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Portfolio Solutions Blog

Rick Ferri
April 20, 2015

The ETF Decision Is Not All or None

Shoebox design has not changed much in 50 years. Shoeboxes are still the same shape, made of the same flimsy cardboard and hold one pair of shoes. The color and lid design do vary among companies, but it’s not a big deal for shoe buyers. We’re only interested in what’s inside the box.

The expansion of exchange-traded products (ETPs), which include exchange-traded funds (ETFs), has provided investors and advisers with more choices over the years. As of March 31, 2015, “The global ETF/ETP industry had 5,669 ETFs/ETPs, with 10...

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Rick Ferri
March 26, 2015

Each year, I put my head on the chopping block and publish a 30-year forecast for global stock and bond market returns. This forecast is used to create long-term asset allocation strategies for our clients. It’s a terribly imprecise exercise because no one can know how financial markets will perform in the future. There are just too many variables and too many unknowns. Yet, here it is. So, why do I risk professional suicide each year with an expected return...

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Rick Ferri
March 05, 2015

3 Costs Investors Must Control

(Triangle [left] Source: The author’s forthcoming book, “The Education of an Index Investor”)  

The cost to invest in mutual funds is often couched in terms of expense ratios and commissions. These are important structural costs and certainly worthy of your consideration. However, other costs are not so obvious that can eat deep into your investment return. It’s wise to...

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February 13, 2015

Time plays an integral part in your investment strategy. Markets can act very differently over the course of one year compared to 10 years. Over the short term, they are typically volatile. Meanwhile, over the long term – say, more than 5 years – markets exhibit behaviors that allow you to choose an investment strategy based on expected performance.

You could say this distinction between short-term and long-term...

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Rick Ferri
February 06, 2015

Peter Bernstein wrote The 60/40 Solution in 2002. His seminal article laid out arguments for why 60% stocks and 40% bonds is the “ideal asset allocation” for long-term investors. He considered this allocation the “center of gravity” on a risk and return spectrum.

Bernstein’s observation is timeless advice for many investors, but not everyone. The 60/40 mix is a solid starting point for a discussion about asset allocation for investors who are accumulating assets for...

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January 29, 2015

Are you ready for some football?

This weekend the New England Patriots and the Seattle Seahawks square off in Super Bowl XLIX. While just about every major television network and news publication has analyzed all the X’s and O’s, we break down the big game from the investor’s perspective.

Here are six investment lessons you can learn from the Super Bowl: 

Correctly picking outcomes is more luck than...

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January 22, 2015

A common financial goal is to help pay for a child’s college tuition. Many families find 529 plans as a smart and tax-efficient way to finance future higher education expenses. These college savings plans were created by Congress under Section 529 of the Internal Revenue Service, from which they got their name.

Almost all states and the District of Columbia sponsor 529 plans that feature their own investment options and benefits. In most plans, you can contribute to a 529 plan in any state. However, since 529 plans vary, as do each individual’s circumstances, you should do your...

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