The End of Social Security’s Interest-Free Loan
The end of Social Security’s payback option means there is less room for error when devising a strategy to maximize your Social Security benefits. The U.S. Social Security Administration (SSA) announced December 8 that, effective immediately, the ability to “pay...
Issues to Consider With a High-Dividend Approach
With the current low yields on fixed income securities, the financial media have produced many articles regarding high-dividend strategies. The following discusses two fundamental flaws with using these strategies as alternatives to either high-quality fixed income portfolios or to other...
Understanding Interest Rate Risk
Many investors have responded to worries about interest rate risk by keeping their fixed income investments restricted to money market accounts and very short-term fixed income securities. The following discusses the risks of following such a strategy and what should...
Corporate Bonds Versus Treasury Bonds
While it is true that corporate bonds have outperformed Treasuries, we have not and do not recommend owning corporate bonds for two main reasons: 1) they contain some of the same risks that stocks do; and 2) the historical outperformance...
Coupon Rate, Yield and Expected Returns on Fixed Income Securities
Currently, rates in the fixed income market are very low. As of September 13, the yield on the five-year Treasury note was close to 1.5 percent. In a low-rate environment in particular, it is critical to understand the differences between...
Interest Rates and Expected Returns
Many people are questioning whether they should stay in fixed income or branch out to other strategies with higher expected returns, due to low interest rates. The following discusses viewing expected returns between investment strategies. The low interest rate environment...
Ratings Agencies and the Municipal Market
In this article, we review our thoughts on the value of credit ratings within the municipal market. Even though ratings agencies appear to have misjudged the credit worthiness of some mortgage-backed securities leading up to the financial crisis of 2007–2009,...
The High Cost of Bad Advice
In this article, we address why we believe the decision of hiring an advisor should not be based solely on fees. The quantity and quality of the services provided varies greatly from advisor to advisor. When you interview potential advisors,...
Many Happy Returns
Author: Jim Parker, DFA In December 2011, Barron’s told investors to “buckle up.” The consensus prediction of its panel of ten stock market strategists and investment managers was for the S&P 500 to end 2012 some 11.5% higher, at about...
