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Portfolio Solutions Blog

October 07, 2015

Investment discipline isn’t easy. Despite best intentions and claims to the contrary, many investors chase performance, react emotionally to market moods, and generally incur far more trading costs than good discipline would suggest. Even when there is a long-term plan in place, if it’s not followed, the plan is useless. Over the years, I’ve seen good intentions go by the wayside time and again because discipline was not followed.   

These observations aren’t limited to individual investors. I’ve seen similar conduct from investment...

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October 01, 2015

If you are interested in index funds, it is likely that you own shares in a U.S. total bond market fund or ETF. There are roughly $160 billion invested in total bond market funds and ETFs, most of which follow the Barclays Capital U.S. Aggregate Bond Market index or a derivative of it. This index is widely considered to be “the benchmark” for the U.S. investment grade bond managers. Truth be told, it’s not the best representation.  It’s less — and it’s more.

The Barclays Capital U.S. Aggregate Bond Market Index and the newer U.S. Aggregate Float Adjusted Index are composed of...

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September 23, 2015

“Ignorance is bliss,” or so the saying goes. Unfortunately, as it applies to Wall Street, that bliss is more likely to go to those preying on investors’ ignorance than by those who remain financially naïve. That’s why it’s so important for investors to arm themselves with understanding, at least of the financial basics. For example, here’s one of my favorite lessons: The less you spend on investing, the more you get to keep.

I feel for investors who don’t manage their costs, because they pay a dear...

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September 17, 2015

In the market’s never-ending story, we never know how its most recent action will play out. One thing we do know is that when the market is more volatile than usual, investors who lack a personalized, long-term plan to guide their way are far more likely to make the wrong moves by the time the cycle is complete. In our opinion, every investor’s long-term plan should include embracing a buy, hold and rebalance approach to investing. This is one of the simplest and most effective ways to diversify and it may help you prosper in various financial markets...

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September 08, 2015

You’ve just received a lump sum of cash. Perhaps it was from a rollover retirement account, the sale of assets, or an inheritance. Now what do you do? Your first thought may be to spend it. That’s always an option – and probably the most fun option. The less-fun decision is to invest it. This is especially less fun if you’re unfamiliar with how all that works. It’s no wonder one of the most frequent questions I am asked is how to invest lump sums of new cash.

One of the first decisions to make is whether to invest the proceeds all at once...

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September 07, 2015

What are you doing in this market environment? I’ve been asked this question thousands of times, in all market environments. It’s a difficult question because it’s natural to want to do something useful today in preparation for what is to come tomorrow. But today’s market environment may not be tomorrow’s, and if we don’t know what tomorrow’s market environment will be, then how do we do something useful today? It can be maddening.

There may be something useful you can do. But first, let’s talk about...

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September 01, 2015

You’ve learned to discount high-cost, actively-managed funds, ignore Wall Street brokers, and see the pitfalls of model ETF portfolios that use tactical asset allocation and charge high fees. You’ve seen the light and clearly understand why a low-cost index fund portfolio has the best chance to achieve your investment goal. Now you want to help others find their way out of the darkness.

Unfortunately, spreading this wisdom is harder than you thought. It’s not that your friends don’t want to understand, it’s that they can’t relate to the obscure concept of index investing. So, here’s...

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