A Potential Effect of Risky Funds on a Portfolio

Vanguard had a fund that invested in precious metals and mining stocks that had performed so poorly in the past 10 years, that Vanguard decided to rename the fund and completely change its investment strategy. This shouldn’t be a complete surprise, as $10,000 invested in the fund in 2008 would be worth just $5,051 at the end of 2017. However,…

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Investing is Hard. Here is the Proof.

If I told you the annualized return over 20 years of the S&P 500 (an index of 500 large U.S. stocks) was 7.2%, what return would you guess the average investor experienced? Higher? The same? Lower? It’s lower. Much lower. In fact, the average investor just barely beat inflation by achieving a meager 2.6% annualized return over 20 years. A…

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Focus, Focus, Focus.

Leonard Lauder, son of Estée Lauder, donated 78 cubist paintings to the Metropolitan Museum of Art. Thirty-three of them were by Picasso. Art expert William Acquavella described the donation as “without doubt the most important collection any private person has put together in many, many years. It is fabulous and worth a billion dollars, easily.” [source: Economist] How did Mr.…

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New Orleans Saints’ running back Alvin Kamara banked his signing bonus, rather than spending it. More players should be coached to do the same.

Alvin Kamara’s got his priorities straight. pic.twitter.com/9jeFLrJvqb — NFL on ESPN (@ESPNNFL) January 4, 2018 “I got my signing bonus and I put that s— in the bank and I went and got some m—–f—ing wings.” The above quote, from rookie running back Alvin Kamara, went viral on social media yesterday after being posted by The MMQB. Kamara went on…

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A word of caution regarding ‘Step-Up Callable CDs’

One advantage of “step-up callable CDs” is they generally pay a higher interest rate than traditional bank CDs, which is appealing to fixed income investors. However, these products come with a wide set of unique risks. A Certificate of Deposit (CD) is a financial product commonly sold by banks that is popular among conservative investors because the deposit is protected…

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Should You Pay Off Your Mortgage?

After years of dutiful payments, you find yourself in the enviable position of having enough accumulated savings or discretionary income that you could aggressively pay down—or completely pay off—your mortgage. But should you? Are there better ways to ensure your financial security? Making the best choice for you Paying down your mortgage faster—or paying it off in a lump sum—seems…

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Hurricane deductibles and other exclusions can trigger large out-of-pocket bills for homeowners

Thousands of homeowners in Florida suffered hurricane damage this year, and many were surprised to learn their homeowner’s insurance policy contains a separate “hurricane deductible” that shifts responsibility for thousands of dollars’ worth of repairs to the homeowner. For those fortunate enough to not have had enough damage to file a claim, now would be an excellent time to review…

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Seasonal and Cyclical Revenue Declines will make Realtors Save More Money.

I have previously written that home builders and contractors need to keep more money in emergency savings than most professionals do. Several realtors and real estate agents have since contacted me to point out that they also have to keep extra money in emergency savings due to seasonal and cyclical sales fluctuations. They are absolutely correct. Financial planning professionals have…

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Combat Lifestyle Creep with Savings Creep.

Between a doctor and a school teacher, who would you expect to have more income left over for savings at the end of each month? In an alarming number of cases, they both have the same amount of money remaining: zero. Many individuals fall into a trap where, no matter how much their income increases, they never save a meaningful…

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