Financial Planning with AAII

Posted on November 29, 2011 | Financial Planning

The fun part about a 401(k) plan is watching it grow over time. But that can easily turn into a frustrating exercise if you don’t understand your retirement plan statement.

Although your employer is required to provide you with a plan statement, there is no standardized form—most, in fact, are quite different. However, Figure 1 (see bottom of page) gives you an idea of some of the information that may be included.

The statement in Figure 1 is divided into several sections: activity this period, current contributions allocation, and a summary of contributions.
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CBOE’s Volatility Index (VIX)

Posted on November 28, 2011 | AAII Journal

The VIX is a measure of the implied or expected volatility of S&P 500 options over the next 30 days. Implied volatility is the market’s estimated future volatility and is reflected in the premiums paid for options.

Originally launched in 1993, the VIX underwent a change in calculation in September 2003. The “original” VIX was calculated using at-the-money put and call options on the S&P 100 index OEX. Furthermore, the original VIX was based on prices of only eight at-the-money OEX puts and calls, the most actively traded index options at the time.

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AAII Investor Update: Analysts Pressured to be Positive

Posted on November 22, 2011 | Investor Update

‘Ban the analysts!’

This is what European Union commissioner Michel Barnier recently suggested. Barnier proposed banning credit agencies from rating the sovereign debt of countries undergoing bailouts. The commissioner was pressured into withdrawing his proposal for a ban, though he is still pushing for other reforms.

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Social Security: Delay or Take the Money and Run—Act II

Posted on November 21, 2011 | AAII Journal

workers who have reached their full retirement age (FRA) is whether to take the Social Security benefit and continue working or wait to take advantage of an increased regular benefit and a significant delayed retirement credit.

The earliest that Social Security benefits may be taken electively is at age 62. A formula is applied to the AIME such that more of the wages are included in the benefit for low wage earners than are included for high wage earners. The 1977 Amendments to the Social Security Act established bend points that are used to determine a person’s primary insurance amount (PIA) from the AIME.

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useful investment guides and tips

Posted on November 17, 2011 | AAII.com

Guide to Direct Purchase and Dividend Reinvestment Plans
Purchase stock without commissions through company-sponsored DRP plans and often at below-market prices.

Guide to ETFs
Check out AAII’s complete listing of all exchange-traded funds, plus a guide to how they work.

Investment Information Guide
Quick access to information and resources that investors are most likely to need.

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PC Buyer’s Guide 2011

Posted on November 15, 2011 | Computerized Investing

If your computer is only a couple of years old, but it is running slowly or you are constantly deleting files to free up disk space, there are a few lower-cost options you can take to upgrade your system. These include adding additional memory (RAM) or adding hard disk space with an additional internal drive or an external drive.

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AAII Investor Update: Buy Good Stocks Cheap

Posted on November 11, 2011 | Investor Update

Joel Greenblatt offered to provide some insights for this week’s newsletter. Joel is the CIO of Gotham Asset Management and author of several investing books. He will also deliver the keynote speech tomorrow (Friday) at our Investor Conference.

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Stocks With Low Risk/Reward Scores

Posted on November 9, 2011 | AAII Journal

Company financial strength is scored by looking at levels of the current ratio (current assets divided by current liabilities) and debt-to-equity ratio (long-term debt divided by equity and expressed as a percentage). Comparative performance is scored by measuring the return on equity (ROE, net income divided by equity) relative to all firms.

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AAII’s Best of the Net: 2011 Guide to the Top Investment Web Sites, 15th Edition

Posted on November 8, 2011 | AAII Journal

AAII awards a Best of the Net rating to sites that provide investment information or service that, in our view, is both useful and substantial to individual investors and available either for free or for a reasonable price.

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AAII Investor Update: Bonds’ 30-Year Run

Posted on November 3, 2011 | Investor Update

“In 30-Year Race, Bonds Beat Stocks,” read a headline on Blooomberg.com earlier this week.

No, you did not read that wrong. Jim Bianco, president of Bianco Research, calculated an average annual gain of 11.8% for long-term bonds. Stocks lagged with an average gain of 10.8%. This has not happened since the Civil War, when the U.S. had a very different economy.

If you thought stocks, not bonds, were the best investment vehicles for beating long-term inflation, you’re right. This is still the case. The performance record of the past 30 years reflects two different events that combined to create a favorable environment for bond prices.

The first was interest rates. Ten-year treasury bonds yielded 15.8% on September 30, 1981, according to Bianco. Earlier today, the 10-year bond yielded 2.06%. Bond prices and interest rates are inversely related, meaning that as yields fell over the past three decades, bond prices rose.
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