Pick Your Muni Funds Carefully

All eyes are on the municipal bond market given the potential for higher income taxes and a growing number of defaults in the public sector. Given the uncertainty, an ideal way to capture the sector is with the right mutual fund. However, selecting a fund is more than choosing the one with the highest yield. [...]

Anything But Market Timing

There are many definitions of market timing. Some are broad and some are narrow. Mine is broad. I believe market timing occurs when an investment decision is made based on a market prediction. That pretty much covers it all. The phrase market timing tends to have a negative connotation, so the investment industry covers it [...]

The Five Dimensions of Risk

There are five basic risk dimensions in stock and bond investing, according to research. How you arrange these risks will determine overall portfolio risk. Understanding what these five risks are is the first step toward building a diversified portfolio around them. In 1993, Eugene Fama and Ken French defined five common risk factors that explained [...]

The Yield Trap

Bond returns depend upon the purchase price, yield at the time of purchase and sale price. The rest is math. Unfortunately, investors often struggle with which “yield” to use when trying to compare investments. There are many, and using the wrong yield may yield disappointing results. Jason Zweig’s recent Wall Street Journal article, High Rates? [...]

Don’t Procrastinate Switching to Index Funds

2012 is the year to change your investment strategy to a low-cost, low-tax, index fund approach. This method provides the highest probability for meeting your long-term financial goals. It may cost you more in taxes to switch if you procrastinate until 2013. We won’t know how much more until December, but odds are very good [...]