Sometimes the direction of the market can change with just a few words. That was certainly the case on June 19th, when the Federal Reserve Chairman Ben Bernanke mentioned the possible end of QE3 in 2014 and the prospect of reducing the central bank’s monthly bond purchases later this year. Almost immediately, nearly all global asset classes started to sell off. Including the ones that are supposed to be uncorrelated. Choosing uncorrelated asset classes is the cornerstone for a well-diversified portfolio. History shows that over the long term, this helps smoothen investment returns, which are usually quite volatile. But once …
Is it the Right Time to Invest in Real Estate?
Despite expecting a pullback in the market, it was up another 2.3% in April. In fact, the market has gone on to hit a record high last Friday. The S&P500 (a representative index of the US stock market) has seen amazing gains this year, up more than 10%. The stock market has been quite resilient this year. It shook off the recent Boston bombings as well as the sudden drop in gold prices. But this sort of performance is usually followed by a pull back, as the market digests its gains. And because of the time of year, that’s what everyone expects. …
Should You Sell In May And Go Away?
Typically, during the summer six-months period of May through October, the U.S. stock market under performs the remaining six-month period of November through April. According to the Stock Trader’s Almanac, since 1950, the Down Jones Industrial Average has had an average return of only 0.3% during the May-October period, compared with an average gain of 7.5% during the November-April period. Every year around this time, the popular press gets all excited will bring up the issue of whether you should “sell in May and go away”. They always have some justification for making a forecast and they like to pretend …
Gold Prices Got You Down?
Last week gold prices dropped 15% in two days. This was the largest drop in 30 years, and created widespread panic on Wall Street. Hedge funds and traders who were betting on the rise of gold prices via futures and the gold ETF found themselves having to unwind their positions in a hurry. The ensuing panic selling probably fueled the downward decline. All over the news, the pundits came out saying that the bull market in gold is now over. Several investors called in, quite concerned about what was happening and what they were reading in the media. After all, …
Setting Up Your Estate to Minimize Probate
Probate subtly reduces the value of many estates. It can take more than a year in some cases, and attorney’s fees, appraiser’s fees and court costs may eat up as much as 5% of a decedent’s accumulated assets. Think tens of thousands of dollars, perhaps more.1 What do those fees pay for? In many cases, routine clerical work. Few estates require more than that. Heirs of small, five-figure estates may be allowed to claim property through affidavit, but this convenience isn’t extended for larger estates. So how you can exempt more of your assets from probate and its costs? Here …
The Merits Of A Fee-Only Advisor
31 NFL players just lost $40 million in a shady casino investment that was recommended by their “financial advisor”. 1 For some of the players, the amount lost was a majority of their networth. Of course, their financial advisor wasn’t advising them in a fiduciary capacity. He was only selling them an “investment” that generated the highest commissions for him – in this case, an tiny ownership stake and $500,000. This is why it’s important to know how your advisor gets compensated and whether he’s really your advisor, or just a financial-product salesman. You should always ask if he has …
Don’t Forget To Fund Your IRA By April 15th
Here’s an important reminder: April 15 is the deadline for funding your IRA for 2012. (If you have a SEP IRA, you have until October 15 if you filed an extension on your personal tax return.) You may contribute up to $5,000 to a traditional IRA or a Roth IRA for the 2012 tax year. If you were 50 or older in 2012, your contribution limit is $6,000. (If you own multiple IRAs, your total IRA contributions for 2012 cannot exceed $5,000/$6,000.) Please note that income phase-outs may limit Roth IRA contributions. Single filers and heads of household can make …
Bad Money Habits To Break In 2013
Behaviors worth changing for the New Year. Do bad money habits constrain your financial progress? Many people fall into the same financial behavior patterns year after year. If you sometimes succumb to these financial tendencies, the New Year is as good an occasion as any to alter your behavior. #1: Lending money to family & friends. You may know someone who has lent a few thousand to a sister or brother, a few hundred to an old buddy, and so on. Generosity is a virtue, but personal loans can easily transform into personal financial losses for the lender. If you …
Common Deductions Taxpayers Overlook
i>Make sure you give them a look as you prepare your 1040 Every year, taxpayers leave money on the table. They don’t mean to, but as a result of oversight, they miss some great chances for federal income tax deductions. While the IRS has occasionally fixed taxpayer mistakes in the past for taxpayer benefit (as was the case when some filers ignored the Making Work Pay Credit), you can’t count on such benevolence. As a reminder, here are some potential tax breaks that often go unnoticed – and this is by no means the whole list. Expenses related to a …
If Interest Rates Rise, What Happens To Bonds?
Investors in longer-term Treasuries could see some rocky road ahead. How long can it last? The Federal Reserve has said that it will do what it can to keep interest rates low, but these efforts cannot stem the tide forever; it’s inevitable, at some point, that interest rates will rise and diminish bond prices. The only question is: when and how much? 1 A fifth year of easing has left some of the decision makers at the Fed thinking it’s time to reverse gears; the minutes of a December meeting cited “several” policymakers wanting to raise interest rates sooner rather …