Your Bond Income Could Be an Illusion

One of the saddest messages I am most often required to deliver to new clients is that their bond income is merely an illusion, and a tricky one at that. In fact, in most cases, their actual income is a tiny fraction of the amount shown in their brokerage statement. If you own individual bonds (not bond funds), this is probably happening to you as well — and costing you dearly. And this can occur indefinitely without your ever noticing. To better understand this, …

Interest Rates Are Low Until You Do the Math

I often hear that interest rates are awful and that it’s the worst time ever for retirees needing to live on fixed income. Yet when you look at after-tax, inflation-adjusted returns, a different picture emerges. Many people smile when I tell them that back in 1980 they could have earned 12 percent on a 10-year U.S. Treasury or certificate of deposit (CD). Depositing $10,000 would have returned $1,200 a year. But if a third went to taxes, that gain would …

Wave Goodbye to $3 Gasoline

First the bad news: Gasoline prices are at a summertime high. Now the really bad news: Sometime soon we might look back on these as the good old days. AAA’s Chris Plaushin, testifying on July 16 before the Senate Energy and Natural Resources Committee, said prices may never go below $3 a gallon again. The next day, prices inched up to an average of $3.66 a gallon for regular unleaded, according to Michael Green, who tracks prices for AAA. That’s …