Hey kids, if you want to make a million dollars, start early and save ‘til it hurts. Here's a guide from Fidelity Viewpoints: There's a well-blazed trail to the million-dollar mark and beyond. Normal people do it every day. It doesn't take entrepreneurial genius, investment wizardry, or wealthy relatives. The secret is that it's not a secret at all. It's mostly about dedication and commitment to your goals. "Be patient," says Ryan Viktorin, CFP®, vice president and financial consultant at Fidelity's Investor Center in Framingham, Massachusetts. "It can happen over time with a consistent, … [Read more...]
What the Fed Rate Cut Means to You: Part III
With the return on cash and money markets coming down, expect investors to look for ways to replace the juicy yields they’ve become accustomed to. Don’t blame the weatherman for the weather—invest for the safety you deserve. Understand that returns on cash will be lower but not terrible—at least not yet. But if the Fed gets its way and cuts down the forest of short-term rates, you want to be prepared. Action Line: There are still yields you can sink your teeth into. Get your lazy cash off the couch and put it to work. The hard part is beating inertia and acting. When you’re ready to … [Read more...]
If It Sounds Too Good to Be True
Now that the Fed has begun its crusade on cash returns, beware of the hucksters looking to separate you from your money. Jason Zweig offers a cautionary tale in The Wall Street Journal, writing: Until you try to solve a financial puzzle, you never know how many levels it can have. In a column published Aug. 30, I highlighted a peculiar investment called the Mega High-Yield Term Deposit, which claimed to offer up to a 15% guaranteed annual return for 10 years. With the Federal Reserve’s rate cut on investors’ minds, high returns have become even more tempting than usual, so I dug in to … [Read more...]
What the Fed Rate Cut Means to You: Part II
Remember when former Fed Chair Alan Greenspan was referred to as “The Maestro” conducting the economy to a soft landing during the 90s? The only problem was when the music stopped, like it did during the Tech Bust earlier this century, hopes and dreams were crushed. The Maestro’s symphony could have been titled “This Time It’s Different,” lulling its listeners like the Pied Piper right up until the last movement that could have been subtitled “Turns Out, Not So Much.” Today, plenty of talking heads are cheering conductor Powell’s rate cut, but what if investors continue bidding … [Read more...]
Remember Dick Young’s Retirement Compounders?
As I mentioned to you here, I did a recent study on dividend-oriented mutual funds. Action Line: If you remember Dick Young’s Retirement Compounders, you know how much he favors dividend-paying stocks where you own the stocks in your brokerage or IRA portfolio, not in a mutual fund. If you like what you see, email me here: ejsmith@yoursurvivalguy.com, and let’s talk. But only if you’re serious. … [Read more...]
What the Fed Rate Cut Means to You
Remember when the talking heads said to stay away from bonds? That the balanced approach was dead? Well, they were wrong. Not that I’m taking a victory lap, I’m not. Because now that the Fed has cut interest rates by a half point, fixed income investing just got that much harder. All those eschewing bonds this year and last may wish they had some maturities beyond the 6-month CDs that now, overnight, will be less appealing. But that’s not why you’re here. You want to know what this rate cut means to you. I’ll tell you. It means you better be prepared for the onslaught of ads selling … [Read more...]
Fidelity Investments: Safeguarding Your Accounts
Within Fidelity's excess of SIPC coverage, there is no per-customer dollar limit on coverage of securities, but there is a per-customer limit of $1.9 million on coverage of cash awaiting investment. This is the maximum excess of SIPC protection currently available in the brokerage industry. What is SIPC? The Securities Investor Protection Corporation (SIPC) is a nonprofit organization that protects stocks, bonds, and other securities in case a brokerage firm goes bankrupt and assets are missing. The SIPC will cover up to $500,000 in securities, including a $250,000 limit for cash held … [Read more...]
Are You Working with a Fiduciary?
Are you working with a fiduciary? How would you know? You should ask. Here's what it means to be a fiduciary from Fidelity: The fiduciary rule is a regulation underpinning fiduciary duty, or the legal requirement for financial advisors to work in their customers’ best interest. Issued by the U.S Department of Labor, the fiduciary rule is meant to save ordinary Americans billions of dollars by regulating the types of actions fiduciaries can perform. A fiduciary is someone tasked with overseeing someone’s asset investment. In the U.S. fiduciaries are bound by law to apply the highest … [Read more...]
Interest Rates Your Dad Would Be Proud Of
America’s debt load is the highest it’s been since the post-WWII era. Look at the interest costs to carry all that debt in the chart below, and imagine you had such a personal debt load. Wouldn’t you want to reduce it? Of course, you would. Now, throw in the fact that the government can print its own money, create it out of thin air, and set its own interest rate level, and it’s obvious it benefits from lower rates. It kicks the can down the road for politicians to pretend they’re serious, and yet they do nothing about it. Look at the debt being accumulated. A gold standard would … [Read more...]
The Size of the Fed’s Bond Holdings
When interest rates decline, bond prices increase. Now you see one of the motivations for the Fed and the federal government to cut rates. It increases the value of the Fed's bonds and reduces the payments on interest for new borrowing to finance the government’s debt. Action Line: Click here to subscribe to my free monthly Survive & Thrive letter. … [Read more...]
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