July 30, 2009 How can I say this best? Stock market valuations are not low. If you are retired or saving in hopes of retiring, you must laser focus on having a consistent flow of cold cash to pay the tab for your weekly grass-fed-to-the-end beef, fresh-ground flax, coconut milk loaded with medium-chain fatty acids, and omega-3-loaded Country Hen organic eggs. In other words, you will want to rely on high-dividend yields for compound-interest power. The two most important words in investing are “compound interest.” Please don’t buy into the jive that trying to buy stocks cheap and then trying … [Read more...]
The Terror of Outliving Your Money
July 24, 2009 The terror of outliving your money has now taken hold for too many investors. It’s not hard to see why, given that discerning investors remember like yesterday the 1965-1981 16-year bear market, where the Dow ended up at 875, 10% lower than its 1965 peak of 969. A little closer to home, we all recall with concern the 1999-2008 nine-year bear market, which left the Dow down a frightening 24% from its 11,497 peak of 1999. For all retired and soon-to-be-retired investors, there is a fast and hard lesson to be learned here. Look to dividends and interest and the miracle of compound … [Read more...]
WARNING! Avoid the Catastrophic Thinking of Retirement Investing
Ah, retirement. Congratulations. You made it. Whether you got here by selling your business or working your way through corporate America, you’ve made it and you must feel relieved, excited, and probably a little nervous. Your retirement years should be some of the best in your life. But they are also some of the most nerve-racking, with no job to easily fall back on. With this in mind I’ve constructed a list of potentially catastrophic thoughts you might have and how to handle them. Picture yourself 10 years from now with the memories you might have of you and your spouse with grandchildren, … [Read more...]
Bond Funds
A recent article in the Wall Street Journal by Jonathan Clements highlighted the advantages of low-cost bond funds. Jonathan correctly points out that low-cost bond funds consistently outperform their high-cost cousins. This is not because low-cost bond funds are run by superior investment managers. It’s simply a result of the funds’ low expenses. As an example, take Vanguard GNMA with an expense ratio of .20% and Franklin US Government Securities with an expense ratio of .72%. Both funds focus exclusively on GNMA securities. The difference in their expense ratios is .52%. According … [Read more...]
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