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It's Déjà Vu All Over Again
Tweet Share on Facebook September 30, 2011 Comment (1)About three months ago, I wrote a piece called “How to Value the Stock Market.” The article addressed the relevance of price-to-earnings ratios (P/E) and earnings yields (E/P). On July 1, 2011, the S&P 500 Index stood at 1335, and estimated earnings were at 97.81. That left us with a P/E ratio of 11.95 and an earnings yield of 7.3 percent—both at levels that indicated the market was undervalued.
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What Makes You Trust Anyone's Investment Advice?
Tweet Share on Facebook September 30, 2011 CommentIt is well documented in surveys and studies by financial institutions that when we seek investment help, we make choices based upon one major criterion: trust. It all boils down to this one word. Who is giving me the advice? Can I trust them?
If you are a hard-core do-it-yourself investor who loves to day-trade, you may trust the Motley Fool or the Daily Options Trader based upon the success of their recommendations. If you delegate your investing, you may trust your friend’s son who works at Smith Barney. You know, the one who got his Wharton MBA and plays with your kids.
[In Pictures: 6 Numbers Every Investor Should Follow.]
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Where Is Your Target-Date Fund Taking You?
Tweet Share on Facebook September 29, 2011 CommentThe popularity of the target-date fund has increased over the years as more plan sponsors make the decision to use these options as Qualified Default Investment Alternatives (QDIA).
[In Pictures: 6 Numbers Every Investor Should Follow.]
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Market Volatility and Your 401(k)
Tweet Share on Facebook September 28, 2011 CommentThe stock market has certainly been on a roller coaster ride over the past couple of months. Most averages currently stand well below the highs reached earlier in 2011. The financial news media regularly speculate whether we are on the verge of another bear market. Many 401(k) investors are certainly wondering if this is 2008-2009 revisited.
[See 5 Questions to Ask Yourself About When You Can Retire.]
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3 Reasons to Hold Cash NOW
Tweet Share on Facebook September 28, 2011 Comment (1)The question people always ask is, “Why should I hold cash when it is paying nothing?” And they mean, quite literally, NOTHING. There are many reasons, but today I’ll focus on three.
[In Pictures: 6 Numbers Every Investor Should Follow.]
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6 Things to Expect From Your Financial Planner
Tweet Share on Facebook September 23, 2011 CommentYou've decided to engage a financial planner—smart move. But, did you know that anyone can call himself a "financial planner?" So how can you determine who is most qualified to handle your situation and what should you expect in a financial planning engagement?
You can ask for a referral from a trusted adviser or reliable friend, but you should also look for valued credentials, specifically the certified financial planner (CFP) designation. A certified financial planner is one of the most respected financial planning designations in the profession and requires a minimum of three years of experience, adherence to a strict code of ethics that mandates each CFP act as a fiduciary in every relationship, and passing a two-day 10-hour examination.
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Are You the Dumb Money?
Tweet Share on Facebook September 22, 2011 Comment (2)In the hit comedy, Dumb and Dumber, Jim Carrey and Jeff Daniels play two guys that are so utterly moronic, that their inanity actually becomes their best asset. Without knowing it, their stupidity guides them past unperceived dangers and smack dab into the middle of unsuspecting success.
If only life worked so charmingly. But in the cold world of Wall Street, the dumb are preyed upon, while the dumber quickly become extinct. Not only is this true, it is actually celebrated as fact by financial mavens and the media alike who have captured this ethos through their invention of the terms smart and dumb money.
[See In Pictures: 20 Funds That Have Weathered Downturns.]
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How to Prepare Your Finances for Death
Tweet Share on Facebook September 22, 2011 Comment (2)Preparing your finances for your death is a topic many don't want to talk about. Death is inevitable, however, and if you don't take the time to plan, your wishes (and your family's financial security) could be at risk.
Everyone should make a few preparations to ensure that decisions are made with the right frame of mind and not out of emotion or grief. Creating a will, naming an executor, and considering your estate are all extremely important. In addition, talk to your family about the following four topics:
[In Pictures: 6 Numbers Every Investor Should Follow.]
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5 Questions to Ask Yourself About When You Can Retire
Tweet Share on Facebook September 21, 2011 CommentDeciding when to retire is one of the most important life decisions you'll ever make. Many people don't know the basic questions to ask in making this decision.
The "traditional" retirement age is 65. This has gone by the wayside to some extent in that the age to receive full Social Security benefits continues to increase. Some people want to retire early, say, at age 55. Others look at how much they'll get from Social Security—benefits begin at age 62, but the longer you delay, the more it pays out. Additionally, many retirement portfolios are worth less than they were a few years ago because of fluctuations in the stock market. Many people are wondering if they might have to put off retiring far longer than they had expected or if they will be able to retire at all.
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3 High-Yielding Fixed-Income Investments
Tweet Share on Facebook September 21, 2011 Comment (3)A one year certificate of deposit (CD) is currently paying an average rate of 0.85 percent—not even one percent. Interestingly, that same CD was paying closer to 6 percent five years ago. So if you had $100,000 invested in that CD, your return went from $6,000 a year to $850. We all know you cannot live on that kind of income.
To make matters worse, bonds have also been hit hard. The 10-year treasury is paying 1.9 percent and the 30-year is 3.20 percent. And while those numbers are poor, the real problem is that when you purchase bonds and interest rates rise, the value of your bond goes down. So you could end up getting a negative return on your "treasury safe haven."
[In Pictures: 6 Numbers Every Investor Should Follow.]
