We just passed the two-year anniversary of a recent stock market bottom. Numerous articles in the newspaper and on the web show investors as a whole are dumb. They took money out of the stock market near the bottom and they are now putting money into the stock market after the market recovered almost to […]
Dollar Cost Averaging: Don’t Stop Buying On the Way Down
Dollar cost averaging means investing a set amount on a schedule, for example $500 a month every month. Dollar cost averaging isn’t the same as periodic investing. Dollar cost averaging means you have the cash to invest in a lump sum now but you choose to phase in your purchases over time. Periodic investing means […]
In-Service Withdrawal: The Law and The Plan Rules
It’s a sad fact many 401k plans are bad: the investment choices are poor; the fees are high. People naturally ask if there’s a way to take the money out of the plan to their own account. We all know when you leave your job, you can. It’s called a 401k rollover. In most cases […]
Timing Mutual Fund Purchases Around Year-End Distributions Backfired Again
Financial advisor Allan Roth has a pet peeve against the Associated Press’s habit of reporting the raw S&P 500 index changes as if they are the U.S. stock market returns. He argues the true U.S. stock market returns should (a) include dividends; and (b) include small caps. I agree with him, but the media don’t […]
Asset Allocation for a 529 Plan
It’s that time of the year again. I need to make a new contribution to my niece’s 529 plan for her future college expenses. When I looked for a plan for her last year, I came to the conclusion that the typical age-based options don’t make sense. The typical age-based options in a 529 plan […]
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 […]
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 […]
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 […]
Negative Real Return Is the Price for Safety
The price to keep our money safe finally hit our face: five-year inflation indexed bonds yield from a recent auction produced a negative number, -0.55%. It means investors in these bonds are guaranteed to earn a return at 0.55% below inflation in the next five years. As absurd as it may sound, investors don’t have […]
Cost Basis Tracking After Converting Vanguard Mutual Funds to Admiral Shares
Forget about what I said about having both Vanguard mutual funds and ETFs. Vanguard just announced they lowered the minimum investment requirement for Admiral shares in most broad index funds from $100,000 to $10,000. Admiral shares are a different share class in the same Vanguard fund but with a lower expense ratio. In most funds […]
Vanguard New S&P ETF Ticker Symbols
With some fanfare, Vanguard launched nine new ETFs based on S&P indexes last week. When I first looked at the ticker symbols, I see a mess. All nine funds use a combination of V, I, O, and G. They are VOO, VOOV, VOOG, IVOO, IVOV, IVOG, VIOO, VIOV, and VIOG. After staring at them for […]
You Should Still Beware of A Bond Bubble
As interest rates go down and down, people have raised warnings for a possible bond bubble. Vanguard, being a major provider of bond mutual funds, has published several white papers and articles trying assure investors they should stick to bond funds and not worry about a bond bubble. Unfortunately the arguments put forward by Vanguard […]