blog27aug2007

Hot Off the Web
Financial Post’s Richard Croft in “Picking the right benchmark” tables the importance of benchmarks in investing (you can read more about it at this website at Benchmarks ). He gives two reasons for their importance: comparison with a passive alternative and because of focus on portfolio rather than individual securities. He also explains what some of the characteristics of good benchmarks are. In a follow-on article “Benchmarks for the real world”  he also gives some examples of good benchmarks built on ETF based portfolios for conservative, balanced and growth portfolios; the ETFs used are XBB (Canadian Bond Index Fund), XIC (Canadian Composite Index Fund), XIN (Canadian MSCI EAFE Index Fund) and XSP (Canadian S&P Index Fund).
Jonathan Chevreau’s “Weaning yourself off that work habit”  in the Financial Post discusses Norman Wright’s book “Recovering from losses in life”; specifically the loss of identity, loss of social contact with colleagues and increased suicide rate sometimes associated with retirement. If your identity is heavily intertwined with your job, he advocates a more gradual weaning off from work than would be associated with sudden retirement. More and more companies and recent changes in pension benefit legislation also make this a more realistic option.
In “Staying balanced in a wild market”  Jonathan Clements advocates keeping your eye on the ball; the ball in this case is your asset allocation. With all the turbulence in the market recently, there is a good chance that your allocations are out of kilter and it’s a good time to rebalance, and rebalancing means to invest more in the funds that were hit the hardest. If you need to sell areas that are overweighed, try to sell in tax-deferred accounts.
In “Health insurers target the individual market”  reference is made to the fact that U.S. health insurers are starting to target two groups that most likely are in need of coverage: people in their 20-30s and early retirees. Companies targeting those unlikely to have employer-sponsored health insurance include WellPoint, Humana and Aetna; they generally offer relatively reasonable rates if you are prepared to take large deductibles.
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