From: blogs.wsj.com
Stocks slumped world-wide this week, with U.S. and European markets off more than 5% and the Shanghai Composite Index losing more than 11%. Oil prices also skidded, dropping more than 6%. Traders feared that slowing growth in China, the devaluation of the Chinese currency and the overhang of too much debt could stifle global economic recovery. Here are five things you should know…
From: wealthmanagement.com
The erroneous belief that active managers can’t beat their indexes has been a key driver behind a move into passive investments such as index funds and ETFs. While it’s true that data shows that active managers, on average, have beaten their benchmarks less than half the time, that’s only part of the story. Some active managers have done considerably better than average.
Morningstar…
From: wealthmanagement.com
Given many investors’ goal of maximizing return, it’s not surprising that some investors select funds based primarily on the funds’ recent performance record. But is that a prudent strategy?
This research note simulates a performance-chasing strategy among U.S. equity mutual funds for the ten years ended December 31, 2013; we then compare the results with a buy-and-hold strategy over the same period. Our analysis…
From: Michael Finke, Wade D. Pfau, David M. Blanchett
The safety of a 4% initial withdrawal strategy depends on asset return assumptions. Using historical averages to guide simulations for failure rates for retirees spending an inflation-adjusted 4% of retirement date assets over 30 years results in an estimated failure rate of about 6%. This modest projected failure rate rises sharply if real returns decline.
As…
From: Matson Money
Some helpful questions contained here within:
When it comes to building your investment portfolio, do you know exactly what you are doing and why?
Do you have a customized lifelong game plan to guide all of your investing and spending decisions?
Have you devised a clear-cut method for measuring the success or failure of your portfolio?
Have you identified your personal risk tolerance?
Do you know how to measure…
From: morningstar.com
The firm puts theory into practice with a focus on investors.
Morningstar recently issued a new Stewardship Grade for DFA. The firm’s overall grade–which considers corporate culture, fund board quality, fund manager incentives, fees, and regulatory history–is an A. What follows is Morningstar’s analysis of the firm’s corporate culture, for which DFA receives an A. This text, as well as analytical text on…
From: AlphaStar Market Review
Investors’ fortunes reversed in May. Whereas April saw foreign investments and hard assets posting strong returns and prompted some investors to make significant changes to their portfolios in response, May was driven by the US markets yet again. This strong performance surprised some investors, after several economic data releases were soft in the month of May.
Analysts hoped that US economic data…
From: nytimes.com
Live in the moment: If you’re skiing, surfing or scuba diving, that’s the way to go. But if you’re investing, that approach can lead to disaster.
The numbers show that most people who are lucky enough to have money to invest end up underperforming the markets by staggering margins. A big reason for that is living in the moment — acting in response…
From: thinkadvisor.com
Ron Surz uses a thought experiment to clarify sequence of returns risk and its perilous implications for target-date investors
We recently advised readers of an obvious but overlooked retirement risk — what retirement planner Dirk Cotton calls sequence of consumption risk.
Now Ron Surz, target-date fund expert and alert ThinkAdvisor reader (and contributor), warns of another obvious but overlooked risk related to sequence of…
From: news.morningstar.com
Question: Index funds are sometimes referred to as passive funds. Are they one and the same?
Answer: The terms “passive fund” and “index fund” are often used interchangeably, but they’re not quite synonymous. In a nutshell, all index funds are passive, but not all passive funds are index funds, at least not in the…
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