Author - Ara Oghoorian, CFA, CFP®

1
Here’s Everything You Can Use Your 529 Account For
2
How to Undo a Roth IRA Conversion and Save Money
3
5 Steps To Overcoming Your Investment Biases
4
6 Risks When Investing in Bonds Today
5
How to Protect Your Investments From Inflation

Here’s Everything You Can Use Your 529 Account For

$334,000; that is approximately how much it will cost to send your newborn to a 4-year private college starting in the year 2030. If you have two children, that future expense comes close to current home prices in Los Angeles. The cost of higher education is rising faster than inflation (including food and energy.) It’s no wonder then that many parents are starting to save early for their children’s college education costs. One of the most efficient investment vehicles to help parents accumulate the necessary funds is the recently introduced 529 plan. Officially known as “Qualified Tuition Programs”, 529 plans …

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How to Undo a Roth IRA Conversion and Save Money

Losing money in the stock market is never fun, but what’s worse is having to pay tax on the lost market value. In 2010, the IRS changed the rules to allow anyone, regardless of their income, to convert an old 401k or a Traditional IRA to a Roth IRA, as long as they pay the tax on the converted value. Many people in the “higher” income brackets have taken advantage of this window of opportunity to gain access to the coveted Roth IRA, which is not available to high income earners.

Even though investors have to pay tax on the …

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5 Steps To Overcoming Your Investment Biases

In a previous article I examined traditional and behavioral finance theories, and identified several biases that interfere with investors’ ability to make sound investment decisions. In this article we delve deeper into each of the biases, and explore simple, yet effective ways to overcome those biases. While there are a multitude of behavioral biases, this article will focus on three: mental accounting, anchoring, and overconfidence.

Mental Accounting – is the process whereby investors categorize their assets into separate mental “buckets”, and thus spend or allocate funds differently. Some examples: Susan receives a monetary gift for her birthday and uses it …

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6 Risks When Investing in Bonds Today

U.S. Treasuries are considered one of the safest investments in the world. Why? Just take a look at the yield on the 10 year bond; despite the deadlock in Washington and the media induced fear that the U.S. may default on its debts, the world still believes that the U.S. will not renege on its debt. As a matter of fact, while the stock market declined recently because of inaction in Washington, the yield on the 10-year bond actually dipped below 3 percent (when investors buy Treasuries, the yield goes down).

Because U.S. Treasuries are perceived to be risk-free, they …

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How to Protect Your Investments From Inflation

If the Federal Reserve has its way, the U.S. will experience rapid inflation in the coming months/years. The Fed believes it’s easier to tame inflation rather than try and control the consequences of deflation. Historically low interest rates, quantitative easing 1 and 2, and a firm commitment to keep interest rates low for an extended period are all fuel for inflation, and a subsequent debasing of the U.S. dollar.

While a weak U.S. dollar helps manage America’s burgeoning trade deficit and benefits American exporters, it makes foreign goods more expensive. Although inflation is perceived as negative, investors should know that …

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