Investment Education

Friday, July 5th, 2019

This is my short list of things I hear way too often in the investment industry, and my honest translation into English.

Friday, May 10th, 2019

Financial markets, including markets for complex instruments that may just look like speculative casino bets, allow important real transactions to occur. And in a brilliantly decentralized way, they bring into harmony people whose information, values, goals, and risk aversion differ.

Thursday, February 21st, 2019

Active managers may be good at finding buying opportunities, but they seem to lose their discipline when it comes to selling.

Tuesday, September 18th, 2018

Social Security is in the hole. It’s time to stop digging. 

Thursday, January 5th, 2017

Financial wellness has become a popular topic with policymakers, human resources departments, and the financial media. The concept is simple: Just as with physical health, financial wellness assesses your ability to support yourself into old age. 

Thursday, July 28th, 2016

It is generally a reasonable approach to invest in passively managed index funds because research has shown that actively managed funds have not shown a consistent ability to beat their indexes. But you've got to pay attention to the fees.

Thursday, July 21st, 2016

Stocks are well known for their high volatility. Stocks respond to financial, economic, and political events in real time.  The recent Brexit vote, for example, caused a sharp drop in stock prices. But the U.S. stock market was able to rebound in several days.

Going forward, it is certain that stock markets will be sensitive to events like the upcoming Federal Open Market Committee meeting (July 26-27), the ongoing presidential election, oil shocks, and so on. But it is far from certain whether we can predict future stock returns. However, an index, called VIX, may surprise investors.

Wednesday, April 13th, 2016

Sometimes when I do a back-of-the-napkin estimate about how much I’ll have saved in the future, I’ll use a handy formula known as the “rule of 72.” This rule says that if you divide 72 by your rate of return, the resulting number is roughly how many years it will take your money to double.

Wednesday, March 30th, 2016

By relying on familiarity as a proxy for a more thorough understanding of these generic medicines, consumers often overspend on name brand medicines. Trusting our intuition instead of relying on objective data can also lead us astray when it comes to investing.       

Thursday, February 4th, 2016

Target date funds are investment vehicles that have gained popularity with regular people but get mediocre marks from investment advisers. Offered by most fund families (Vanguard, T. Rowe Price, Fidelity, etc.), they are frequently included as an offering in 401(k) plans. According to Morningstar, investors had about $700 billion in target date funds at the end of 2014, although their growth is slowing. There's a lot to like about target date funds.

Wednesday, January 6th, 2016

Markets go up and down daily. For every buyer, there is a seller. But there is a broader historical point here. Even during periods of relative growth, there are negative stretches.

Tuesday, December 22nd, 2015

The most brilliant investment strategy in the world will not make up for a lack of putting money aside. How much you save versus how much you spend is the most important driver of whether you will succeed in having money for your future financial goals.

Friday, December 4th, 2015

There is one core tenet to my investment philosophy: Focus on important factors that you can control.

Tuesday, November 24th, 2015

Investing for retirement should be a long-term process. It would be nice to extrapolate meaning from three- or five-year performance, but more often than not we may actually be chasing returns that are likely to regress to the mean in the future.

Tuesday, September 22nd, 2015

Financial professionals recognize that many smart people, even those with large sums of money, don’t have a deep understanding of investing. What they’ve found is that if they can make something seem extra difficult, they can convince you that they must be doing a good job.

Friday, August 14th, 2015

Summer recap
Our “summer vacation” edition reviews the investing scene at mid-year: Bond yields remain low, equities have performed reasonably well, and commodities have tumbled.

Tuesday, August 4th, 2015

For those who aren’t students and are attempting to build credit, there is a hurdle to overcome, because lenders abide by the unwritten law, “you must have credit to get credit.” Fortunately, there are a number of ways to overcome this.

Monday, July 27th, 2015

Workers who are saving for retirement through IRAs and 401(k)s probably have been asked about asset allocation—how much they want to invest in stocks, bonds, or other investments, and the level of risk they are willing to tolerate with their retirement savings. Those who are already in retirement face a new challenge: how to allocate their investments to generate the income they will need for the rest of their life.

Monday, June 29th, 2015

Do changes in the economy affect the stock and bond markets?
From day to day, fluctuating prices in the financial markets are of great interest for high-frequency traders. But daily market movement is so volatile that economists call it a “random walk” whose next steps are unpredictable. To date, no clear pattern of daily movement has been found by researchers. 

Monday, January 12th, 2015

When it comes to retirement drawdown strategies, what you read in the popular and financial press is often focused on households with higher-than-average savings.