Treasure Hunting in Secondary CDs
I mentioned in a previous post Short-Term Fixed Income: CDs vs Bond Funds that I would buy CDs as short-term fixed income investment for my solo 401(k) account.
Because Fidelity administers my solo 401(k) plan, I can buy only what's available through Fidelity. I looked at new-issue brokered CDs. The yields are lower than the best rates available from other banks and credit unions.
Then I looked at secondary CDs. Secondary CDs are like "pre-owned" cars. They are being sold by bond dealers. The dealers bought the CDs from the previous owners, who for one reason or another decided not to hold the CDs to maturity.
It's Not 529's (Or 401k's) Fault
Ever since I switched from reading Financial Times to Wall Street Journal (FT subscription ran out; no option to use airline miles), I started encountering more and more sob stories. If this continues, I'll be like Frank at Bad Money Advice.
On Tuesday I mentioned the story about laid-off employees burning through their severance and turning down job offers. On Wednesday I read this article about people stopping using 529 plans because of market losses:
Burning Through Severance, Turning Down Job Offers
While on the commute train this morning, I read this article on Wall Street Journal:
* Link goes to Google. WSJ will display full article if you come from a link through Google.
It tells us stories about how some people coped with unemployment while on severance pay. The subjects in the article spent just like before, burning through their severance. They also turned down job offers because they didn't like the job description.
Marriage Tax Penalty and Unit of Taxation
The marriage tax penalty refers to the fact when two people marry, they pay more taxes than they do when they are single. This happens when the two persons have roughly the same income.
The mirror image of the marriage tax penalty is the marriage tax bonus, that is when two spouses have disparate income or one spouse decides to stay at home, they pay less tax than they do if they don't marry.
I touched on the topic of marriage tax penalty in two previous posts: » Read more …
It's a Stock Picker's Market
If you read or watch financial commentary, I'm sure you've encountered this piece of insight:
"It's a stock picker's market."
I heard a guest say this in a recent episode of WealthTrack. Is it true?
Absolutely. If someone picks the right stocks, they will have a better performance than the market. There's no doubt about it. It's a tautology.
How Much Should Unbiased Financial Advice Cost?
How many times have you heard "before you make any big money decisions, check with your own financial advisor"? NPR's Marketplace Money program says that all the time. It can't be taken at face value because it assumes that everyone has a financial advisor.
I've never had a financial advisor. I'm guessing the percentage of the population who have a financial advisor isn't that high. If they all say people should check with their financial advisor, why don't most people have one?
1. Too many sharks. For those who have a financial advisor, I'm guessing again that most are not working with a fee-only advisor who acts as a fiduciary and only gives advice in the best interest of the client.
Book Review: The Bogleheads' Guide to Retirement Planning
I've been waiting for this book for a long time. About this time last year, the leaders of the Bogleheads investment forum announced a book project and asked for volunteers. I was selected and assigned to write a chapter on defined benefit pension plans. The book was finally published in September and I got my free book from the publisher last week. This is the first time I got the chance to read the whole book.
The title is The Bogleheads' Guide to Retirement Planning. It covers a wide range of topics on planning for retirement. The emphasis is on planning, not saving or investing for retirement, although there are still a few chapters on investing. It starts off with the planning process. Then it goes over the different savings and investment vehicles, investment strategies, how to make the most of social security, withdrawal strategies once you are retired, insurance, estate planning, how to find help if you need it and what to do if you face divorce or too much debt you can't repay.
I like the broad approach in this book. Retirement planning is a complex subject. There can be full-scale books on each of the topics covered in this book. Every chapter covers the main points in about 15 pages so the size of the book stays manageable. If the reader wants to read more about a particular subject, there are a list of additional resources at the end of each chapter. The book serves as a good roadmap for retirement planning.
Austin Frakt on NPR
Remember The Incidental Economist (TIE) who used to co-blog with me here? His real name is Austin Frakt. He's famous now. His blog posts, which I still help host under his own domain name, have been cited in Washington Post, Mother Jones, The Atlantic, and many other high profile places. He's been quoted in Business Week twice. He got a 15-second sound byte on NPR today.
Short-Term Fixed Income: CDs vs Bond Funds
The interest rates are really low these days. If you are trying to rollover a matured CD or if you want to save for something you need in a few years, it's not easy to find a good option.
After rolling over my IRA to my solo 401k at Fidelity, I want invest a small sum in the solo 401k account in short-term fixed income. I went and looked at my options.
Treasuries
I Bonds: Hold Or Sell?
Savings Bond Advisor reported that the next inflation adjustment on I Bonds will be 3.07%. I bought some I Bonds in April 2008 when the base rate was 1.2%. They will earn 0% starting this month through March 2010. Based on the 3.07% inflation adjustment, these I Bonds will earn 4.28% between April and September 2010.
I had planned to sell them in January 2010 after they earn nothing for three months. Now it looks like I will hold them one more year until January 2011.
If I redeem them in January 2011 instead of January 2010, these April 2008 I Bonds will earn
Subscribe
More Links
Checking Accounts - Read reviews and other information about banks and accounts.
Get payday loans from a company that operate according to state regulatory standards.
BT stock market education program is put forward in a plain, easy-to-understand method.
