The Economic Myth-Destroyer Gets His Due

Imagine a person who always, in every circumstance, makes rational decisions with his money.  He saves when he ought to and spends exactly as he should spend, in order to maximize the “utility” of whatever wealth he happens to possess.  He defers gratification with ease.  When he invests, he has instant and total access to […]

read the full article

What Costs More

Inflation has been pretty benign over the last 20 years, right?  The U.S. Consumer Price Index has ranged from negative 0.4% in 2009 to a high of 3.8% in the awful 2008 economic year.  In 13 of those 20 years, the CPI was below 2.5%, which is hardly comparable to the double-digit inflation […]

read the full article

What Does It Mean When Your Portfolio is Up 10%?

You receive portfolio performance reports every three months—a form of transparency that financial planning professionals introduced at a time when the typical brokerage statement was impossible to decipher.  But it might surprise you to know that most professionals think there is actually little value to any quarterly performance information, other than to reassure you that […]

read the full article

Why Using Home Equity to Invest in the Stock Market is a Bad Idea

“Strong stock market encourages the resurrection of a bad practice – borrowing money against the value of your home to play the market. The horror story set out below is likely to be repeated if these practices continue.

read the full article

Three And A Half Years Since The Last 10% Correction

The most expensive colleges are now over $65,000 per year. At the same time, student loan debt is over $1 trillion and escalating right along with the cost of college. Student loans, however, are not the only way families can borrow to help pay for college. The following is an overview of the 8 common types of loans used in education funding, followed by a bit of guidance to help you understand which loan(s) might be best for you and your child. 2015 Guide To FAFSA, CSS Profile, College Financial Aid And Expected Family Contribution (EFC)

read the full article

6 Fear-Driven Money Moves That Sabotage Your Net Worth

The most expensive colleges are now over $65,000 per year. At the same time, student loan debt is over $1 trillion and escalating right along with the cost of college. Student loans, however, are not the only way families can borrow to help pay for college. The following is an overview of the 8 common types of loans used in education funding, followed by a bit of guidance to help you understand which loan(s) might be best for you and your child. 2015 Guide To FAFSA, CSS Profile, College Financial Aid And Expected Family Contribution (EFC)

read the full article

Portfolio Solutions 30-Year Market Forecast for 2015

Each year, I put my head on the chopping block and publish a 30-year forecast for global stock and bond market returns. This forecast is used to create long-term asset allocation strategies for our clients. It’s a terribly imprecise exercise because no one can know how financial markets will perform in the future. There are just too many variables and too many unknowns. Yet, here it is. So, why do I risk professional suicide each year with an expected return forecast that’s bound to be wrong? I do it because it’s necessary.

read the full article

The Mistakes That Individual Investors Make

Individual investors get lower returns than they should. According to a recent study by Jason Hsu of Research Affiliates and coauthors, even though the compound return on the S&P 500 was 8.97% per year from 1991-2013, the average stock mutual fund investor earned only 6.87%, a full 210 basis points per year lower. Other studies have found similar results, and the same pattern has been shown for investors in bond mutual funds. The return shortfall earned by the average investor is due to predictable mistakes that can be avoided.

read the full article

The Pros And Cons Of Seller Financing

Cutting out the middleman typically represents progress. Can you imagine depending on a telephone operator to put your call through? (Come to think of it, going through an operator might save us from making those calls we really shouldn’t make.)

But back to the point: Who wants to deal with a third party when you don’t have to?

read the full article

Total-return investing and asset location can offer results

The prospective client, a recently retired dentist, had sold off all his stocks and put his life savings into long-term bonds, high-yield (‘junk’) bonds, mortgage REITs, and similar securities in an attempt to generate sufficient income to live on, said Cordaro, a financial advisor with RegentAtlantic Capital, an RIA firm in Morristown, New Jersey, that manages $3.2 billion in assets.

read the full article