Category Retirement Finance
Time Diversification: Stocks are less risky over the long-term??? (Not!)
(Originally posted August 6, 2010) The myth of “time diversification” promises that if you invest (in risky assets) for the long-term you can eliminate risk, i.e. time reduces/eliminates risk. Tell that to somebody who was invested for 20 years with a 100% stock allocation (e.g.S&P500) and was planning to retire in the spring of 2009; […]
What Now? (October 13,2008)
What Now? (October 13,2008) In a Nutshell The impact of the recent market drop must be assessed on our financial health and corrective action may be required: -review current annual spending in detail, and set budget for next near -estimate expected “must” and “want” expenditures in retirement -identify the known (secure) pension sources of income […]
Are “target-date” funds or age-independent “fixed-asset allocation” right for you?
Are “target-date” funds or age-independent “fixed-asset allocation” right for you? In “Target-date funds I” and “Target-date funds II” I discussed some of the advantages and disadvantages of target-date funds and some simple methods for doing a low-cost implementation. In my May 11, 2008 Hot Off the Web blog I referred to a recent article in […]
Target-Date Funds II
Target-Date Funds II A few weeks ago in my Target-Date Funds (also called Lifecycle Funds) blog, I outlined some of the advantages and potential problems with them. I promised to look at a simple model that you may choose to use to implement your own custom Lifecycle/Target Date Fund using existing ETFs. In “Lifecycle funds: […]
Target-Date Funds I
Target-Date Funds Target-Date funds have a lot to offer. They are supposed to be a “single decision” fund and completely maintenance free. Once you selected your target retirement date, then just choose the Target-Date fund closest to that date and you are set until retirement. Life-time income funds are the complementary “single decision” funds that […]
Fiduciary
Fiduciary In a nutshell In the simplest terms, a fiduciary duty requires the fiduciary to place the interests of the client ahead his own (or his employer’s or shareholder’s or anyone else’s). There are no shades of grey here: this is not about moral but legal obligation, it’s not about disclosing that you have a […]
“Probable Outcomes” by Ed Easterling
“Probable Outcomes” by Ed Easterling In a nutshell In “Probable Outcomes” Ed Easterling makes his heroic pitch for active investment management in periods of “secular bear markets”. While I did enjoy the book (lots of historical data and insightful analysis, but no how-tos for achieving success in the holy grail of active management) he hasn’t […]
“The Quest for Alpha” by Larry Swedroe
“The Quest for Alpha” by Larry Swedroe In “The Quest for Alpha” Larry Swedroe systematically dismantles the theory that active money management (defined by him as stock selection and market timing) can lead to alpha (returns above risk-adjusted benchmark) after fees. He argues that “if markets are highly efficient, efforts to outperform are unlikely to prove […]
Pfau: “Safe savings rates: A new approach to retirement planning over the lifecycle”
Pfau: “Safe savings rates: A new approach to retirement planning over the lifecycle” In a nutshell Pfau extends William Bengen’s analysis of SAFEMAX (safe maximum withdrawal rates over a 30 year retirement) to the accumulation phase and defines a SAFEMIN (safe minimum savings rate through one’s 30 working years necessary to deliver 50% of one’s […]
Am I on track for retirement?
Am I on track for retirement? In a nutshell An essential missing element from DC plans is a feedback loop which at least annually gives you an indication of whether you are on track to your planned retirement date and income level. Wade Pfau, whose work on safe savings ratesI reviewed a few weeks ago, […]
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