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Tag: Behavioral Finance

Things to Think About Before Deciding to Payoff a Mortgage Early

Posted on: August 20, 2018| Behavioral Finance, Major Financial Decisions,

Many view debt-free homeownership as an important step on the journey to financial freedom and, eventually, a successful retirement. As housing costs increase across the country, particularly in and around major cities, being able to live in your home while only paying tax and insurance can go a long way toward keeping monthly expenses manageable. […]

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Fixed Income Investing in an Era of Rising Interest Rates

Posted on: March 29, 2018| Behavioral Finance, Investment Decisions,

Let’s talk about bonds for a minute. Occasionally, we get asked about what the future prospects are for bond investors. Sometimes with the implication being: “Should I be invested in bonds at all?” For the past decade, we’ve lived in a very low interest rate environment, relative to historical averages. (Click charts below to enlarge) […]

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Recent Market Volatility

Posted on: February 9, 2018| Behavioral Finance, Investment Decisions,

It’s been grizzly out there. Times like these give me a chance to share my absolute favorite quote about markets. From Bill Bernstein’s book, he recalls how investor Ralph Wagoner explained markets: “He likens the market to an excitable dog on a rather long leash in New York City, darting randomly in every direction. The […]

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How to Handle a Large Inheritance, Settlement, or Windfall

Posted on: March 30, 2017| Behavioral Finance,

Rapidly advancing from rags to riches, or riches to… far more riches, is obviously exciting. However, the improper management of this wealth can be detrimental. You don’t have to look hard to find stories about how athletes, lottery winners, inventors, or estate beneficiaries have gone broke despite coming into enormous wealth. An inheritance or windfall […]

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Morningstar Star Ratings – What is a Five-Star Fund?

Posted on: March 9, 2017| Behavioral Finance, Investment Decisions,

I had an interesting conversation with someone who was asking about the mutual funds we employ. Specifically, he asked if we use “Five-star mutual funds”. I probably shouldn’t have been surprised, based on how ubiquitous Morningstar is for investment research, but I had never been asked about Morningstar Star Ratings before. In the world of […]

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The Your Age in Bonds Rule for Portfolio Allocation Might Be Hurting Your Retirement

Posted on: February 16, 2017| Behavioral Finance, Investment Decisions,

Rules of thumb are common in the investment world. There’s the “rule of 72”, which gives us an idea of how often money will double. The safe retirement withdrawal rate lets us know how much we can “safely” draw from retirement portfolios without significant risk of long-term depletion. Finally, there is the your age in […]

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Explaining Diversification and Why We Do It

Posted on: December 1, 2016| Behavioral Finance, Investment Decisions,

Diversification is hailed as “the only free lunch on Wall Street”, based on the famous quote by Harry Markowitz. Some of us accept this as a fact and take a diversified approach to our portfolios. Then, a stock our buddy picked quadruples its value or the S&P 500 outperforms other asset classes over a multi-year […]

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The Pros and Cons of Getting a Store Credit Card

Posted on: November 17, 2016| Behavioral Finance, Budgeting,

With Black Friday approaching, many consumers are looking for ways to save a bit of money on their holiday purchases. Inevitably, a lot of people have the idea to open that store credit card that promises to save them 20% on today’s purchase. It’s free money, right? Not exactly. If you’ve been here before, you’ll […]

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