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1
Lehman CDS Auction Should Reveal Winners and Losers
2
FDIC Account Insurance Limits Raised Temporarily
3
Fidelity and Vanguard Join Treasury’s Money Market Guaranty Plan
4
Saving for College Remains an Elusive Goal
5
A Historical Perspective on the Current Bear Market

Lehman CDS Auction Should Reveal Winners and Losers

Lehman CDS Until now, it hasn’t been entirely clear how much damage will result from the Lehman bankruptcy. An auction taking place today will be an important step in assessing which financial institutions stand to take a hit. Today’s auction involves a type of security that many people know little about or have only heard of recently: credit default swaps.

What are credit default swaps?

Generally, an “investment swap” involves trading one security for another.  However, another kind of investment swap is a contract: one in which two parties agree to enter into transactions with each other on the basis of changes …

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FDIC Account Insurance Limits Raised Temporarily

As part of the Emergency Economic Stabilization Act of 2008, the level of FDIC insurance coverage has increased as of October 3rd to $250,000. As I noted in an earlier post, it’s possible to have much more than $250,000 of coverage at the same bank, because the coverage depends on the titling of the account.

For example, if a husband and wife each have an IRA and an individual account, and the two also a joint account at the same FDIC-insured bank, their deposits are insured to the follow limits:

Husband:
Single-owner account – $250,000
Joint-owner account -$250,000
IRA …

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Fidelity and Vanguard Join Treasury’s Money Market Guaranty Plan

081 - VanguardToday’s WSJ notes that Fidelity, Vanguard, and T. Rowe Price Group have signed up for the Treasury Dept’s guaranty fund for money market funds that were held prior to September 19th. Now all the major mutual fund families with large money market funds appear to be participating in the fund (Charles Schwab is also on the list). Investors wondering about their accounts should check their fund’s web site; participating funds seem to be announcing their participation fairly prominently. You may also want to confirm that the specific fund that you own is covered; for example, Schwab’s U.S. Dollar Liquid Assets …

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Saving for College Remains an Elusive Goal

For the last couple of years, Fidelity Investments has surveyed parents of children under the age of 18 about their plans for future college expenses. The most recent survey of about 3,000 parents, reported in this news release from Fidelity, looks at anticipated college costs and family resources available to pay for college. This year’s survey found that 62 percent are counting on student loans to help cover the cost of their children’s college education.

Fidelity found that one-third of parents have either had to reduce or eliminate the amounts that they had been saving regularly for future college expenses, …

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A Historical Perspective on the Current Bear Market

Dimensional Financial Advisors is a passive-investment-oriented investment firm closely associated with Eugene Fama, 2003 Economics Nobel Laureate and father of the efficient market hypothesis. Today they sent me a link to a very nice presentation by their vice president, Weston Wellington. The presentation, “Is It Different This Time?” runs about 18 minutes long and puts the present stock market gyrations into a historical perspective by reviewing some of the “bear markets” of the last 50 years. It’s not overly jargon-filled and should be pretty accessible. The present market downturn reflects concerns about the non-availability of credit, the extent and …

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