Why most conventional portfolios make huge and often unintended bets on the stock market. How role-based investing can lead to a more balanced portfolio. Photo by Mangrove Mike In this episode you’ll learn: Why asset class returns and volatility are driven by changing expectations.How most investors are making a huge bet in stocks even though they might not be aware of it.The benefit and challenges of holding assets that perform well during various economic regimes.Why … [Read more...]
193 Plus: Pensions, Bankruptcy Risk and Speculation
This week February 24, 2018 on Money For the Rest of Us Plus, we clarify the importance of understanding a pension's funding status before choosing the pension via a lump sum payment. We also clarify the risk of investing in crowdfunding platforms in the case of bankruptcy. We explore how investments with positive expected returns can be speculative for individuals and how to manage that speculative risk. Finally, we discuss asset allocation for accounts designated for children. … [Read more...]
180: Can You Outperform Harvard’s Endowment?
Why have college endowments underperformed a simple three fund Vanguard portfolio? Should you mirror a simple two or three fund portfolio or invest more like an endowment with multiple asset classes? Photo by Bill Badzo In this episode you’ll learn: How have college endowments underperformed a simple three Vanguard fund portfolio.What's the difference between time weighted and dollar weighted returns.Why are college endowments shifting more of their portfolios to alternative … [Read more...]
178 Plus: Retirement Allocations, MLP Update and Forecasting Errors
This week October 28, 2017 on Money For the Rest of Us Plus, we look at two types of forecasting errors for future returns. We address a member's question who is concerned about the 70% of his portfolio he says is languishing in cash and another who is considering stop limit orders. We answer a member's question regarding rental real estate and reducing exchange rate volatility. Finally, we discuss the current environment for master limited partnerships. … [Read more...]
154 Plus: How Your Profession Impacts Your Investment Strategy
This week April 20, 2017 on Money For the Rest of Us Plus we look at how investors should factor in their employment in terms of their overall asset allocation, such as the variability of their income and the industry in which they work. We look at a new study by Vanguard on dollar cost averaging versus investing lump sums. We explore the implications of the phrase, "the market went up because the money had no where else to go." Finally, we consider how investment bubbles can contribute … [Read more...]
153 Plus: Evaluating Annuities, Directed Trades and Private Real Estate
This week April 15, 2017 on Money For the Rest of Us Plus we help a member analyze whether it is better to take a lump sum payment or an annuity that a former employer is offering. We look at how major retail brokerage firms such as Schwab and Fidelity direct trades to market makers and whether that is a good thing or not. We analyze how an investor might adjust their publicly traded portfolio mix if they own rental real estate. Finally, we try to determine which precious metal is most … [Read more...]
151 Plus: Asset Allocation, Harm and Risk Tolerance
This week April 1, 2017 on Money For the Rest of Us Plus we profile three members who have questions on deciding an appropriate asset allocation given their life circumstances. To help them and other members with similar questions, we take a big picture look at risk, harm, asset allocation and timing. … [Read more...]
MNY150 Plus: Asset Allocation Example, Managed Futures and Bonds
This week March 25, 2017 on Money For the Rest of Us Plus we walk through the process of breaking down a portfolio to determine its asset allocation, expected return, risk and fees. We also discuss managed futures and the challenge of estimating the impact of a bond fund's duration on performance over multiple quarters. … [Read more...]
135 Plus: Investing Cash, Active Versus Passive, and SEC Yields
This week December 3, 2016 on Money For the Rest of Us Plus we look at why the model portfolios are a jumping off point to investing rather than a one size fits all solution. We discuss using actively managed funds to complement passive ETFs. We explore how SEC yields are calculated and how yield to maturity assumes reinvestment of interest/dividends. Finally, we look at where cash should be invested. Audio duration: 18:44 … [Read more...]
MNY127 Plus: TIPs, Individual Stocks and Investment Conditions
This week on Money For the Rest of Us Plus we start off by discussing a leading investment concern; what to do about rising asset class valuations driven by low interest rates. We also look at when inflation indexed bonds are attractive investments. Finally, we explore how to incorporate a portfolio of individual stocks into an asset allocation to determine an appropriate return. … [Read more...]
