Online Discount Brokers
Posted on August 8, 2014 | Investing
As a member of AAII and reader of Computerized Investing, chances are that you perform a significant amount of investing on your own. Though individual investors still call full-service brokers to place trades, many have now switched to fully using online discount brokerages. These online brokers have a number of advantages over “traditional” brokers, such as cost and convenience, and they are constantly evolving and improving. Most online discount brokerages charge $10 or less per trade, but there are some online deep discount brokerages that charge just a few dollars per trade.
Offbeat Offerings: Mortgage-Backed Securities
Posted on May 20, 2014 | Investing
The current housing market decline, increasing mortgage defaults and the financial struggles at Fannie Mae and Freddie Mac have shined a spotlight on a particular fixed-income product that is often not particularly well-understood by individual investors—mortgage-backed securities.
Where Credit Is Due: A Look at the Ratings
Posted on April 4, 2014 | Investing
There are many factors that individuals must consider when making investments in fixed-income securities. Current bond yields, current bond prices, and current as well as future interest rates all may have a big impact on the return of a fixed-income investment.
The Dividend Yield: Stock Mutual Funds and ETFs That Generate Income
Posted on February 26, 2014 | Investing
Are you looking for an investment that has the potential to produce a growing income stream and long-term capital appreciation along with reasonable risk? Bond funds won’t suffice; their income is a prisoner of prevailing interest rates, and their capital appreciation in the long term is essentially zero, a combination that is exposed to inflation risk.
How to Set and Revise Realistic Price Targets for Your Stocks
Posted on February 6, 2014 | Investing
An investor over time attaches some validity to his or her initial price objective, meaning that modifying that expectation becomes difficult for reasons totally contained only between one’s ears.
But stocks go where they want to, despite what any participants think is justified and despite what investors might wish would happen. Investors unable or unwilling to let go of original price opinions are doomed to lose, either through losses in positions that never come back, and/or from better opportunities elsewhere that have been lost.
Taking Aim at Your Retirement: A Look at Target Date Mutual Funds
Posted on June 5, 2013 | Investing
There is an appealing simplicity in the concept of target date funds that has a strong attraction for investors: Just pick a year, and lean back—your portfolio management is now on autopilot, with coordinated diversification among the major asset classes that is rebalanced periodically toward your estimated time of arrival, your target date.
But while the concept of the target date fund has a justified appeal to a broad range of investors, making the right choice among the many target date fund offerings and understanding how the funds work is not quite as simple as it appears at first glance.
The Risk/Growth Dilemma
Target date funds are built on the assumption that investors who are farther from their target retirement date should have higher allocations to stocks, and that the stock commitment should decrease as the target date approaches. Thus, funds with an earlier target date will start out with a lower stock allocation than funds with a later target date, but all of the target funds within a family will decrease their commitment to stocks as the target date approaches.
Market Barometers: A Look at Stock Indexes and How They Work
Posted on May 8, 2013 | Investing
You may not need a weather man to know which way the wind blows.
But in the financial world, you do need a stock market index to know which way the stock winds are currently blowing. That’s why the broad market indexes are quoted daily by virtually every media source as a barometer of the state of the overall market.
How do these market indexes work and what are they telling you?
State-Based Exchange-Traded Funds
Posted on April 9, 2013 | Investing
Exchange-traded funds (ETFs) are continuing to prove themselves as ever-present and almost chameleon-like in their ability to take on many new forms as a perceived need arises. The latest additions to the ETF world are state-based ETFs.
Life Cycle Funds
Posted on April 5, 2013 | Investing
Life cycle funds are marketed as a maintenance-free way for individuals to invest for retirement. They were created under the assumption that many individuals needed a one-stop investment vehicle that properly rebalances their portfolios over their investment lives, as their investment needs change. Typically, in an individual’s younger years, riskier but higher-return potential assets should be emphasized, but as the individual approaches retirement, the percentage commitment to these types of investments should be gradually reduced. Life cycle funds are designed to follow this investment pattern.
At first, life cycle funds were limited to mutual funds, but over the years, life cycle exchange-traded funds ETFs have been created.
14 Personal Finance Questions
Posted on January 28, 2013 | Investing
A list of practical answers to frequently asked investing and personal finance questions.