Speaking of not selling, I find this tidbit quite interesting: the vast majority don’t sell anyway. Steve Utkus, Director of Center for Retirement Research at Vanguard, wrote in the Vanguard Blog that during the recent volatile days, between Aug. 1 and Aug. 10, only 2% of all 401(k) participants in plans administered by Vanguard made […]
+/- 5% Rebalancing Bands
When the stock market moves up or down, it can knock your asset allocation off your target. Rebalancing means selling the winners and buying the losers in order to bring a portfolio back to its target allocation. When it comes to rebalancing a portfolio, the 5%-band method is a popular one. It says that you […]
Don’t Sell, But Don’t Buy Either?
When stocks are down, don’t sell. But also remember to buy more. “Don’t sell” is correct only if “buy more” is correct.
Buying Stocks On Sale
I was away for only a week, and look at what happened. After I came out of my seclusion, I heard we beat the clock on the debt ceiling but Treasurys got downgraded anyway. I was surprised to see that my limit buy orders were all filled last Thursday and Friday even though I didn’t […]
Are Convertible Bonds and Preferred Stocks Good Investments?
A reader sent me this question about convertible securities mutual funds. I would love to read your opinions on convertible securities mutual funds. This is a subject that seems to be ignored completely by personal finance bloggers. What I would like to know is How do these funds work and is there an interest rate […]
Living with Negative Real Interest Rates
Reader KD asked me to comment on the repercussion of interest rate on savings being lower than inflation because the Fed is holding the short-term interest rate close to zero. It has been this way for several years now. The same thing happened in early 2000s when the Fed cut rates and held them too […]
Fitness Trainer and Financial Advisor
In a previous post Pay Someone to Enforce the Discipline, I compared fitness trainers to financial advisors. "I’m pretty sure [the trainees] 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?" Peter Sagal is the host of NPR’s new […]
Save More For Retirement Or Save For House Down Payment?
I see this question come up a lot from recent college graduates. After you contribute enough to get the employer match in the 401k or 403b plan, should you save more for retirement, or should you save for a house down payment? The question is asked presumably because the income does not allow one to […]
Take Money Off the Table After a Good Run
Almost three years ago, when the stock market entered a bear market, I devised a plan for overbalancing, which called for increasing the percentage of my portfolio invested in stocks as the market goes lower. Stock Market Allocation to Stocks -5% 60% -10% 60% -15% 60% -20% 65% -25% 65% -30% 70% -35% 70% -40% […]
Customer Service Hours at Mutual Fund Companies and Discount Brokers
Today is Good Friday. Stock and bond markets are closed. If you have a question about your account, is the mutual fund company or brokerage firm where you have your money open to answer your questions? I’m not talking about automated IVR systems. I’m talking about live human being customer service reps. I polled some […]
Bond Yield and Risks Triangle
There was an article on Washington Post by Robert Pozen and Theresa Hamacher about bonds: A bond backfire after racing to buy long-term Treasuries and sell tax-exempt funds Although I don’t agree with everything they said, especially their error about a TIPS fund in taxable accounts, on balance it’s a good article about the yield […]
S&P 500 + Extended Market = Total US Stock Market
My employer informed us our 401k plan added a new index fund to the lineup. It used to have only an S&P 500 index fund. Now it added Fidelity’s Spartan Extended Market Index Fund. 100% of my money in the 401k plan is in the S&P 500 fund because it was the only index fund […]