Why You Shouldn’t Substitute Stocks for Bonds

A friend sent me the following article from the USA Today insert of his local paper. The article proclaimed “The 60/40 stock-and-bond portfolio mix is dead in 2016” and went on to explain that with bond interest rates near historical lows, one should reach for higher returns by taking more risk with stocks. The article quoted one adviser who suggested investors in their 60s invest 70 to 80 percent of their portfolio in stocks. I couldn’t disagree more, and here …

Cutting Through Financial Jargon

Ever hear something like this and scratch your head wondering what it means? Our exclusive quantitative modeling system using proprietary algorithms will optimize your portfolio for minimum volatility with maximum alpha exceeding the efficient frontier. Sure, those big words definitely sound impressive, but what do they truly reveal about the person or firm saying them? Are they indicative of an expertise that would benefit investors, or just financial word salad meant to both dazzle and intimidate them into believing that …

Play the Odds When Investing

Perhaps you’ve heard that low-cost passive index mutual funds tend to perform better than funds in which managers actively pick stocks. By my calculations, however, over any given year, roughly 42 percent of actively managed funds outperform the low-cost index. So buying the index fund seems to be shooting for being only slightly better than average. Yet don’t most of us want to be an A student at the top of the class? To really understand the odds of beating a …

How to Evaluate Free-Money Offers

I’m typically not one to jump on promo offers, as they usually take a ton of time and have too many strings attached. Every now and then, however, I see a great offer that holds up to scrutiny. That’s why I took up Capital One 360 on its offer for free money and will make $500 on the deal. Capital One 360, by the way, is an FDIC-insured unit of Capital One Bank. Below are the reasons I chose this …

Financial Adviser Exposes Own Portfolio

People are often surprised when I describe my personal portfolio to them. Using an analyzing tool from Chicago-based Morningstar, I’ve put together a brief description of my own daringly dull portfolio and, far more important, why it looks like it does. Most of my investments are in mutual funds with an average expense ratio of 0.16 percent annually. I don’t have enough money to diversify by buying individual stocks, so I buy low-cost index funds that track the overall market. …

Why I Like 529 College Savings Plans

If you want to help pay for higher education for a child or grandchild, consider using a 529 college savings plan. These plans allow you to put money aside for tuition and other college-related expenses, while getting some nice tax advantages as well. Since I have a son who will be college bound in a couple of years, I’ve looked at all sorts of ways to pay for it and can say the 529 plan is by far the best …