Buying Savings Bonds With Your Tax Refund

Over the past few weeks I’ve mentioned (in passing) the ability to buy additional Series I Savings Bonds with your tax refund. In short, you can request up to $5k in I-Bonds (in $50 increments) with your tax refund. These are issued in paper form and are in addition to the $10k annual (electronic) purchase … Read more

Why Did My Mutual Fund Share Price Drop?

Every year around this time, investors scratch their heads and wonder why the share price (or net asset value; NAV) of their mutual fund dropped even though the market went up. The short answer is that many mutual funds distribute their dividends as well as capital gains around this time. When this happens, the share … Read more

We Don’t (Automatically) Reinvest Dividends

Dividends make up a substantial fraction of the returns on many investments, and most of us reinvest them — at least in our early years. The easiest way to reinvest your dividends is to automate the process. Simply direct that money straight back into whatever produced it. And yet… My wife and I don’t do … Read more

Proper Asset Allocation in Retirement

A reader recently wrote in with a question about asset allocation in retirement, having been advised that anyone in retirement should have at least 80% in equities. He’ll be retiring at age 66 later this year and, based on everything that he’s read, this recommendation seemed quite high to him. While I’m not in the … Read more

The Value of a (Good) Financial Planner

While we’re on the topic of financial planners, and at the risk of getting stuck in a rut… Have you ever wondered what the advice of a good financial planner or advisor is worth? In other words, what sort of benefit are you actually deriving from their planning services (and the associated fees)? Well, now … Read more

Inside Our Investment Portfolio

Today, I thought I’d pull back the curtain and give you an idea of what our investment portfolio looks like. If you’ve been following my articles, it will likely come as no surprise that I’m a huge fan of index funds, and our holdings reflect that. We have the lion’s share of our investments at … Read more

Tax Consequences of Vanguard Mutual Fund Share Conversions

A reader recently wrote in to ask the following about Vanguard Admiral Share conversions: “We’re getting close to being able to convert our Vanguard mutual funds to Admiral Shares. We’re pretty excited about this, but I’m also a little worried. Are there any tax consequences that I should be aware of? I’d hate to get … Read more

Mutual Funds vs. ETFs – Which I Prefer and Why

The first exchange traded fund (ETF) was launched 20 years ago, in 1993. Since then, ETFs have gained a great deal of popularity. So, if given the choice between an old school (open-end) mutual fund and an equivalent ETF, which would you choose and why? Personally, I remain partial to mutual funds. Yes, we do … Read more

Investment Returns: Effects of Stock/Bond Allocation

I was messing around last night in Vanguard’s Portfolio Watch and decided to look at the performance of various very simple portfolios. These included all possible allocations (in 10% increments) from 0% stocks and 100% bonds to 100% stocks and 0% bonds. The results, which were based on real world market performance from 1926-2011, were … Read more

Investment Management Fees and the Growth of the Finance Industry

I recently ran across an interesting article by Burton Malkiel in The Journal of Economic Perspectives. In it, he examined the growth of the financial services industry since 1980. Care to guess what he learned? Well, for starters… As a fraction of the GDP, the size of the financial services sector increased by ca. 70% … Read more