Portfolio Solutions Blog
3 Costs Investors Must Control
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 know what those costs are and how they relate to each other.
Two large costs that are not as obvious as expenses, and often difficult to quantify, are behavioral and tax costs. Behavioral cost occurs when an investor turns...Read More »
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...Read More »
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...Read More »
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...Read More »
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...Read More »
The end of December through early January in the financial industry is forecasting season – the time of year when market “experts” tell the media how they believe markets will perform over the next 12 months.
Unfortunately, most of what is said is more hype than substance. In fact, the majority of market forecasters are proven wrong.
CXO Advisory Group, a market research firm, studied 6,582 forecasts made by 68 experts about the U.S. stock market from 2005 through 2012. It found that the aggregate accuracy of...Read More »
“The investor’s chief problem – and even his worst enemy – is likely to be himself.” – Benjamin Graham, The Intelligent Investor
Finding a sensible investment strategy isn’t that difficult, but executing it over the long term is. You may expect the randomness of market returns to likely be the biggest challenge to successful investing, but it’s not. It’s you.
You are a living, breathing investment risk comprised of innate behavioral biases. It’s okay,...Read More »