This and That: 4 percent rule, Dow milestone and more…

March 14, 2013


The 4 percent rule says that a traditional retiree can withdraw 4% a year from a balanced portfolio of stocks and bonds without running out of money for 30 years. But there are many potential scenarios in which the rule comes up short. The Wall Street Journal suggested three ways in which retirees can boost the odds of a portfolio outliving them.

The New York Times reported the story of a woman who suddenly lost her husband and spent countless hours tracking down financial accounts and urges people to get their acts together on her website. I recall writing a post on this topic when dealing with the estate of a family member who had passed away.

With the Dow Jones Industrial Average in the news for setting multiple new highs since 2007, Larry Swedroe says his message remains the same: just stick to your plan.

The Economist weighed in on the Dow Jones milestone by saying that the best that can be said for stocks now is that they look better than the alternatives such as cash and bonds.

In client meetings held across the country, Steadyhand’s Tom Bradley discussed what he expects from the markets in the near future. It is interesting to note that Tom is overweighting cash within fixed income and foreign equities within stocks. The entire presentation is available here.

Unlike large capitalization stocks that make up the Dow Jones index, small cap stocks are setting all time highs. Some market watchers are saying that the period of small cap outperformance that started in the year 2000 may soon be over.

Ellen Roseman pointed out that one can save on tires by shopping online. Perhaps, but I’ve found that my local Costco often has the same or cheaper pricing on tires.

It is just a trickle now but The Atlantic magazine says that a surprising new trend called insourcing — manufacturing jobs coming back to high labour cost geographies — appears to be gathering steam.

In an interview with CNBC, Warren Buffett said that Main Street investors can get their “fair shake” on Wall Street by buying very low cost index funds and hanging on for 20 or 30 or 40 years.

In an article on ETFGuide.com, John Bogle defends his view that while exchange-traded funds can be used wisely, the record shows that they are significantly more likely to be used for speculation.

Bloggers Offer their Best Financial Tips

November 19, 2012


November has been designated as Financial Literacy Month (FLM) by the Financial Consumer Agency of Canada, a Federal Government body tasked with educating consumers about financial products and services. As part of FLM, Glenn Cooke of Life Insurance Canada organized a campaign by Canadian bloggers who published their best financial tips below in reverse alphabetical order. If I missed yours, let me know and I’ll glad to add it to the list.

And last, but not the least, Canadian Money Forum members shared their money tips here. There were a couple of interesting tips (such as this one) in there that normally one wouldn’t think of.

This and That: Fiscal Cliff, Vanguard ETFs and more…

November 9, 2012


Falling off the Fiscal Cliff: With the US elections over and done with, we are going to hear incessant referrals to the term “fiscal cliff” in the news. This CNN Money article explains the budget and tax cut items that make up the fiscal cliff. Unfortunately, Canadians need to pay to this as well because US estate tax parameters will revert back to 2001 levels.

Vanguard DRiP and new ETF ticker symbols: Vanguard announced today that six new ETFs have started trading on the TSX. The new ETF lineup includes some long-standing demands from ETF investors — a dividend ETF, a REIT ETF and an unhedged S&P 500 ETF. The fund company also announced that it is introducing a DRiP program.

The Coming Bond Massacre: Earlier this year, Warren Buffett said that bonds should come with a warning label. Investors, of course, are still piling into bonds. In colourful language, the Reformed Broker says here that investors piling into bonds are “walking beneath a dangling piano hoisted 10 stories above their heads”.

New Books on Warren Buffett: Jason Zweig did a short review of two upcoming books on Warren Buffett in The Wall Street Journal. He finds one — a compilation of 80 articles on Warren Buffett called Tap Dancing to Work — to be worthwhile and the other — a compilation of quotes called The Oracle Speaks — not so much.

Investing in Commodities: A column in The Wall Street Journal explained the options available to investors who want to gain exposure to commodities in the metals, energy and agriculture sectors.

A New York Times article offers some tips to picking passwords that can thwart hackers.

Want to ruin your financial life? Author and comedian (remember the “Bueller? Bueller?” scene from Ferris Bueller’s Day Off) Ben Stein has some tips in the hopes that people will do the opposite.

Is today’s low interest rate environment good for stocks? This article in The Economist says that based on past experience, low interest rates portend low stock market returns. That may be true but it seems to me that long-term investors would prefer a 2.3 percent real return to negative real returns.

Carl Richards has some tips for putting together a list of financial goals even though future goals may just be best guesses at this point.

Larry Swedroe has six reasons why the US economy is performing much better than the headlines indicate.