To follow up on last week’s question, let me now say that annuities DO in fact, have their place. To cut through all the complexity, the most important single reason to invest in an annuity is to protect you from outliving your assets. “Outliving your assets” is not a meaningful concern for those who have Read more »
When Is it Definitely NOT Appropriate to Purchase an Annuity?
Dear Less: My wife and I are 55 and 53 respectively, and we have $160K and $220K (also respectively) in 401K plans currently sitting in accounts at [firm name removed] (a lady my Mother-In-Law recommended). We consolidated 3 plans into 2, and I am trying to determine if annuities are a good way to go Read more »
An All-TIPS Retirement Savings Portfolio?
Question: I’m curious how you might evaluate the thinking of Zvi Bodie, who notes, in this link, that 100% of the money he is setting aside for retirement is held in treasury-inflation-protected securities, and that all of one’s income needs for retirement be comprised essentially of social security plus TIPS in an IRA account. The Read more »
Is 295 Stocks Enough Diversification?
Question: ACWV has only 295 holdings. How can this be a truly global, highly diversified fund? Thanks. Answer: I like the way you think. The greatest danger in equity investing is inadequate diversification, and I’d much rather someone be overdiversified than underdiversified. I’m also not going to fight to the death on this one, since Read more »
What about Dividend-Growth Investing?
Question: May I ask what your opinion is re “dividend growth investing”? The angle that attracts me is that if one could get by on the dividends alone (in addition to Social Security, pension, etc.), you would not be forced to sell assets to live on during a down market. As such that would constitute Read more »
What Is a Good Diversification Strategy for Bonds?
Question: Andrew Tobias said to “Ask Less” the money questions. OK, here’s mine. Is the following a good diversification strategy for bond holdings: 50% total bond index, 50% intermediate bond index? Many bond funds mirror the Barclays U.S. Aggregate Bond index. However, supposedly around 75 percent of the index tracks government securities or other types Read more »
Are Commodity Futures a Good Hedge?
Question: I’ve been holding PCRDX since 2006 in a tax-sheltered account. How have I done? What are your current thoughts on commodities? Answer: PCRDX is the PIMCO Commodity Real Return Strategy Fund, which uses Treasury Inflation Protected Securities (TIPS) as collateral for a 100% long investment in a basket of commodity futures. Depending on when Read more »
How Much Better Is Alternative Weighting of Stock Indexes?
Question: Can you review the research on market weighting vs. equal weighting vs. fundamental weighting? What might be the long-term advantage in return for one method vs. another (or, to put it another way, how much can I expect to lose if I chose the wrong method)? Answer: My primary reason for preferring the use Read more »