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Portfolio Solutions Blog

September 01, 2015

What’s the fastest way for younger people to grow their wealth? The answer is to make saving a habit. A solid savings plan that puts away 10 percent of income or more is the most reliable method for growing wealth at an early age. Learning to invest well is also important, but it’s not nearly as important as sticking to a regimented savings plan.

Parents and grandparents encourage children to start saving at an early age. We buy them cute piggy-banks and tell them to put money in it for a rainy day. When our children grow into young adults and start working full time, we tell them...

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August 29, 2015

Mutual fund rating services divide mutual funds into categories based on their investment style. This helps investors compare the performance of one style to another and helps them compare the performance of individual funds in a particular style. While useful in many ways, this methodology can also create the illusion of superior performance when none exists.  

Among the most familiar investment style tools is the Morningstar Style Box, a nine-square grid that...

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August 29, 2015

I love you man, but you’re wrong!

Legendary Fidelity Magellan fund manager Peter Lynch wrote "buy what you know" in his classic book, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market. The basic principle is simple: you're more likely to be successful in the market if you buy what you're familiar with. Peter Lynch was wrong; or at least he wasn’t quite right.

Warren Buffett once commented that had you been at Kitty Hawk in 1903 and marveled at the...

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August 24, 2015

For as long as I have followed Vanguard Group founder and former CEO John Bogle, he has never embraced investing in foreign stocks. “I wouldn’t invest outside the U.S.” he said during an interview with Carla Fried for Bloomberg Business. “If someone wants to invest 20 percent or less of their portfolio outside the U.S., that’s fine. I wouldn’t do it, but if you want to,...

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August 17, 2015

The Big Apple is the famous nickname for New York City. It was made popular in the 1920s by John J. Fitz Gerald, a writer for the Morning Telegraph. The name was also popular with jazz musicians in the 1930s and ‘40s who coveted gigs in posh Manhattan nightclubs.

Most people still associate The Big Apple with NYC, but there may be a challenger. The challenger is Apple, Inc. (ticker: AAPL). 

Apple is the most valuable corporation in...

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August 10, 2015

Interest rates are going up. The Federal Reserve has essentially said so. They just haven’t said exactly when or by how much. Are you afraid of higher interest rates? If so, what you fear is probably the potential bad side. While they may have a dampening effect, there also are some silver linings to be found.

Most news articles about higher rates focus on the negative aspects: They may corrode the economy and the financial markets, increase mortgage interest payments and other consumer borrowing costs, decrease spending, increase the value...

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August 01, 2015

Congress is wrestling with the idea of creating a uniform fiduciary standard for all investment advisors. This would either force stockbrokers (registered reps of brokerage firms) to adhere to the same fiduciary standard that fee-only advisors must follow, or lower the standard for fee-only advisors and raise it somewhat for brokers so there is a meeting in the middle. Will any change fix the problems in the advisor industry? I have doubts.

Even if brokers were required to be fiduciaries at the current standard, there is a difference between following a legal fiduciary standard and...

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