Compounding investing wisdom...
Welcome to the end of the week! Just sit back, relax, and enjoy this weeks roundup in another edition of Happy Hour.
Obama came forward this week recommending net neutrality be enforced by making internet providers utilities. The Republican response was an emphatic disagreement per usual. Really, it was Ted Cruz making a fool of himself.
We’ve also devolved to a point where reverse psychology might work in D.C. Continue Reading…
Much of the discussion around investing involves managing costs. Taxes need to be part of that talk. Like fees and expenses, dividend and capital gains tax eats away at your returns.
Any time your investments make money, taxes aren’t far behind. To make it easy on us, Congress whipped up a simple complex tax code for income, dividend, and capital gains tax rates. Lucky for us, that tax code can change on a whim, making it worth staying updated on.
Before we go any further, dividend and capital gains tax are for money invested through taxable accounts only. Taxes on investments are a moot point when dealing with retirement and other tax advantaged accounts. You can buy and sell all day without worrying about the tax consequences, though I don’t recommend it. Continue Reading…
Welcome to the end of the week! Just sit back, relax, and enjoy this weeks roundup in another edition of Happy Hour.
The midterm elections are finally over. No more political ads or candidate bashing. The People have spoken. And just in time too. Those can’t miss holiday attack ads are coming soon.
Big data site FiveThirtyEight got its political projections right..again. But, are you really surprised by the results? Continue Reading…
Equal weighted fund strategies are the laziest form of active indexing. When you put the least amount of thought into changing an index, the lazy solution is to give every stock an equal say. However, the results show equal weighted funds outperform your vanilla cap weighted funds.
That outperformance is accidental.
Luck would have it that by equal weighting every stock, you accidentally tilt toward factor premiums, like value, momentum, volatility, or size, which can add to long-term performance. I cover this in the smart beta guide. If you weighted stocks alphabetically you’d see similar results. Then the fund industry could charge a premium for ALPHA-bet funds instead.
With international funds, an equal weighting adds risk. I suspect this is one reason the equal weighted MSCI EAFE fund didn’t last long. The side effect of equal weighting international, emerging market, or global funds, is increased country risk. Continue Reading…
Welcome to the end of the week! Just sit back, relax, and enjoy this weeks roundup in another edition of Happy Hour.
The hardest thing most people have with investing is knowing where to start. How do I build a portfolio and what funds should I use? I hazard to guess its the biggest reason more people don’t start sooner.
Technology, in the form of robo-advisors, have popped up to remove this obstacle. All you have to do is set up regular deposits, answer a few questions, and the robo-advisor does the rest. Continue Reading…
A major step in the retirement planning guide is to understand all the savings tools available. The IRA is the most versatile tool in your retirement toolbox. To take advantage of it, you should stay on top of yearly changes to the IRA contribution limits.
Each year the IRS announces the inflation adjusted numbers for the traditional and Roth IRA contribution limits along with the traditional IRA deduction limits. These cost of living adjustments are made when the inflation index meets a certain criteria. In turn, the adjustments prevent inflation from eating away at the IRA limits and your ability to save for retirement.
The 2016 IRA contribution limits will look just like it did for 2015. Both the traditional and Roth IRA will have the same contribution limit, which will max out at $5,500. If you are 50 years or older, there is a $1,000 catch up contribution. Continue Reading…