According to Forbes.com: As of June 10, 2011, the District of Columbia and 22 states imposed estate and/or inheritance taxes. Illinois is the latest of the states to adopt a tax; it acted in January. In May Connecticut lowered the amount it exempts from its tax from $3.5 million to $2 million per estate, retroactive to Jan. 1. (As in the federal system, bequests to a spouse are state-estate-tax-free.) States with estate taxes typically exempt $1 million or less per estate from their tax and impose a top rate of 16%. Six states levy only an inheritance tax, with the rate depending on the … [Read more...]
Baby Boomers Place Their Bets
You may be surprised at how ill prepared baby boomers are for retirement. In his Wall Street Journal article “Retiring Boomers Find 401(k) Plans Fall Short,” E.S. Browning writes: The median household headed by a person aged 60 to 62 with a 401(k) account has less than one-quarter of what is needed in that account to maintain its standard of living in retirement, according to data compiled by the Federal Reserve and analyzed by the Center for Retirement Research at Boston College for The Wall Street Journal. Even counting Social Security and any pensions or other savings, most 401(k) … [Read more...]
Stocks Get Bernanke Bounce
In his twice-a-year economic report before Congress Wednesday, Federal Reserve chairman Ben Bernanke’s comments helped stocks rally during the morning session, with the Dow Jones Industrial Average surging 164 points—for a Bernanke bounce. He told the House Financial Services Committee that “We have to keep all options on the table” in fighting inflation or deflation. Well, that clears things right up, doesn’t it? Bernanke went on to say that “If we get to the point where the recovery is faltering” and inflation drops to zero, then he would consider additional stimulus options. Great, more … [Read more...]
The Most Popular Bond Fund
When investors ask me to review their company’s 401(k) investment options, I can’t get over the lack of bond fund choices offered by the plans. More times than not, the choice is between a bond fund with a maturity too many years out for my comfort level, and one with credit risk that is far too high. Unfortunately the retirement plan advisors that put these plans together are more interested in conformity than coming up with a formidable bond lineup for participants. According to a study released in October from BrightScope Inc., the PIMCO Total Return Fund was the most popular bond fund … [Read more...]
Weak Real Estate Values
The following chart illustrates the close correlation in recent years between real estate investment trusts (REITs) and stocks. For my money, this makes REITs far less attractive today than did the negative or low correlations and the much higher yields of days gone by. And I also don’t see much value in REITs given that 10-year Treasuries yield about the same—both are near 3% today. In a separate item, the Securities and Exchange Commission is looking into nontraded REITS as reported in the Wall Street Journal piece “Nontraded REITs Are Put on Notice by SEC.” The article … [Read more...]
Absolute Return
The next time you see an advertisement for an absolute return fund, make sure you do your homework and understand exactly what you’re getting yourself into. I’ve been digging through the 100-plus prospectus pages of the Putnam Investments Absolute Return suite of funds and can tell you the reading isn’t as straightforward as I’d like it to be. Even in the reduced format of the Putnam Absolute Return 100 Fund’s summary prospectus 2/28/11 (only seven pages), there’s some mind-numbing small print. Here’s what I gather you’re up against for the Class A shares: a 1% sales load (charged at the … [Read more...]
Investing in Your Food Supply
You may want to start thinking and investing like a farmer. As a group, farmers’ average age continues to rise. And as their numbers decline in the coming years, the quality of our food is likely to follow suit, given the notion that more processing will pick up the slack. That’s why it’s so important to protect our heritage breeds—animals that were around when Thomas Jefferson walked the fields of Monticello. Protecting our heritage breeds may not be something you think about every day. But those who work at the SVF Foundation in Newport, Rhode Island, do. The SVF isn’t your ordinary farm. … [Read more...]
This One Thing Could Save Your Life and Your Portfolio
You might think I’m crazy buying $175 sneakers. I’ve never spent that kind of money on sneakers before, and it’s at least double what I’ve normally spent in the past. So I’m calling my Newton sneakers an investment. I was introduced to Newton sneakers by my Pilates teacher and trainer, Jane Beezer, as we were discussing the book Born to Run by Christopher McDougall. It’s reshaping the sneaker industry. And as it turns out, less is more. Years of running injuries can be tied back to a sneaker industry that babied our feet with too much cushion, encouraging a heel-first strike point rather … [Read more...]
A Little Mistake That Can Cost Hundreds of Thousands of Dollars
You being in the top 97th percentile in good looks and wealth might be good. But being in the top 97th percentile in the fees you pay your investment advisor is…not so good. PriceMetrix, a wealth-management software firm, has come out with a report showing that a significant variation in pricing exists between investment advisors. The firm has quite a database to pull from—15,000 advisor books, 2.3 million investors, 380 million transactions, 1 million fee-based accounts, and over $850 billion in investment assets. The study examined the pricing on balanced accounts for households with … [Read more...]
Outliving Your Money
Just over thirty years ago, the 3-Month Treasury-bill yielded 16.3% in the secondary market. At the beginning of this month, as you can see in the chart above, it yielded only 0.01%. That’s 1 basis point, or a difference of 16.29%. It can’t possibly go below zero. Though the yield is already negative when accounting for inflation, as investors line up to pay to lend the government money. Investors are in a real predicament, especially those living on a fixed income. How many investors built their retirement savings plans using such low rates as inputs in their models? Not many to be sure. … [Read more...]
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