I was listing to WEEI sports radio last week when I heard an advertisement pushing structured settlement investments. The juicy 5%-7% yields are hard to ignore in this low interest rate environment as is the annoying sales pitch. But you want to stay away from this toxic waste. There's a reason they sound too good to be true. This article from 2010 helps sum it up for you. What are the potential dangers in buying your very own high-yielding hunk of a lawsuit? High yields, but unsuitable for most investors. First is the lack of liquidity. Imagine you expect to hold one of these annuities … [Read more...]
Make the Best Use of Tax Deferred Accounts
A recent article in Financial Planning noted that investors can generate 20 to 50 basis points each year in return by properly allocating assets among their taxable and tax deferred accounts. Many investors make the mistake of owning assets not subject to taxes in their tax deferred portfolios. Within tax-deferred accounts, the best fit are investments that generate income subject to the ordinary tax rate, which can be as high as 39.6%. Fran Kinniry, a principal with Vanguard's Investment Strategy Group, argues that tax-deferred accounts are "extremely valuable shelf space," and should be … [Read more...]
Bezos vs. Buffet: Billionaires’ Different Take on Media
With the sale of The Washington Post, Warren Buffet has unloaded a large stake in a drowning media company. Taking it off his hands is another billionaire, Jeff Bezos. Buffet’s Berkshire Hathaway has been the largest holder of Post Co. shares since the 1970s and will receive $53.5 million of the $250 million buyout price for its stake. One might assume losing Warren Buffet, who runs one of America’s most profitable companies, as a major shareholder would be a burden on The Washington Post, but that’s simply not the case. With Bezos coming onboard, WaPo is getting a manager who is an expert … [Read more...]
New Hampshire’s Unknown Billionaire: Keep it Simple Stupid
Turns out not all the money in the world is made by sexy tech companies. Keep it simple stupid. Aug. 5 (Bloomberg) -- Bloomberg's Matthew G. Miller reports on the wealth of Billionaire C&S Wholesale Grocers Chairman Richard B. Cohen. (Source: Bloomberg) … [Read more...]
Pros vs. Joes Investing
Are you a bearish pro or a bullish Joe? Last week we showed you a chart from BlackRock displaying just how poorly the average (Joe) investor's performance is. This week, as though to confirm that sad discovery, Bank of America Merrill Lynch has put out a chart showing that the bullish activity in stocks is being driven by average Joes. Meanwhile, the pros are heading for the exits in rapid fashion. Chart via Zero Hedge … [Read more...]
Average Investors Prone to Bad Decisions
Current market volatility is creating a moment ripe for bad decision making on the part of the average investor. An interesting chart (below) published by BlackRock at the end of 2012, but no less pertinent today, shows that the average investor didn't even keep up with inflation from 1992-2011. Rash decision making is likely at fault. … [Read more...]
Annuity Guarantee “WILL BE REVOKED”
I've been warning investors about variable annuities for a long time. Hartford Insurance has issued a letter to its variable annuity investors warning that the guarantee will be revoked if they don't have 40% in bonds. Apparently Hartford has a contractual right hidden within the pages of the prospectus. Most investors need a doctorate to understand what they're signing up for with variable annuities. In this case, as is most often the case with variable annuities, the investor loses. Hartford is one of many insurers seeking to reduce exposure to what have turned out to be costly guarantees … [Read more...]
Shocking Statistics about American Savings
The New York Fed announced yesterday that household debt levels have fallen to $11.23 trillion, down from a peak of $12.68 trillion in the third quarter of 2008. That’s good news for Americans’ personal balance sheets, but paying off debt isn’t enough to get one through his golden years. Are you saving enough for retirement? [expand title="Click here to read more."] As you can see on the chart below. Savings rates have been very low for a long time. Since 2000, the average monthly savings rate has been 3.5%. For the last two months the rate has been below 2.8%. But the historical average … [Read more...]
Going Broke!
If you feel like you’re spending too much don’t feel so bad. These guys take it to another level. 15 Ways Professional Athletes Go Broke By Tony Manfred | Business Insider – Mon, Mar 11, 2013 9:58 AM EDT Two very different ex-NBA players ran into financial issues in two very different ways recently. Robert Swift — who earned $11 million in three seasons — had his house foreclosed on after prematurely flaming out of the NBA and apparently not doing much else. Allen Iverson — who earned $154 million in salary — found out the hard way what happens when you keep living the good life after the … [Read more...]
Election Year Buzz Turns into Hangover
Surprise, surprise, consumer sentiment in America reached its post-recession high in November, just as politicians were sending Americans to bed each night with dreams of jobs and prosperity on the horizon. Meanwhile, Americans supporting incumbents in 2012 told themselves everything was OK to justify voting for their candidates. That false positive sentiment bled through to surveys as expressed deluded hope. Now that those heady days are over, sentiment is based deeper in the reality that taxes have gone up on 77% of Americans, job growth remains anemic, gas prices remain elevated, and … [Read more...]
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