A crucial retirement planning decision for many workers involves deciding when to begin Social Security benefits. Anyone can begin collecting as early as age 62, but that means the retiree receives a permanent reduction in benefits that can reach 25% or more. Retirees can also wait until normal retirement age, which currently ranges from 65 and 10 months to 67, […]
Warning to retirement savers: Don’t reduce stocks as you age
Many retirement investors intuitively believe that they should reduce their exposure to stocks as they age. After all, they have to protect their retirement nest eggs when retirement approaches and cannot afford to lose a big chunk of it in a market downturn, they believe. Recent research by two professors at Lewis & Clark College in Oregon turns this standard […]
Client Letter – Q1 2008
As you may have heard, it has been a rough quarter for both U.S. and international equity markets. Nevertheless, a well-diversified portfolio should have weathered the storm much better than an undiversified portfolio. As you can see from the chart below, the worst performing asset classes this quarter were U.S. large stocks, U.S. small stocks, and emerging markets. The best performing […]
International stocks can help dampen your portfolio’s risk
Foreign stock markets were on fire last year, handily beating the U.S. market and drawing the attention of domestic investors. The Brazilian stock market gained 44%, Germany 22%, China 96%, and India47%. The U.S. market, as measured by the Standard & Poor’s 500 Index, gained just 3.5%. And that was not an isolated, one-year event: foreign stocks on average have […]
The price of active investing: Would you believe $100 billion?
American mutual fund investors are spending a lot of money in a vain quest to beat the market, says famed finance professor Kenneth R. French of Dartmouth. French has made public preliminary results from his detailed study of the costs investors pay to own actively-managed funds whose goals are to beat the U.S. stock market. The estimated annual cost so […]
How heavily should a retiree invest in the stock market?
Common sense seems to tell those who are in or approaching retirement that they should cut back on their investment risk. After all, they will have to rely on it for income and feel they can’t afford to lose it. One rule of thumb says that you should subtract your age from 100 and the remainder is the percentage that […]
Want to be a better investor? Start learning from your mistakes
Remember when a special teacher in your life told you it was good to make mistakes as long as you could learn from them? It is probably one of the most important maxims for investors—and probably one of the most ignored. The evidence that investors don’t learn from mistakes is widespread. Every few years a new mania takes hold and […]
Turnabout for Cramer: Use index funds
This may be one of the strangest investment stories of the year: Jim Cramer, the cable television madman who rants about buying stocks, now says most investors should use index funds. Wait a minute, this isn’t the same Jim Cramer who ran a hedge fund and whose Mad Money show on CNBC nightly touts individual stock plays, is it? You […]
Have the bear market jitters? Here is how to survive and thrive
Recession fears, rising unemployment, and stock markets plunging worldwide: What’s a poor investor to do? Not only are the headlines scary and unsettling but so are the monthly statements from your broker showing a drop in your portfolio value. It can be very hard to maintain your focus and long-term commitment to the stock market when investors all about you […]
Client Letter – Q4 2007
Happy New Year! The year 2007 was the most volatile year we have had since 2002. Our overall returns for the full year ranged from 4% to 7%, depending on the level of risk in your portfolio. So, it turned out better than you probably thought! As you can see from the chart below, the worst performing asset classes were […]