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Investing Blog Roundup: Beating TIPS Yields with I Bonds

While I Bonds aren’t exactly a secret, they don’t get the amount of coverage they deserve — especially in an interest rate environment such as today’s in which yields on the other type of inflation-adjusted bonds (TIPS) are negative, even all the way out to 30-year maturities.

Presumably, that lack of discussion is for a combination of reasons. Nobody makes any money promoting I Bonds. There are no mutual funds that own them. There’s an annual purchase limit. And a lot of people don’t really like dealing with TreasuryDirect.

But as Harry Sit points out, there’s one easy way to buy some I Bonds each year:

Recommended Reading

Thanks for reading!

Investing Blog Roundup: What’s Next?

It’s been one heck of a week, to follow what was, by any measure, one heck of a year.

In finance, one thing you eventually have to accept is that it’s impossible to predict what’s going to happen next. Lots of events look obvious, in hindsight. But lots of potential events that didn’t happen would have looked obvious in hindsight as well.

That feeling — unsure what’s about to happen, recognizing that some of the potential outcomes are dramatically different than other potential outcomes — feels particularly acute right now.

As always, thank you for reading, and I wish you well.

Recommended Reading

Investing Blog Roundup: Rich as I Say, Not as I Do

This week I particularly enjoyed an article from Nick Maggiulli pointing out something that’s not frequently mentioned about personal finance experts:

“Many of them have gotten wealthy by selling advice to others rather than by using their own advice. […] The people telling you how to build wealth did not, in fact, build their wealth in that same way.”

Other Recommended Reading

Thanks for reading, and Happy New Year!

I wish you happiness and health in 2021.

Investing Blog Roundup: How America Invests

For many years, Vanguard has published an annual study (“How America Saves“) that looks at investor behavior within employer-sponsored plans. Last week, Vanguard released a new study: “How America Invests,” which looked at the portfolios and transactions of Vanguard clients in more than 5 million retail households from 2015 through the first quarter of 2020.

There’s a lot of material, but one thing that strikes me — and which is in keeping with the data from the annual employer-plan studies — is that individual investors (at least, those who are Vanguard clients) aren’t the dummies they’re often made out to be.

For instance, most Vanguard clients don’t jump in and out of the stock market at inopportune times, because most Vanguard clients don’t really do very much at all, other than simply buy more of whatever it is that they already own (which happens to be quite a good investment strategy, in my opinion, hence the name of this blog).

Here’s one such piece of data:

Fewer than one-quarter of Vanguard households trade in any given year, and those that do typically only trade twice. [Mike’s note: they’re defining trading here as moving money from one investment option to another within an account.] Most traders’ behavior is consistent with rebalancing or is professionally advised. […] Twenty-two percent of households traded in the first half of 2020—a rate typical of trading for a full calendar year. Despite the increase in trading, less than 1% of households abandoned equities completely during the downturn, while just over 1% traded to extremely aggressive portfolios. The net result of the portfolio and market changes was a modest reduction in the average household equity allocation, from 63% to 62%.

Other Recommended Reading

Thanks for reading!

Investing Blog Roundup: How to Make Your 401(k) Pay as Much as a Pension

In the realm of personal finance, far too much attention is paid to investing — with the implicit idea that if you find just the right mutual funds, just the right asset allocation, and just the right plan for rebalancing, you’ll be sure to meet your goals.

In reality, none of those things matter very much, unless you have a sufficiently high savings rate (or, in the case of a retiree, a sufficiently low spending rate).

Recommended Reading

Thanks for reading!

Investing Blog Roundup: Portfolio Makeovers

If you’ve hung out on the Bogleheads forum very much, you’ve surely seen plenty of discussions in which a person comes in with a mess of a portfolio and forum members provide suggestions for how to clean it up: changes that would improve diversification, reduce costs, simplify, etc.

This week Morningstar is publishing a similar series from Christine Benz — providing portfolio makeovers for people in a range of circumstances.

Recommended Reading

Thanks for reading!

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