The consideration of after tax returns is also important, because different investments offer different tax rates and these differences can be significant. Interestingly, the author here also does not touch upon diversification or indeed any other key tenets of modern portfolio theory. Risk aversion is not mentioned either, even though this is a key element in people's satisfaction with their investment performance. Another interesting and overlooked element is that of fees. All costs must be considered in financial planning, though it is understandable from the financial manager's perspective that discussion of cost be kept to a minimum. The main weakness of the Fort Worth article is that it focuses on only a handful of issues. The advice lacks focus, or synthesis.
Overall, both of these articles have strong elements, but are incomplete in scope. In both cases, the theoretical underpinnings of financial planning are not given much if any time. This can be taken as a strength in that the reader is likely to be turned off by such discussion, but it is also a weakness in that the theoretical information helps for...
The issues presented in both of these articles are important to understand, but they are not at the core of building a strong investment portfolio. The approachability of these articles is admirable, but it comes at the expense of complete understanding of financial planning.
Financial planning is a complex subject, and the biggest let down with both of these articles is that this complexity is not highlighted. There are a lot of practical challenges that prevent people from engaging in sound financial planning, but these articles do not tackle them. It is okay to tackle only a handful of issues, as long as the reader is made to understand the limitations of the piece and the degree of complexity that the article has distilled into a few sentences.
Works Cited:
Rosenthal, Burk. (2009). The Foundations of Financial Planning. Fort Worth Business Press. Retrieved May 5, 2009 from http://www.fwbusinesspress.com/display.php?id=10111
No author. (2008). Your Investment Plan. FinPlan.com. Retrieved May 5, 2009 from http://www.finplan.com/invest/investplan.asp
