Rick M at computer

Sensible Perspectives

Presidential elections, presidential terms and investment returns

Posted by Rick Miller on October 29, 2016

The US Presidential election is fast approaching. It is worth asking whether investment returns vary in predictable ways or are especially risky at such times. Perhaps we should be taking some action? One might imagine presidential elections to have both short-term and long-term effects on the stock market. The short-term effects would reflect the impact […]

Need a Short-term Loan? How About an Interest Free Loan from Yourself?

Posted by Chuck Luce on October 28, 2016

You accidentally took a $100k distribution from your Individual Retirement Account (IRA) and you are under the age of 59 ½. Oh no!  You’ve just incurred a 10% tax penalty in addition to the regular income tax on the distribution, right?  Maybe not.  If you return that $100k to the IRA within 60 calendar days […]

What are I Bonds good for?

Posted by Frank Napolitano on October 27, 2016

In my previous post, I described what an I Bond is. Here I will offer a few examples of how I Bonds might make sense in an investment portfolio. Recall that I Bonds are a sort of inflation-protected savings account. They earn interest every year equal to inflation plus a (currently small) fixed rate. The […]

What President Donald Trump Might Mean for Investment Returns and Investing

Posted by Rick Miller on September 21, 2016

Trump’s unpredictability is likely to lead to greater market volatility. Historically, the stock market and the economy have performed better in Democratic administrations than under Republican presidents. If enacted, specific Trump policies could have both negative and positive implications for the economy, for corporate profits, and for short-term stock returns. Many, but not all, of […]

Student Financial Aid: Newer, Faster, Better?

Posted by Rick Fine on September 20, 2016

The Federal Student Aid office of the U.S. Department of Education recently published an advisory for parents of college students seeking federal financial aid. Three major changes are coming: * Students attending college in the 2017-2018 school year will be able to submit the Federal Application for Student Aid (FAFSA) as early as October 1, […]

I Bonds: What they are and how they might fit into your portfolio

Posted by Frank Napolitano on September 19, 2016

I Bonds are a kind of inflation-protected savings account. In this article, I’ll describe their general characteristics and some of their limitations. In a follow up article, I’ll describe when I Bonds can make sense as an investment. Series I Savings Bonds: Protection against inflation Series I Savings Bonds are inflation-protected U.S. Savings Bonds. Also […]

Just How Good is Social Security, Anyway?

Posted by Rick Miller on August 26, 2016

Axel Börsch-Supan, a German expert on public pensions, spoke at the 18th Annual Meeting of the Retirement Research Consortium in Washington, DC earlier this month.  He offered an implicit framework for how public pension systems should work. He suggested that these systems should: Be operationally transparent Automatically adjust to changes in the supporting economy Not […]

Guaranteed Minimum Withdrawal Benefit Annuities – Part 2: The solution to rock solid financial security? Or too good to be true?

Posted by Rick Fine on August 25, 2016

In last month’s newsletter, I described a product called a Guaranteed Minimum Withdrawal Benefit (GMWB) annuity, and I gave an example of how it works.  A GMWB annuity is one of several types of products that more broadly fall under the name, Guaranteed Minimum Living Benefits.  Each type of product in this category works in […]

Investment Returns – How to Calculate Return

Posted by Frank Napolitano on August 24, 2016

First, we saw how we could use holding period return to calculate the return of a simple investment with two cash flows, one at the beginning and the other at the end of the period. Next, I introduced the concepts of time-weighted return (“TWR”) and money-weighted return (“MWR”), the two preferred methods used by investment […]

Understanding Your Returns – To weight time, or to weight money? That is the question.

Posted by Frank Napolitano on July 28, 2016

In my previous article, I introduced my friend Tim who wanted to know how to calculate his fund’s performance. I described the simplest method of calculating returns, holding period return, which is just the percentage change in value of an investment over time. Holding period return has limited value, however, since it assumes that all […]