What Investors Really Want
What Investors Really Want is the title of a book I’m going to start reading. It got endorsements from some people I respect: John Bogle, Burton Malkiel, and William Bernstein. That’s always a good sign.
Before I read the book, I’d like to answer that question. What do investors really want?
Getting in on a high flyer early
The Forgotten Deductible IRA
This article is inspired by a post made by Kevin M on the Bogleheads forum. You may have heard of this rule of thumb about retirement savings priorities:
- Contribute to 401k (or 403b) to get the full employer match
- Maximize Roth IRA
- Maximize 401k (or 403b)
- Invest in taxable account
Kevin asked why a Roth IRA as opposed to a deductible Traditional IRA is used in Step 2. It’s a very good question. In the financial media and blogs, everybody talks about the Roth IRA. The deductible traditional IRA is hardly mentioned.
Muni Selloff: A Preview of Deflating Bond Bubble
In case you haven’t noticed, the municipal bonds market had a small earthquake. It offers a preview for what can happen when a bond bubble deflates.
The epicenter of the earthquake is in California. Although its budget trouble has been known for a long time, investors didn’t mind until last week. What made investors pay attention all of a sudden? Pundits floated all kind of theories — QE2 not meeting expectations, Build America Bonds program ending, Republicans gained seats in mid-term elections, and so on. The truth is nobody knows. It just happened. When it happens, it happens fast.
Here’s the 1-year price chart for iShares California AMT-Free Municipal Bond ETF (ticker: CMF):
A Finance Professor Writes About Prepaying Mortgage
The following was written by a finance professor at a major university, who shall remain unnamed until the said professor comes out to claim ownership. It was published yesterday by a blog run by several well known university professors.
I’m quoting the full text because it was disowned by the blog that published it. A blog editor removed it as if it never existed. If and when the original blog restores it, I will replace the quoted text with a link.
You Pay Me Interest, I Pay You Fees
Bank fees were in the news again a few weeks ago when Bank of America announced it will take a $10 billion charge for anticipated lower fee revenue as it abandoned overdraft fees from debit card transactions. Back in September New York Times personal finance columnist Ron Lieber wrote that maybe customers will be willing to pay monthly fees if the checking account comes with some innovative services customers want.
Ron was enamored with depositing checks by taking a picture of the check with a smartphone.
Many of us would gladly pay a few dollars a month for that feature alone from our own banks.
Book Review: The Only Guide You’ll Ever Need for the Right Financial Plan by Larry Swedroe
Larry Swedroe is a well known financial advisor. He wrote at least eight books on investing. I read and liked most of his previous books. I also subscribed to his blog Wise Investing at CBS Money Watch.
The Only Guide You’ll Ever Need for the Right Financial Plan is a new book published in August 2010. In this book, Swedroe and his co-authors try to tie together the previous three “the only guides” on stocks, bonds, and alternative investments and add more on how to apply the strategies. Larry Swedroe wrote in the preface:
What investors need today is a book offering more specific investment advice, one focusing on the “art” of investing and guiding investors to adapt a winning investment strategy to their own situation. That is what this book is all about.
Complain About Bad Service
I wrote about paying more for good service. This time I’m facing the opposite. I’m debating if I should complain about bad service.
It’s getting cold outside. Some mice or rats decided to come into my attic for shelter at night. I called a pest control company I used in the past. They provided good service to me before. Not this time.
They sent a different guy, maybe their mouse trapping specialist. For the service, he had to come to my home several times: closing the vents, setting the traps, checking on the traps, resetting the traps, and checking on the traps again.
Pay Someone to Enforce the Discipline
When I run at the community tracks in the morning, I see many other runners. I also often see a group of people doing different exercise drills with a trainer. I didn’t ask but I suppose the participants are paying the trainer for leading the drills. I’m pretty sure they can get exercise routines off the Internet and do the same exercises on their own. Are those people foolish in paying good money for nothing?
American Express charge cards lack one feature found on similar American Express credit cards: the option to carry the balance and pay over time. Charge cards must be paid in full by the statement due date with no exceptions. Although the option to extend payments over time (with interest) isn’t that great, it’s still an option. Yet the charge cards have an annual fee and the credit cards don’t; all other benefits are identical. Are charge card customers dumb when they pay more for less?
In either case I see people are paying someone to enforce the discipline. They are not foolish, but actually smart.
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