Monthly Archives: May 2011

What’s the Difference Between Passive Investing and Tactical Asset Allocation?

Recently we wrote a post about Tactical Asset Allocation and how tough it can be to execute effectively. That in turn set off a discussion of the lack of meaning in terms like “buy-and-hold” and “tactical asset allocation.” I was accused of setting up a false dichotomy. There are stocks that you buy and hold. You do that because they continue to do well, argued Roger Lowenstein. But you do have to be willing to let go of the ones that aren’t working.

Lowenstein believes in stock-picking, but if you don’t think that you have that skill, or if you want to balance a few such picks with a broader diversified approach, then you may indeed be interested in the passive v. allocation debate.

In a recent post on his Wise Investing blog, Larry Swedroe sought to better explain just what passive investing in. It is not “by and hold.” Passive investing is passive, but not pulse-less. Continue reading

The Wealth(y) Solution

When it comes to investing, it turns out that the rich are just like me and you, only with a few more zeros. They too worry about investment losses more than they appreciate gains. They too often let emotion hold sway over their investing decisions.

So says Eric Golberg co-author of a new book called The Wealth Solution and the Director of Wealth Management for Loring Ward, a San Jose, Calif.-based investment manager with more than $7 billion in assets under management that published the book.

Golberg should know. Continue reading

Searching for the Best Internet Investing Sites

Question: How many personal finance websites do you think there are on the World Wide Web?

Answer: nearly 4,100, according to The Nielsen Company.

Question: How many good ones are there?

Answer: Far, far fewer according to one study.

Finance Websites That Work

In a study published this March, by the Center for Retirement Research at Boston College, Kimberly Blanton searches for the “finance websites that work.”

Blanton, a one-time Boston Globe reporter, now a writer for the Financial Security Project at BC splits the successful sites into three broad categories: financial data aggregators, financial decision tools, and personal finance communities. For each she selects a few of the most successful and searches for patterns behind their success. Continue reading

Cool Investing Tools: Portfolio Instant X-Ray

Sometimes we are not as diversified as we think we are. To see what your portfolio actually looks like, rather than just what you want it to look like, you might find it useful to use a free Morningstar tool called the Instant X-Ray. The Instant X-Ray is easy to use. Simply enter your holdings, include how much is in each holding and the Instant X-Ray sorts through their data and gives you a read on just how diversified you are.

Insight Into Your Portfolio’s Current Holdings

The process only takes a few minutes. For people who have investments in a couple of different places (Individual Retirement Account, 401(k), accounts) the tool allows you to aggregate your holdings in one spot and get an overall read on how well you’re meeting your diversification plan. Continue reading

Retirement, Risk and Creating a Lifetime Paycheck

Remember those kids from grammar school who were always top of the math class? They grew up to become actuaries. According to the web site of the American Academy of Actuaries, an actuary is an expert in “putting a price tag on risk.” They use math, statistics, economics and finance to predict the likelihood of future events and then try to come up with solutions.

They also appear to be the only people in the world who really understand pension plans.

Risks in Retirement

The Society of Actuaries (SOA) recently did an in-depth analysis of its 2009 study of the key risks in retirement. Since these guys are all about risk, it seems worth paying a little attention to the issues they highlight. Continue reading

Brokerage Costs are Down. Are Yours?

Generally brokerage fees have been dropping steadily over the past two decades. But how have your costs fared? According a piece by Felix Salmon, brokers often charge as much in fees as they can get away with, applying different rules to different clients.

Which raises this important question for any investor: how much are you paying in brokerage fees and charges? Continue reading

Getting Real About Retirement Costs

The Employee Benefit Research Institute (EBRI) does an annual study called the Retirement Confidence Survey (RCS). The RCS typically shows that Americans are not saving enough for retirement and that many people simply have no idea how much they need to save.  The 2011 study is no exception. Among other things, the RCS asks participants how they are estimating how much they need to save and where their current estimates fall.

The 2011 survey finds:

  1. Only 42% of workers have even tried to calculate how much they need to accumulate in order to retire
  2. 31% of workers think that they can retire with total savings of $250,000 or less
  3. 19% of workers think that they can retire with total savings of $250,000 to $500,000

These numbers are pretty close to the RCS findings in the past, and the longer these numbers hold, the more it is clear that the self-directed retirement planning process is not succeeding. Continue reading