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College Savings Plans – Choosing the Right Allocation

Friday, June 4, 2010   

According to the College Board, the average annual cost of a private, four-year university was over $26,000 during the 2009-2010 school year (about $7,000/year for a public university), with tuition costs rising 5% faster than the inflation rate.  Today’s college savings plans provide more incentives and flexibility than ever before, but they don’t relieve parents and grandparents of the important responsibility of choosing the right investment mix.  […]

Posted by George | DIY Investing | Comments (0)
 

Tax Loss Harvesting and the Wash Sale Rule

Thursday, May 27, 2010   

When an investment declines in value after purchase, it’s generally considered a bad thing.  For investors who know their tax rules, however, capital losses have a silver lining.  Each year, the IRS lets you use investment losses to offset an unlimited amount of capital gains and up to $3,000 of ordinary income.  By strategically harvesting capital losses instead of simply absorbing them, opportunistic investors can soften the blow of declining investments and boost their long-term returns. […]

Posted by George | Tax-Efficient Investing | Comments (0)
 

Inherited IRAs – Don’t Forget the Required Distributions

Tuesday, May 18, 2010   

The Worker, Retiree, and Employee Recovery Act of 2008 suspended Required Minimum Distributions (RMDs) for 2009, giving many IRA investors a much-needed extra year of tax-deferred growth.  After a one-year RMD layoff, however, investors must be careful not to miss a required distribution in 2010 and owe a sizable penalty.  Those who inherited an IRA in 2009 are particularly susceptible. […]

Posted by George | IRAs & 401(k)s | Comments (0)
 

Target-Date Funds: A Simple Way to Save for Retirement?

Wednesday, May 12, 2010   

Over the past five years, target-date retirement funds have surged in popularity, growing fivefold in assets and becoming an option in three out of four workplace retirement plans.  These “set it and forget it” mutual funds offer quick and easy access to a diversified portfolio that automatically adjusts as you get closer to retirement, but they aren’t without their limitations.  It takes a little bit of homework to avoid the potential pitfalls of this simplified savings solution. […]

Posted by George | DIY Investing | Comments (0)
 

Roth Conversion and the Pro-Rata Rule

Thursday, May 6, 2010   

Roth IRA conversion is one of the hottest investing topics of 2010.  Since the IRS lifted the ban on Roth conversions for $100k+ earners at the start of the year, scores of articles have been written about whether to convert.  For many investors, the answer lies in understanding the simple but all-important pro-rata rule that the IRS uses in determining your conversion tax.    […]

Posted by George | IRAs & 401(k)s | Comments (0)
 

Commission-Free ETFs: Vanguard Back on Top

Tuesday, May 4, 2010   

I recently wrote about the significance of commission-free ETF offerings at Schwab and Fidelity.  For investors who make small, regular contributions to their accounts, ETF commissions had previously been a deal-breaker, making index funds the default choice for building a long-term investment plan.  In the wake of these announcements, it seemed as though Vanguard, the historical leader in low-cost investment products, had fallen behind the competition.  Well, don’t call it a comeback, but today’s unveiling of commission-free ETF trades and other significant cost reductions clearly re-establishes Vanguard as the low-cost investing leader.  […]

Posted by George | Index Funds & ETFs | Comments (0)
 

Index Investing – Myths and Facts

Thursday, April 29, 2010   

Index investing, an approach that attempts to mirror the performance of market indices at minimal cost, has been maligned and misunderstood for decades.  The criticism began even before Vanguard founder Jack Bogle created the first index mutual fund in 1975, as the concept was prematurely labeled as “Bogle’s folly.”  Upon creation of the fund, which would later become the Vanguard 500 Index Fund, Fidelity Chairman Edward C. Johnson III was asked if his company would follow Vanguard’s lead.  He replied, “I can’t believe that the great mass of investors are going to be satisfied with just receiving average returns.” […]

Posted by George | Index Funds & ETFs | Comments (0)
 

Tax-Efficient Investing: Return-Maximizing Fund Placement

Tuesday, April 27, 2010   

Intelligent investors focus on controlling costs.  Choosing low-expense funds and a low-commission broker is a great start, but for many investors, the largest investment cost of all is taxes.  If you have a taxable investment account, Uncle Sam is eventually going to claim a share of your returns, but there are steps that you can take to minimize the damage.  By understanding how taxes affect your investments and intelligently dividing funds between taxable and tax-sheltered accounts, you can maximize your after-tax returns and increase your chances of reaching your investment goals. […]

Posted by George | Tax-Efficient Investing | Comments (0)
 

TIPS – Inflation Protection for Your Investment Portfolio

Thursday, April 22, 2010   

Treasury Inflation-Protected Securities (TIPS) are inflation-indexed bonds that are issued by the U.S. Treasury.  If you’ve never taken a good, hard look at these one-of-a-kind bond investments, now is the time.  Regardless of your financial circumstances or risk profile, there are plenty of reasons to consider adding TIPS to your long-term asset allocation plan. […]

Posted by George | Asset Allocation | Comments (0)
 

Asset Allocation Step 3: Implement Your Plan

Thursday, April 15, 2010   

Now that you’ve decided on a risk-appropriate equity/bond split and broken down the equity and bond portions of your portfolio into target percentages, you’re technically finished with the asset allocation process.  Of course, there’s still the small matter of implementing your plan.  With thousands of investments to choose from, how should you go about narrowing down the field?  I’m glad you asked. […]

Posted by George | Asset Allocation | Comments (0)
 
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