“These are the times that try men’s souls.” Paine

With the market down over 1000 points during the past few weeks, it’s easy to become overwhelmed by the negative news and sell all your holdings until the storm has passed. But is this the best course of action? Will you meet your financial targets if you sell each time the markets become tumultuous?

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The role of bonds in a portfolio

Most investment portfolios are composed of stocks and bonds. If stocks provide the highest expected returns between these asset classes, why bother adding lower returning assets to a portfolio?

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Chasing Yield Through Corporate Junk Bonds

In today’s low interest bearing environment, investors are seeking out ever more exotic investments in the hopes of boosting their current income. While online banks such as ING Direct and Emigrant Direct offer rates at or below 1%, those brave enough to invest in hi-yield bonds, or junk bonds, can earn upwards of 8-10%.

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Book Review — Elements of Investing

While not impressed with many of the titles I read each month, this book is quite different. Written by two distinguished authors, Malkiel and Ellis, their 100 years combined experience shows quite clearly in this short and concise book on investing. I agree with most of what they had to say, such as: invest in index funds through a low-cost carrier, rebalance on an annual basis, and don’t trade into and out of stocks making your ‘bookie’, or stockbroker, rich in the process. Read More…

Protecting your retirement assets from yourself

When it comes to investing, many of us are our own worst enemies. Trading stocks could be compared to gambling in that a whole host of emotions are unleashed when we win or lose. In attempting to beat the market, we tend to sell winners too early and hold onto losers far too long. If we are to achieve long-term success in the financial markets, we must do whatever it takes to eliminate emotions from the equation. Read More…

Brief History of Mutual Funds

The first U.S. open-ended mutual fund was launched in 1924 out of Boston, Massachusetts. Known as the Massachusetts Investors’ Trust, it immediately offered investors the opportunity to invest in a wide number of companies at a fee that they could never match on their own. In addition, shares were very liquid, making them a convenient investment vehicle. Read More…

Schwab’s ETF Bet

The Wall St. Journal ran an article this week that terrified many managers of actively-run mutual funds. Quite simply, Schwab has decided to offer commission free ETFs to 401(k) participants. The traditional mix of mutual funds in a 401(k), that we are all accustomed to, charge excessive annual fees well in excess of 1.50%. If you decide to sell throughout the year, add on another 1% or more in redemption fees. Retirement accounts are cash cows for those on Wall Street and drain our retirement savings faster than Bernie Madoff ever could. Read More…