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What is a bond ladder?

Date10 Nov 2014

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Q: What is a bond ladder? A:A bond ladder is a portfolio of individual bonds that have different maturities. For example, a bond ladder could be constructed with equal numbers of bonds with maturities across 1–10 years, or it could consist of bonds that mature in 2–7 years. Since buying small lots of individual bonds...

Drive: Correct Motivation Is Key in Developing Youth

Date03 Nov 2014

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So far, we have seen how “practice makes perfect” in Talent is Overrated and discovered the importance of developing right-brain capabilities in A Whole New Mind. In my final installment of articles on the subject of guiding our youth into financial and professional adulthood, I will take a look at another important question: “What motivates...

Ignore Bad Advice About Declining Stock Prices

Date27 Oct 2014

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Last week was the worst week for the S&P 500 and the NASDAQ since May 2012. The S&P 500 index dropped 3.1 percent on the week to 1,906.13 and the NASDAQ fell 2.3 percent to 4,276.24. Not surprisingly, the market’s volatility and rapid decline brought out the worst in the financial media. The amount of...

Should you stay invested in the short term while waiting for interest rates to rise?

Date27 Oct 2014

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Q: Should you stay invested in the short term while waiting for interest rates to rise? A: First, other than very short-term interest rates that are heavily influenced by the Federal Reserve, it’s difficult to predict changes in interest rates. Second, to determine whether a short-term fixed income approach will be superior to an intermediate-term...

The Importance of Ignoring the Noise of the Market

Date27 Oct 2014

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Last week was uncomfortable for market watchers. The Dow dropped more than 200 points one day and surged more than 200 the next. Both moves were attributed to small, seemingly random things. The International Monetary Fund cut its global forecast, and the Federal Reserve released its meeting minutes. I’ll leave it to you to figure...

The Three Keys to Surviving Major Life Transitions

Date27 Oct 2014

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You might think that the most important work a financial advisor can do is related to allocating a client’s investment portfolio, or perhaps helping secure a timely insurance policy or drafting the optimal estate plan. In fact, the most important work is done when clients are in the midst of navigating life’s major transitions. I...

3 reasons to avoid ETFs: Advisor

Date27 Oct 2014

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Exchange-traded funds—commonly referred to as ETFs—are all the rage. While there are several excellent reasons to use an ETF over the seemingly archaic traditional mutual fund, they are not a universally preferable solution. First, to be fair, let’s review a few reasons why ETFs can be a better solution than mutual funds. ETFs generally have...

Past Returns No Sign Of Future

Date27 Oct 2014

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Earlier this week, we discussed some of the academic literature surrounding historical versus current valuations as a metric for forecasting future returns. We learned that because there’s so much variation over time in the equity risk premium, there isn’t any methodology that will produce highly accurate forecasts of stock returns. Stocks are risky investments, no...

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