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.  […]

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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. […]

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Investment Policy Statements – Bad Behavior Defense

Thursday, March 25, 2010   

I recently discussed several of the return-reducing psychological traps that plague do-it-yourself investors.  Well, that was the bad news.  Fortunately, we have a powerful weapon in the fight against harmful behavioral biases:  The Investment Policy Statement (IPS).  This document formally outlines the investment objectives, philosophy, boundaries and procedures for managing your portfolio so that you can avoid making impulsive, biased decisions.   […]

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Psychology and Investing – Common Behavioral Biases

Tuesday, March 23, 2010   

Legendary investor Benjamin Graham said, “The investor’s chief problem – and even his worst enemy – is likely to be himself.”  After decades of research on individual investor behavior, few would argue with Mr. Graham’s hypothesis.  When unchecked, the same natural human tendencies that allow us to function, and even succeed, in our daily lives, can wreak havoc on our investment portfolios.  […]

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Portfolio Rebalancing – It’s Never Too Late

Monday, March 15, 2010   

You’ve probably heard about the benefits of rebalancing your investment portfolio: it keeps your asset allocation consistent with your risk profile, it has the potential to boost your returns, and it enforces good investing habits (buying low and selling high).  Still, it’s a chore, and one that can fall by the wayside at a time of year when you’d rather be preparing for warm weather activities.  […]

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Morningstar Instant X-Ray – Three Ways to Use the Output

Thursday, March 11, 2010   

After meticulously entering your portfolio holdings into Morningstar’s free Instant X-Ray Tool, you should have a clear view of your overall asset allocation, broken down by style and region.  Now what?  Let’s discuss three important questions that you can answer using the tool’s output.  […]

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X-Ray Your Portfolio (if you really want to know what’s inside)

Monday, March 8, 2010   

Do you know what’s in your investment portfolio?  Don’t answer too quickly.  If you’re like many people, your portfolio isn’t made up a few neat and tidy accounts; it’s a hodge-podge of IRAs, past and present 401(k)’s, inherited accounts, personal savings, and more.  Complicating the matter further, your accounts are held at multiple investment firms.  How can you make sense of it all? […]

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