Sell OF THE WEEK 1/28/2015

Posted on January 28, 2015 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Intuit (INTU) is his “Sell of the Week” on the MoneyLife Radio Program. MoneyLife is a daily personal finance show that sorts through the financial clutter to bring you the information you need to lead the MoneyLife.

Audio url: Sell of the week





BUY OF THE WEEK 1/27/2015

Posted on January 27, 2015 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Reliance Steel & Aluminum (RS) is his “Buy of the Week” on the MoneyLife Radio Program. MoneyLife is a daily personal finance show that sorts through the financial clutter to bring you the information you need to lead the MoneyLife.

Audio url: Buy of the week




AAII WEEKLY FEATURES 1/27/2015

Posted on January 27, 2015 | Weekly Features

Investor-Update

This week’s AAII Weekly Features has been updated.
View this week’s Top AAII Articles, Featured Stock Screen and Member Question.

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Retirement Withdrawal Calculator

Posted on January 27, 2015 | Computerized Investing

Throughout the years, there has been much discussion regarding an optimal retirement withdrawal rate. A withdrawal rate is a function of how much money you withdraw from your retirement fund each year. I’m sure many of you have heard of the oh-so-popular 4% withdrawal rate standard. Some experts have suggested a lower rate given low bond yields, while others have suggested a variable rate that gives retirees more flexibility depending on market conditions. Many assert that investors are better off choosing a first-year retirement withdrawal percentage and then growing the withdrawal amount each year to keep pace with inflation. However, this can be tricky. What if you choose the wrong initial rate? If you choose a rate that is too high, you face possible shortfall risk (the risk of running out of money within your lifetime). If you choose a rate that is too low, you might not be taking full advantage of your retirement savings.

Instead of focusing on a specific withdrawal rate to use throughout retirement, you could calculate how much you can afford to withdraw annually in retirement based on the amount of money you want to have left over for your estate, how many years you estimate you will be in retirement and estimated inflation and rate of return. CI’s Retirement Withdrawal Calculator does just this.

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Potential Upside (and Downside) to the ECB’s Bond Purchases

Posted on January 23, 2015 | Dividend Investing

It will be a while before we know what the impact of the European Central Bank’s (ECB) bond purchase program will be. Yesterday, as you’ve probably heard, the ECB announced its intention to purchase 60 billion euros of bonds per month between March 2015 and September 2016.

The immediate impact was a decline in the value of the euro against the dollar. This is a good thing for Americans with near-term plans to travel to Europe. It’s not good for American companies conducting business across the Atlantic. A stronger dollar makes U.S. products more expensive and reduces profits translated from euros into dollars. (The actual reduction from currency translation depends, in part, on the type of hedging employed.)

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Deflation Concerns Abound

Posted on January 23, 2015 | Stock Superstars Report

What do Tom Brady and the European Central Bank (ECB) have in common? They have both been fighting rumors of deflation in their respective arenas. Tom Brady, of course, is the quarterback of the Super Bowl-bound New England Patriots, and he is being accused of illegally deflating the footballs used in the AFC championship game.

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The Fourth Quarter Quarter 2014 issue of QMFU is now available on-line.

Posted on January 23, 2015 | Quarterly Mutual Fund Update

Investor-Update

“A Reversal of Fortunes” — The second half of last year marked a reversal of fortune for certain fund categories.

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Social Security: Delay Benefits at the Expense of Personal Savings?

Posted on January 22, 2015 | Financial Planning

With the exception of only the top income quintile, Social Security is the largest source of retirement income for all Americans.

While many retirees also heavily rely on their investments to provide income, they face a challenge in balancing their personal savings against Social Security benefits.

The problem is that retirees have two goals that often compete:

Obtain the highest Social Security benefits and, if married, the highest benefits for the surviving spouse. This generally entails delaying benefits, ideally to the latest possible age of 70.
Minimize savings withdrawals in the early years of retirement, particularly before 70. This generally entails taking benefits as early as possible.

However, since it is difficult for those who retire before age 70 to do both, investors should be looking for the best compromise for their situation.

Even for middle-income retirees, the outcomes can vary by hundreds of thousands of dollars. The free T. Rowe Price Social Security Benefits Evaluator tool (troweprice.com/socialsecurity) can help preretirees choose their strategy. Using that tool, a T. Rowe Price study examined some of the trade-offs involved, which depend on retirees’ marital status.

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Oil Shows the Folly of Forecasts

Posted on January 22, 2015 | Investor Update

Investor-Update
Whenever Mr. Market wants to change something, he can turn the dials pretty swiftly and cause prices to move significantly. The speed and the magnitude of the changes are often greater than many investors realize while the price adjustments are occurring.

Oil provides a good example. At the end of last June, oil traded at $105.37 per barrel. Over the next three months, the price declined to $91.16. Then, in the fourth quarter, oil plunged by more than 41% to $53.27 on December 31, 2014. Oil has continued to fall this month, trading at $46.50 per barrel today. Put another way, oil has fallen by 56% since the end of June and 49% during the 16-week span starting at the end of September.

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Mixed Opinions on Rate Hike’s Effect on Stock Prices

Posted on January 22, 2015 | AAII Survey

This week’s Sentiment Survey special question asked AAII members what impact the first rate hike by the Federal Reserve will have on stock prices. Slightly less than one out of three respondents (32%) do not expect the first increase to impact stock prices. Several of these individual investors believe the hike is or will be anticipated. About 22% of respondents expect stocks to decline immediately and then rebound or a rise to higher levels. A nearly equal number expect stock prices to fall following the rate hike announcement. A small number of respondents expect stock prices to rise (6%) or say other factors could play a role in influencing the direction of stock prices (5%).

Here is a sampling of the responses:

  • “A small drop that quickly reverses. No long-term impact.”
  • “I believe the first move will be downward, but after a few weeks, the Dow will increase.”
  • “I think it will be minor. I think [the rate hike] has been talked about enough.”
  • “Little effect if the rate hike is measured, e.g. 0.25%.”
  • “Stocks will pull back as a result of the rate hike.”


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