Investing for 200 Years

Investing for 200 Years

February 23, 2012

Tonight at my son’s Cub Scout meeting they had a reptile expert come show his various reptiles that they’ve rescued. He talked about how a big problem is that people buying reptiles don’t take into consideration how long they can live. Snakes can live beyond 20 years, alligators 70 years and tortoises for 200 years.…
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How to Choose a Financial Advisor

February 23, 2012

In full disclosure, I am a financial advisor and for objectivity’s sake I’m going to pretend for a moment that I’m terminally ill and this is the advice that I’m giving to my existing clients on choosing someone other than me. First of all, I think that you have to decipher fees versus costs. Yes,…
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Stocks Part 2 – Understanding the Numbers and Ratios (less basic)

February 21, 2012

In the previous installment I went over a glossary of stock terms, let’s continue our definitions. These terms are not usually the first numbers you see on a stock, but can tell you important information about how a company is doing. Inst. Own – This is short for “institution ownership”, it tells you how much…
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Stocks Part 1 – Understanding the Numbers and Ratios (basic)

February 21, 2012

A constant goal that I have is to educate clients. My hope is that when clients hear terms in the media or in casual conversation that they could have some understanding of what is being discussed. The other day a client asked me what a “price per earnings ratio” was (otherwise known as a “P/E…
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What’s the Difference Between The Federal Reserve and The US Treasury Dept

February 21, 2012

Most of us know the heads of these organizations: Ben Bernanke as the Chairman of the Federal Reserve (Alan Greenspan being his predecessor) and Timothy Geithner as the Secretary of the Treasury (Henry “Hank” Paulson being his predecessor). But it’s not always obvious how each of them is functioning. The US Treasury Department can be…
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So Much for the End of the World

February 17, 2012

As I write this, the Dow and S&P 500 just closed out about on another post-Financial Crisis peak (if you can pretend for a second that the Financial Crisis is over). The S&P 500 needs another 14.61% and the Dow needs another 8.7% and each will be setting all time record prices. Not only that,…
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Why Does it Feel Like My Own Expenses are going up Faster than Inflation?

February 17, 2012

Last year, the US Bureau of Labor Statistics reported that inflation was 3%, but many of us feel that things have gotten far more expensive. I feel that there are three reasons for this: 1. Perception – From a psychological standpoint, you’re going to emotionally register a price increase (i.e. as “pain”) with a stronger…
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Bonds Part 2: What Else Affects Price Movements?

February 16, 2012

In the previous article on bonds (“Part 1”) I gave an analogy to help readers understand how bond prices can move based on how the interest rate environment changes. Let’s go back to that bank lobby where we’ll pretend that you can buy and sell CDs to illustrate how other things can effect bond prices.…
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Bonds Part 1: The Difference Between Price and Yield

February 16, 2012

The way the media reports day to day bond market activity can be confusing. The reason is that they can either choose to focus on price or yield to convey what they did that day. One reporter may say “prices on bonds rose today” and another may say “yields on bonds fell today” and they…
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Financial Management Unique to Baby Boomers

February 14, 2012

Boomers are in a tough spot. They’ve had two of the most severe stock market declines in the past 80 years and now they are in an investing environment with fixed income rates (such as on CDs or savings bonds) that haven’t been this low in their lifetimes. To make matters worse, inflation has been…
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Municipal Bonds 101

February 13, 2012

A common way that people have the chance to earn a tax free rate of return is through municipal bonds. This is different than a tax deferred investment, which enables you to pay the taxes down the road such as when you sell it or when you start taking withdrawals (like with a Traditional IRA).…
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The Bond Rating System

February 13, 2012

The bond rating system can be confusing because there are three separate but similar systems of rating bonds. We all hear of “AAA” rated bonds, and then know that last summer US bonds were downgraded to “AA”. But some may have seen a weird rating like “Aa1” on a bond or maybe “Caa2”. The key…
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Retirement Income Planning

February 11, 2012

Retirement is one of the hardest life events to plan for financially. Because there are so many variables that cannot be predicted, many people find that predicting the proper amount of money that they need to save is next to impossible. There are several different methods to determining a good amount of money that needs…
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What’s the Difference between Diversification and Asset Allocation?

February 10, 2012

Frequently I hear these terms used interchangeably, but they are two distinct concepts seeking to solve the same problem. Investing efficiently and effectively is not about randomly picking stocks and bonds because of the possibility of earning a high return, but creating an investment strategy that places you in a position to potentially earn the…
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Of all the Charlie Browns in the world, you’re the Charlie Browniest

February 6, 2012

Many of you may recognize this as a quote from Linus in A Charlie Brown Christmas. The investing world seems to keep getting more and more Charlie Browny all the time. As I write this, treasury bond prices are at 45-year highs … ahem, highs. You don’t want this on anything if you’ve just purchased…
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