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
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
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
In case you missed it, Vanguard recently released data looking average portfolio size and stock allocation as a function of age. It’s an imperfect analysis in that it focuses on retirement plan participants at Vanguard. Thus, it’s a non-random sample and limited to defined contribution plan holdings. But still… Those quibbles notwithstanding, the data are … Read more
The other day, while perusing the Bogleheads investing forum, I ran across a misunderstanding of how mutual fund expense ratios work. In short, someone was holding three different all-in-one mutual funds and was thinking of combining them all into one to avoid “avoid paying the expense ratios” on two of them. As it turns out, … Read more
I’ve talked in the past about several ways of effectively outsourcing the management of your investment portfolio. Possibilities range from using an all-in-one mutual fund to engaging a service like Betterment to hiring a financial advisor. That being said, you may be interested in maintaining a bit more control and/or avoiding the extra fees associated … Read more
The vast majority of individual investors are aware that you should periodically rebalance your investment portfolio. While much has been written about rebalancing strategies — when and how to rebalance your portfolio — less attention is typically paid to why you should rebalance. Or, perhaps more accurately, I should say that when people do think … Read more
Ever wondered about the best and worst daily, weekly, monthly, and yearly performances of the stock market? Well, wonder no more… You’ll find the relevant data, based on the Dow Jones Industrial Average (DJIA), listed below. Note that all of these data points are listed in terms of percentage gains/losses, and are current as of … Read more
Lifestyle creep is a popular personal finance boogeyman, and for good reason. If you’re not careful, your expenses will increase in lockstep with your income and you’ll never get ahead. But did you realize that you can use the same principles to supercharge your retirement (or other) savings? It’s really quite easy. Here’s how it … Read more
