Dividends Aren’t Enough

April 18, 2011

Dividends are a beautiful thing. Last week I wrote about my mother-in-law’s bond fund that paid her a steady stream of dividends over the years – twenty five years to be exact. Every month, the dividend came like clockwork and she spent it. Now she is using the funds to pay for her care – she is 97. This strategy worked for her because she has other funds invested in other types of vehicles. Here is the problem with using the dividend strategy as the only strategy—even if the dividend doesn’t increase, the cost of goods and services do. So the dollar buys less and less each year. Continue reading “Dividends Aren’t Enough”

Dividends Matter

April 11, 2011

I thought about the power of dividends when I worked on my mother-in-law’s taxes. She has been selling off an investment to help pay for her care and as the one who helps her with her taxes, I had to find her basis (what she originally paid for it) to report it on her tax return. She’d owned this mutual fund as long as I’ve known her and that means she has been taking a dividend from it for almost 20 years. When I dug into it, what I found was that she had a loss – her initial investment not only hadn’t grown but was less than she put in. What a disappointment! Continue reading “Dividends Matter”

What and When to Buy – How We Decided to Purchase Our Rental Property

February 17, 2011

The past couple weeks have been a flashback in time for me as I have been providing some basic general principles regarding the purchase of investment property. What I’d like to do this week is to tell you a story about a certain financial professional and his wonderful wife and the lovely discussions they had before they pulled the trigger and bought an investment property.

It was a pleasant time back in those days, two newly married professionals having dinner conversations surrounding things like vacations, the day’s work, retirement, etc. Continue reading “What and When to Buy – How We Decided to Purchase Our Rental Property”

Fact Check Your Investments

January 20, 2011

One of the (many) aspects of my job is being part of our ongoing fact checking process. We are constantly staying on top of the latest in tax law changes that can encompass everything from retirement plan limits to education and estate planning issues. Needless to say we are kept busy! Continue reading “Fact Check Your Investments”

Investments Du Jour – Are They Right for You?

January 13, 2011

Over the holidays I was enjoying a wonderful dinner at my brother-in-law’s house and as is the tradition, a conversation ensued after the meal. It started off innocently enough, a little banter about politics, careers, vacations and of course the inevitable, investments. Now I’ve been involved in a lot of conversations surrounding investments and what my opinion is on the investment du jour. For those of you who frequent my posts, you know that I am a big proponent of sticking to fundamentals in making investment decisions. So, asking me my thoughts on investments will lead to such topics as: what is the worst thing the investment can do and can you live with the outcome? How does the investment fit in your overall portfolio? Do you understand the basics of how the investment works? I certainly understand that the answers to those questions may not be exciting but a solid investment choice doesn’t necessarily need to be exciting to get the end result we hope for. Continue reading “Investments Du Jour – Are They Right for You?”

How Much Investment Education Do I Really Need?

January 06, 2011

I often get asked the best way to learn about investing. It really is quite simple. Just like anything else, if you have even a slight interest in something, you will be more open to learning about that topic. For investing, some people will want to learn everything they can because they aspire to manage their own portfolios at some point. Others will want to know just enough so that they will not be taken advantage of. But, everyone should have at least an understanding of not only what they’re invested in but also why. Continue reading “How Much Investment Education Do I Really Need?”

Investing: Two Paths, One Goal

December 16, 2010

My wife and I recently took our last vacation for the year (boy did we need it). Because of the environment that we were in, it was easy to do some writing. This place – Cabo Pulmo — is off the beaten path, meaning no phones, no internet and no TV, so my wife and I got to spend some quality time bantering with my Dad and step-mom. When we were done with that we also took in some great hiking.

As we were hiking on one of the trails, I came across the inevitable “fork in the road.” Now in hiking, invariably one trail is easier to take, less elevation gain, fewer obstacles, easier on the body, etc. But it takes a longer time to reach the end of the hike. The other trail, more often than not, results in reaching the end quicker but you will climb higher faster and probably run into several obstacles that could also be more dangerous.

As I was hiking, I thought how this trail closely resembles the path(s) of the conservative and aggressive risk tolerance profiles.

The Conservative Investor: They will often have the bulk of their investable assets in cash or cash equivalents. In order to reach a retirement goal, they may have to save a lot more which could take a bit longer, but they won’t have to deal with market fluctuations.

The Aggressive Investor: They may be able to reach their retirement goal sooner due to the potential higher return their investments could earn, BUT they will also have to deal with obstacles such as 2008.

The point here is that much like hiking, there isn’t one right way to reach your goal, just know which path is the right one for you.

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Investment Strategies: Keep it Simple!

December 02, 2010

Recently while my wife and I were on vacation with my Dad and step-mom, he found some time to talk to me about some new behavioral strategies regarding investment strategies. I thought some of the things were interesting, such as taking a personality test to help define possible strengths/weaknesses and delving a bit further into a myriad of investing traits. Continue reading “Investment Strategies: Keep it Simple!”

Do You Have a Retirement Maintenance Issue?

November 18, 2010

The other day I was flying back home from Tennessee when it came to my attention that my flight was being delayed due to a maintenance issue. Now while I find this aggravating, I certainly would prefer getting home in one piece. Amongst the ramblings (and choice “words”) that I overheard, was this statement: “Plane has been sitting here all night and they wait until morning to find this maintenance issue?” I chuckled to myself as I gave the person a polite smile, but then I got to thinking… Continue reading “Do You Have a Retirement Maintenance Issue?”