frame (source: Michael Bluejay, How to Buy a House, 2009).
Over the last 20 years, U.S. Stocks, as judged by the S&P 500, averaged a +8.2% return, U.S. Small Cap Stocks (Dimensional US Small Cap Index) averaged +11.5% per year, and International stocks (MSCI EAFE) returned 4.4% per year.
On average, we don't expect real estate investments to return more than the rate of inflation in terms of growth. However, you also have to look at the impact of tax advantages to the investor, income yield, and the fact that direct investments in real estate often allow for significant leverage (you have to put no more than 20% of your own money into your home purchase, for example). So, your rate of return has to include income yield, growth, and the limited amount of your own capital in the investment. Depending on the situation, this can look very attractive to the right investor.
Of course, if you buy real estate directly (instead of through a partnership such as a publicly-traded Real Estate Investment Trust), you also need to factor in your time in managing the property and the maintenance and repair costs.
In my opinion, if you are not interested in the hands-on management of a property, the stock market makes more sense because you don't have to factor in personal time, expenses, and vacancy costs.
I typically don't allocate any more than 10-20% of a portfolio to hard assets, like real estate. You sacrifice growth for income with REITs. As young as you are, you should start with a good stock index fund issued by Vanguard (Vanguard 500 Index Fund - VFINX) or Dimensional Fund Advisors (US Core Equity 2 Porfolio - DFQTX) and keep plowing money into it for the next 40 years. You will then be able to look back at your decision as one of the best things you ever did.
The Certified Financial Planner certification is awarded to advisors who have completed the prescribed coursework by the CFP Board, passed a rigorous 6-hour final exam, and have at least a Bachelor's degree. Their is also an experience requirement - three years of professional full-time experience or serving a two year apprenticeship under the guidance of a CFP® Professional. The topics covered in the CFP® program (per the CFP Board website) are:
- General principles of financial planning
- Insurance planning
- Investment planning
- Income tax planning
- Retirement planning
- Estate planning
- Interpersonal communication
- Professional conduct and fiduciary responsibility
- Financial plan development (capstone) course
An advisor who is approved to use the CFA® credential has passed three rigorous 6-hour exams, has at least a bachelor's degree, has four years of professional work experience, and must also be a member of CFA Institute.
The topics covered in the CFA program are more focused on investment valuation, portfolio management, and financial analysis. It is a very demanding program, and some equate it to a self-study MBA.
Although there is some overlap, you will find that advisors, portfolio managers and consultants who obtain the CFA® charter tend to be more focused on investment management, while CFP® certificate holders tend to work more directly with clients designing and managing their financial plans, tax planning, and day-to-day personal financial advice.
Choosing to invest in mutual funds over individual stocks is largely a matter of personal preference, once you have a portfolio of enough size to make that choice to begin with.
A properly diversified stock portfolio should consist of at least 10 holdings in different industries. You'll need at least $25,000 to accomplish this without undue cost. Additionally, you should be either using a fee-only advisor (or Registered Investment Advisor) to assist you with building your portfolio, or be prepared to do the necessary research yourself. It will take some time to review and stay on top of your holdings regularly, however, if you select good-quality domestic companies like Johnson & Johnson, Procter & Gamble, Wal Mart, Disney, etc. , you may not need to spend so much time reviewing the account.
I'm a big fan of owning your own stock portfolio, but it is not right for everyone. If you would rather do other things with your free time, select a good quality, no-load, low cost mutual fund and let the manager do the work for you (or better yet, buy an index fund that invests in the Dow Jones Industrial Index, Standard & Poor's 500 Index, etc.)
Bond mutual funds make even more sense, as the time and expertise involved in managing a bond portfolio is beyond the scope of most investors (and advisors, in my opinion). So, if you are going to invest in bonds, I'd highly recommend buying a bond mutual fund (and at this point in the interest rate cycle, favor short-term bond funds).
Here's a list of some of my favorite stocks that you could start investigating on your own (this is not a stock recommendation):
- 3M Company, symbol MMM
- Allergan, AGN
- Coca Cola Company, KO
- Bershire Hathaway, class B, BRK.B
- Costco Wholesale, COST
- AFLAC Insurance, AFL
- Walt Disney Company, DIS
- Kroger Co, KR
- McCormick & Co Spices, MKC
- Qualcomm Inc, QCOM
These ten companies are a good start for an initial review. I could write pages about how to analyze these companies, but time does not permit. In addition to the resources here on Investopedia, take a look at Guru Focus also, they have a great website for education and company statistics.
Best of luck!