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...]
Cheeseburger in Paradise
Your financial freedom is at the mercy of a politicized Federal Reserve seemingly more interested in recapitalizing big Wall Street banks than helping you maintain your purchasing power. Near-zero interest rates and a declining dollar turn their lunch into a cheeseburger in paradise while you’re stuck brown-bagging it. The Fed’s dual mandate of full employment and price stability hasn’t exactly materialized, as unemployment logs in at about 9% (11% in Rhode Island), and searching for lower prices has become the great American pastime. Meanwhile, balanced economic growth, which is part of … [Read more...]
The Fed Is Killing the Dollar
You can feel rich and poor at the same time. Take the college student living large on Mom and Dad’s tab. He may be enjoying his last semester of college but could also have a knot in the pit of his stomach; come next month, he graduates with no job. The same up-and-down feeling might apply to the purchasing power of your dollar today. For example, you can feel rich by being a vulture investor in Florida and buying a condo at a deeply discounted price. But then you’ll feel poor driving south when your snowbird daydreams are abruptly interrupted by the sticker shock of filling up the … [Read more...]
Capital Gains vs. Dividends: 10 Takeaways
In 2008, one-third of investors over 65 had reportable capital gains, and 40% of investors between the ages of 45 and 65 had reportable capital gains. Both facts were reported by the IRS and highlighted in a report by the Tax Foundation. Here are my takeaways: 1. Obviously both age groups headed for the exits too soon, selling in a year when the S&P 500 was down 37%. 2. But that’s what happens when stocks are too heavily relied upon, as they were by investors trying to make up for the devastating losses from the tech bubble in the early 2000s. 3. Yes, 2000–2010 may have been the lost … [Read more...]
Up 5,000% in 10 Years
Do you dream of buying shares of the next Microsoft before they take off? How about the next Apple? Apple shares are up 4,200% over the last decade. Even better than Apple, shares of priceline.com are up almost 5,000% over the last 10 years. These are life-changing returns. A modest $20,000 investment in priceline.com 10 years ago would be worth more than $1 million today. If only you had the foresight to identify the last decade’s winners ahead of time, you could be 10, 20, or 30 times richer than you are today. Sound like the beginnings of a pitch you’ve heard before? My … [Read more...]
Retirement Isn’t What You Expect
You don’t want to face a retirement in which you are forced into lowering your living standards. Yet that is exactly what the majority of baby-boomer households are up against. They may not have a choice in how they live their retirement years, because they’re not prepared. Retirement isn’t as easy as everyone thinks it is. It’s emotionally difficult not having a steady paycheck and the peace of mind a paycheck can provide. You have an idea of how much your living expenses will be, but you don’t necessarily expect the dream vacation or car your spouse suddenly needs to have. And even if you … [Read more...]
Fidelity Still the Best
You should browse Fidelity.com when you have some free time between Christmas and New Year’s. You’ll have an enjoyable experience. That’s because few, if any, investment companies spend as much money on technology as Fidelity Investments. That’s been true for years, a fact I remember well because my first job out of Babson College was with Fidelity. It’s hard to believe that was almost 16 years ago. At the time, there was no question Fidelity was the leader in technology. Chairman Ned Johnson III made technology a priority, and that explains why the company remains at the top today. I … [Read more...]
It’s a Shame You Don’t Make More Money
Yes, you may feel it’s a shame you don’t make more money. But you don’t want to make the mistake of being more aggressive with your portfolio to make more money. That’s a fool’s errand. Working more, saving more, and spending less guarantee you’ll make more money. Putting more of your money in stocks or commodities guarantees only one thing: You’ll have more of them. The market has zero interest in you making more money. And don’t think the Fed is doing you any favors with the bubbles it has inflated. Easy money has decimated hedge funds and venture capital. Commodities and farmland may be … [Read more...]
The Takeaway from Buffett’s Decision to hire Todd A. Combs
This week, Berkshire Hathaway announced that Todd A. Combs would be joining Berkshire as an investment manager and likely successor to Warren Buffett in the role of chief investment officer. Mr. Combs is an obscure 39-year-old manager of the $400-million Castle Point Capital hedge fund based in Greenwich, Connecticut. Not much is known about Mr. Combs. As of this writing, the media still hasn’t been able to track down a photo of the new Berkshire investment manager. That’s remarkable in this day and age. We do know that Mr. Combs graduated from Florida State University and Columbia Business … [Read more...]
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