Dividends Are Not Free Money

by Michael on Aug 26, 2013 · 11 comments

The past few years have seen an explosion of interest in dividend investing. While there are (arguably) good reasons for this, many investors don’t seem to fully understand what dividend payments actually represent. I thus thought it might be worth shedding some light on the subject. Note that my goal […]

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Today I want to expand on my previous article about the relationship between interest rates and bond prices. You should now be well aware that interest rates and bond prices move in opposition. When rates fall, bond prices increase. And when rates increase, bond prices fall. But how big is […]

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Interest Rates and Bond Prices

by Michael on Jul 22, 2013 · 2 comments

The FINRA Investor Education Foundation recently released some troubling poll results about the “financial capability” of members of the American public. A key aspect of their poll, which was conducted in 2012 and followed a similar survey in 2009, was a five question quiz covering everyday aspects of finance and […]

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What is Tax-Equivalent Yield?

by Michael on May 28, 2013 · 3 comments

I’ve mentioned tax-equivalent yield in passing a couple of times. Today, I want to spend a few minutes expanding on the topic. In general terms, whenever you hold a tax-exempt investment in a taxable account, you’re earning more (after taxes) than you would with an equivalent, taxable investment. Said another […]

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I recently looked up the yield on the Vanguard Intermediate-Term Tax-Exempt municipal bond fund and was surprised by what I saw. According to Google, Yahoo, and Morningstar, it’s yield was a little over 3%. Wait a minuteā€¦ Over 3% for a tax-exempt bond fund? In the current interest rate environment? […]

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