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Archive for the ‘retirement planning’ Category

Folio Investing Celebrates Its Target Date Folios’ Five-Year Record of Outperformance

Posted in Diversification, ETFs, Investors, Long-term investing, Low Cost Investing, Regular Investing, retirement planning, Risk, Uncategorized, Volatility, tagged , , , , , , , on January 24, 2013 | Leave a Comment »

Folio Investing’s Successful ETF-Based Alternative to Legacy Target-Date Funds Offers Superior Diversification, Risk Targeting and Flexibility; Firm Seeks Distribution Partner to Broaden Availability

Folio Investing announced today that, over the five years since they were brought to market in December 2007, its Target Date Folios have significantly outperformed traditional target-date funds. The Folios have provided both higher returns and lower volatility than the competing funds during this tumultuous period. (more…)

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One Advisor’s Approach to Income Investing

Posted in Bonds, Dividends, Financial Advisors, Income Investing, Retirement, retirement income, retirement planning, Risk, Stock Investing, tagged , , , , , on January 14, 2013 | Leave a Comment »

Guest post by Contributing Editor, John Graves.

Editor’s Note:  John Graves has been an independent financial advisor for 26 years. He is one of the two owners of The Renaissance Group, a Registered Investment Advisor based in Ventura, CA.  John’s book, The 7% Solution: You Can Afford  a Comfortable Retirement, was published in 2012.  When I read this book, I was impressed with John’s approach and thinking and I recommend it as a good read.  I contacted John and asked if he would consider contributing to this blog.  After we bounced around some possible topics, he sent me the following piece that describes his process for designing income plans for retirees.  (more…)

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Getting Help in Choosing and Managing a Portfolio

Posted in 401(k), Asset Allocation, Diversification, Financial Advisors, financial planning, Investors, Long-term investing, Low Cost Investing, Portfolio Investing 101, retirement planning, Risk, tagged , , , , , on December 20, 2012 | Leave a Comment »

There is currently $5 Trillion invested in Individual Retirement Accounts (IRAs), $4.7 Trillion invested in self-directed retirement plans provided by employers (401(k), 457, and 403(b) plans), and $2.3 Trillion invested in traditional pension plans offered by private companies.  These numbers are stunning for a number of reasons.  First, self-directed retirement plans (IRAs, 401(k)’s, etc.) dramatically dwarf the amounts invested in traditional pensions.  This is part of a long-term trend, as employers move away from traditional pensions, but the magnitude of the shift is striking.  With the assets in IRA’s surpassing the $5 Trillion mark earlier this year, the amount of money in individual accounts is moving ahead of employer-sponsored plans.  What’s more, it is anticipated that IRA’s will continue to grow relative to employer-sponsored plans as people retire and roll their savings from their ex-employer’s plan into an IRA.  This matters because investors in IRA’s have even less help in creating and maintaining their portfolios than investors in employer-sponsored plans.  (more…)

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Investing for Income vs. Total Return

Posted in Bonds, Dividends, Income Investing, Long-term investing, retirement planning, Risk, tagged , , on December 10, 2012 | 2 Comments »

One of the most-discussed issues in long-term investing is whether to focus on income generation or simply to think in term of total return (price gains plus income).  The discussion of this topic often focuses on whether investors should seek out stocks that pay dividends vs. simply planning to sell a fraction of their portfolio periodically to provide income.  I recently wrote a long article on this topic, which has been cited in a very interesting discussion of this theme going on at Bogleheads.    One of the most active participants in the debate on the Bogleheads forum and elsewhere is Larry Swedroe, a well-known advisor and author.  As I read the Bogleheads discussion thread, it strikes me that there is considerable confusion around this topic, so I thought I would add a few more thoughts. (more…)

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An Alternative Approach for Drawing Income from Your Portfolio

Posted in 401(k), Asset Allocation, Commodities, Diversification, financial planning, Investors, Retirement, retirement income, retirement planning, tagged , , , , , , on November 23, 2012 | 1 Comment »

The question of how to safely generate income from a retirement portfolio is one of the most challenging in financial planning.  In the days when people had traditional pensions, their employers simply promised them a constant inflation-adjusted income for the duration of their retirements.  As we have moved away from traditional pensions and into self-directed savings plans such as 401(k)’s and IRA’s, investors and advisors must create their own customized income plans.  New research from Morningstar highlights what appears to be a better approach to creating a stable income stream from an investment portfolio. (more…)

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Sector Watch: Municipal Bonds

Posted in 401(k), Asset Allocation, Bonds, ETFs, pensions, Retirement, retirement income, retirement planning, Risk, Taxes, Uncategorized, tagged , , , , , , , , , , , , , on November 19, 2012 | Leave a Comment »

Municipal bonds are issued by states and municipalities and typically have tax advantages relative to other fixed income assets.  In general, income from muni bonds is tax exempt at the federal level and at the state level for investors living in the issuing state.  Municipal bonds have historically been favored by investors in high tax brackets who, of course, derive more benefit from the tax exemptions by virtue of being in the highest tax brackets. (more…)

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Game Theory, Behavioral Finance, and Investing: Part 4 of 5

Posted in Behavioral Finance, Investors, Retirement, retirement planning, Stock Investing, tagged , , , , on November 7, 2012 | Leave a Comment »

In earlier installments of this article, I have discussed some behavioral biases that tend to influence people to make bad investing decisions.  In this post, I explore several more of these biases.  The focus of this piece is on how we perceive ourselves and our ability to make independent decisions.  One of the key ideas within rational markets is that people gather public information and make informed decisions.  Without rational market participants, it is unlikely that markets themselves will converge to appropriate prices for traded assets (stocks, bonds, real estate, etc.).  (more…)

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Managing Your Portfolio’s Exposure to Interest Rates

Posted in 401(k), Asset Allocation, Bonds, Diversification, financial planning, Investors, Long-term investing, Market Outlook, Retirement, retirement planning, Risk, tagged , , , , , , , , , , on October 24, 2012 | 3 Comments »

Today, the yields on ten-year Treasury bonds are at a fifty-year low, and no period prior to the last few years reflects yields that even come close.  From 1962 to 2005, the lowest the 10-year Treasury bond yield ever got to was just below 4%, more than twice the current yield.

The chart below shows how unusual our current environment is.  The vertical axis is the yield from 10-year Treasury Bonds and the horizontal axis is time and we are looking at a period from 1962 to present.  From 1980 to today, we have seen the yield of 10-year Treasury bonds go from about 12% per year to below 2%.  The 10-year Treasury yield is considered a benchmark measure of bond yield and interest rates.  The Fed funds rate and the 10-year bond yield are very closely tied to one another.  For another illustration of how interest rates, the Fed funds rate and 10-year bond yield are related, see here. (more…)

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Saving and Investing for Retirement: Part Five

Posted in Asset Allocation, Bonds, Diversification, ETFs, financial planning, Investors, Long-term investing, Low Cost Investing, Mutual Funds, Portfolio Investing 101, Retirement, retirement income, retirement planning, Risk, Stock Investing, Volatility, Wealth, tagged , , , , , , , , , , on October 2, 2012 | 2 Comments »

Effective Actions in an Uncertain World: Part Five of Our Special Five Part Series

There are a number of factors that we need to predict in order to come up with saving and investing strategies for retirement.  The values that we assign to these factors will have a huge impact on whether or not we will be able to meet our goals.  First, there is the expected return that investors will make on their retirement savings.  Second, there is the common estimate that people will need about 85% of their pre-retirement income to support them once they stop working.  Finally, there is the potential impact of behavior on savings rates, investing, and spending.  (more…)

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Saving and Investing for Retirement: Part Four

Posted in 401(k), Active Investing, Asset Allocation, Bonds, Diversification, ETFs, financial planning, Income Investing, Investors, Long-term investing, Retirement, retirement income, retirement planning, Risk, Stock Investing, Volatility, Wealth, tagged , , , , , , , , , , , , , , , , on September 28, 2012 | 1 Comment »

Generating Income: Part Four of Our Special Five Part Series

During their working years, investors focus on saving and investing with a goal of building wealth.  As they enter retirement, either by ceasing paid employment entirely or by scaling back paid employment, investors shift their focus to using their portfolios to provide a reliable long-term stream of income.  This transition from building wealth to income generation is the subject of a great deal of research in retirement planning.  Once investors are at or near retirement, the most significant financial challenge is using their accumulated savings to provide substantial income for their retirement years.  (more…)

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