The Need for a Consumer Financial Protection Agency
Lately I received some comments on two related old posts: $10,000 Lesson On Variable Universal Life (VUL) and What Is WFG and What Does It Do? I’m pretty sure most of you don’t monitor the comments on old posts like I do. I’m using these to lead a discussion on the need for a consumer financial protection agency.
From Jaymz on Variable Universal Life insurance (VUL):
Low-Minimum Index Funds and Commission-Free ETFs for Small Investors
The deal for small investors is getting better. If someone wants to invest in index funds and ETFs with very low cost, Vanguard is no longer the only choice. Competition is really good for customers.
Schwab has 5 index funds that require only $100 minimum initial investment. The lineup is not as extensive as Vanguard’s, but it’s adequate for a small investor. Although Schwab doesn’t have a bond index fund, customers can buy Treasury bonds at auction or buy new-issue CDs, all for free.
Schwab customers can also buy 8 Schwab ETFs without commission. Because these ETFs are new, my first choice would be the index funds unless the asset classes can’t be covered by the index funds. Here’s an example of a simple portfolio using Schwab index funds and ETFs: » Read more …
My Future Is Not a Game
I beat the market in 2009 … in a mock trading game. My return from $100,000 fake cash was +48.6%.
Among more than 100 Vanguard mutual funds, only 5 had a higher return in 2009 than I did in the game.
No Sugar Coating Please: It Was a Lost Decade
Happy New Year! With the first decade in the new millennium having come to the end, there’s a lot of retrospection in the media. What happened? What should’ve happened but didn’t? In the investing world, some say the decade was a “lost decade” and some apologists say how it wasn’t.
I read articles from both camps. I’m not convinced by the contrarians who say it wasn’t a lost decade. Hence the title of this post. Although it’s not the news everybody cheers for, I have to respect the facts. It was a lost decade. Let’s not sugar coat it and say it wasn’t.
As in any other debate, the definition is very important. What is a lost decade, really? I define it as a decade in which risk taking wasn’t rewarded. You took risk, you did what everybody says you are supposed to do, but you have nothing to show for after ten years. That’s a lost decade.
529 Plans: Age-Based Options Don’t Make Sense
A new-born niece came into my extended family recently. I got the task for looking into setting up a college education fund for her.
I know about 529 plans. Every state has at least one plan. Some states have several plans. I quickly identified Ohio CollegeAdvantage 529 plan as the best plan for my niece. Her parents live in a state that does not give a tax deduction for 529 plan contributions. They can use a plan offered by any other state. The Ohio CollegeAdvantage 529 plan has low cost Vanguard index funds.
Like many other 529 plans, the Ohio CollegeAdvantage 529 plan offers age-based investment options. There are actually four age-based options, three of which offer exclusively Vanguard funds. Within the Vanguard age-based options, there are conservative, moderate, and aggressive tracks. Here’s how the middle-of-the-road Vanguard Moderate Age-Based Option will invest:
Conventional Wisdom "Don’t Buy a Distribution" Is Wrong
I mentioned this last year in my post 3 Reminders About Year-End Mutual Fund Distributions. I see the conventional wisdom “don’t buy a distribution” is still going strong. Vanguard reiterated this conventional wisdom in its blog post The record date: Not a tune you can dance to in early December.
But the conventional wisdom is wrong. I patiently waited until I can have a real life example.
After Vanguard published the blog post, Ella posted on the Bogleheads investment forum and asked if she should invest in two ETFs right away or wait until the ex-dividend date. » Read more …
Money Is Fungible
A woman by the name of Melissa called the public radio program Marketplace Money and said her husband had a 50% pay-cut a few months ago. In order to make up for the lost income, she took up teaching part-time at a college. The college just notified her that she’s now eligible to join the college’s retirement plan.
It sounds like a 401(a) money purchase plan. The decision is one-time: if she doesn’t join now, she won’t be able to join later. If she joins, she must contribute 5% of her pay and the college puts in 8%. But, she’s tight in her budget. You can imagine so after her husband’s pay was cut in half. So she asked the radio program if she should join the retirement plan.
WellsTrade: Free Trades With Easy Qualification
This is old news but since it wasn’t included when I gave TFB Awards three years ago I thought I’d mention it now. WellsTrade is an online brokerage service offered by Wells Fargo Investments, LLC. Its most attractive feature is 100 free trades a year.
To qualify for 100 free trades, you only need $25,000 in any combination of banking, brokerage, and credit balances with Wells Fargo (mortgage balance counts at 10%). The brokerage piece is the key. Bank of America also offers free trades but the qualifying balance has to be 100% on the banking side. You can’t use the brokerage balance to qualify.
100 free trades per account include open-end mutual funds in addition to stocks and ETFs. No other brokerage accounts let you buy Vanguard mutual funds for free. Small online broker Zecco offers free trades with $25k balance but the free trades don’t cover open-end mutual funds.
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.
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
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SuperFreakonomics by Steven Levitt and Stephen Dubner -
