Investing | Unbiased financial advice from fee-only financial planners

Parking Your Cash

Jul 17 2008

If you have a longer-term CD that is now coming to maturity, you’ve probably been disappointed to discover how much interest rates have dropped since you last locked in your CD rate. What are the best options for those with short-to-medium-term cash to invest these days?

My first observation is a warning: you should scrutinize closely any investment that is not a straightforward money market fund or CD. Why? Because there are quite a few short-term cash “alternatives” being touted right now; among these are a variety of ultrashort bond funds, bank loan funds, and exchange-traded notes.

With interest rates …

Some Days You Get the Bear, and Some Days the Bear Gets You

Jun 28 2008

Wall Street is licking its wounds this weekend, no doubt, after being pretty badly clawed by what is almost certainly a bear market. In the coming days you’ll see all sorts of articles offering you free advice, e.g. identifying “Bear Market Stocks You Should Buy Now,” providing lists of the mutual funds into which you should put all your money, and so forth. What should you do?

First of all, if I may borrow a phrase from the Hitchiker’s Guide to the Galaxy, “Don’t panic.” If you’re an investor, you should already have expected that the markets could drop, because …

Buffett’s Bet

Jun 18 2008

Legendary investor Warren Buffett has made an interesting wager with the management of a New York hedge fund. Buffett is betting that over the course of ten years, the hedge fund won’t be able to outperform a passive S&P 500 index fund after fees are considered.

The bet – each side is putting up $320,000, to be held by a third party and invested in a zero-coupon Treasury bond for ten years – is Buffett’s way of ridiculing the high fees charged by hedge funds. Protégé Partners, the other party in the wager, runs a fund of hedge funds. …

An Investment That Seemed too Good to Be True – Because It Was….

May 22 2008

There is a warm place in the Bostonian heart for locals who have become famous (or notorious, at least). One such was Charles Ponzi, the colorful fraud who emigrated to Boston in 1903 with a couple of dollars in his pocket and managed to become a millionaire by 1920 (before he got caught). Although he did not invent the “Ponzi Scheme,” he carried it off with such flair that when it recurs – as it does fairly often – it is invariably referred to by his name. The Associated Press reported recently that the SEC has frozen the assets of

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What’s an Index? – An Introduction to Market Indices

May 16 2008

When I meet with a prospective client for the first time, I try to explain a little about my approach to investments. On a couple of occasions when I’ve mentioned “index mutual funds,” someone has asked me, “what’s an index?” I’m always happy to get this kind of question; such questions help me remember that not everyone on the planet is a personal finance geek (and that’s a good thing).

The Earliest US Market Index

The idea of a market index, in the US at least, apparently began with Charles Dow, the founder of the venerable Wall Street Journal. He …

Category - Investing