Category Fixed Income
I-Bonds “Real” Interest Rate Goes Back Above ZERO
I-Bonds “Real” Interest Rate Goes Back Above ZERO — for the first time since the rate was set to zero back in Nov, 2010. For the last three years, any newly purchased US Treasury Series I savings bonds – which pay interest which is a composite of a fixed “real” rate plus a variable […]
US Treasury I-series savings bonds – still zero real yield
For the 6th straight 6-month period in a row, US Treasury I-Bonds will be issued with a fixed “real” rate of 0%. That’s zero. Nil. Nada. Zip. The nominal yield is higher, since it’s a composite built out of the fixed (zero) rate plus a component representing inflation. The composite rate right now is 1.18%. […]
A whopping 52.6 percent tax rate on ordinary income
From an article about ranking the tax efficiency of certain income-oriented investments for six-figure earners: Begin by choosing marginal tax rates for both ordinary income and long-term capital gains. Litman Gregory assumed a whopping 52.6 percent rate on ordinary income, which includes 8 percent for state income tax. The federal portion consists of this year’s […]
Malkiel: Buy Stocks, not Bonds
Burton Malkiel has been speaking up a lot lately, and with much the same message – repeated several times over the last few months (at least since an op-ed back in April). While hitting on some of the same themes he’s hit on for 40 years (index funds, low costs, broad diversification, don’t time the […]
Real 10 year yields
From an article about adjusting assumptions for retirement withdrawal rates in a ‘yield-free’ world. http://www.advisorone.com/2012/06/27/retirement-in-a-yield-free-world?t=the-retiree The author makes some important points about the rule-of-thumb that so many use for planning the level of withdrawals that’s “safe” from a given portfolio (or flipping it around, the level of savings that will be necessary to […]
Zvi Bodie, TIPs, Zero-Cost Collars and Equity Risks
Major piece in today’s Wall Street Journal, “Why Stocks are Riskier Than You Think” by Zvi Bodie and Rachelle Taqqu http://online.wsj.com/article/SB10001424052970204795304577221052377253224.html?mod=googlenews_wsj (Of course, Bodie and Taqqu are also hoping that this article will lead a lot of people to buy their recent book, “Risk Less and Prosper”. Bodie and Taqqu’s own retirement plan likely hinges […]
Savings Accounts
The current interest rate environment is weighing heavily on those who count on getting any kind of return on their cash and/or low-risk investments. Treasury bond yields are at historic lows, especially at the short end of the curve. That means that the most cash-like treasury securities – the ones which mature the soonest and […]
Top 10 non-leveraged ETFs over the last year
I saw an article on a financial planning site pointing to the fact that 8 of the top 10 performing ETFs in 2011 were US Government Bond funds. So I just did a quick double check via Morningstar’s ETF screener, though the screener doesn’t let me pick a specific year – it lets me do […]
Waggoner: What we learned from bonds’ victory
http://www.usatoday.com/money/perfi/columnist/waggon/story/2012-01-05/stocks-bonds-diversification/52395986/1 Great column from John Waggoner in USA Today. The headline is a reference to the fact that over the last 1yr, 10yr, 20yr and 30ys periods, bonds (long term treasuries, mainly) have had higher total returns (with dividends all reinvested) than large-cap US stocks (mainly the S&P 500). Some takeaways: the selection of stocks […]
WSJ/Burton Malkiel: Where to Put Your Money in 2012
WSJ/Burton Malkiek: Where to Put Your Money in 2012
Another excellent op-ed piece by Burton Malkiel, author of the classic “A Random Walk Down Wall Street”.
Malkiel makes the following points (summarized – but you should really read the article):
- Bonds, especially US and Europe, are not positioned to do very well in the future
- Stocks, especially the US and Emerging Markets are
- Emerging Markets, in general but especially Brazil and China and even India look good (natural resources, demographics, etc)
- Single-family houses in the US are less expensive and with ultra-low mortgage rates (see “Bonds” above — a mortgage is the opposite side of buying a bond – it’s borrowing rather than lending!) look good. (“Housing affordability has never been better.” Though, of course, that’s contingent on good credit and probably a job.)
- Costs matter – this was the final paragraph and it’s always worth repeating: “Control the thing you can control — minimize investment costs. That is especially important in a low-return environment. Make low-cost index mutual funds or ETFs the core of your portfolio and ensure that any actively-managed investment funds you purchase are low-expense as well.”
Meyers Wealth Management 