FVIM's Insights

News and information about preserving your life savings

Dividend-Paying Stocks and Other Mental Math Tricks

We hear this one a lot: Preserve your principal and live off of the proceeds in retirement . When interest rates disappoint, this often translates into investing in dividend-paying stocks instead. Unfortunately, while a focus on dividend stocks may be a common denominator found in many retirees’ investment equations, the logic doesn’t quite add up. Let’s go over why this is so, and why there may be better ways to both preserve and enjoy your total wealth. Money = Money It’s true that the notion of “principal” versus “interest” versus “dividends” can make for convenient mental accounting when managing your money....
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4279 Hits

Fed Forecasts and Investor Mishaps

The can-do spirit dies hard in us Americans, and usually that’s a good thing. But when applied to investing, active energy is less advisable, especially if it involves trying to outsmart the market by chasing expert forecasts. Hopefully, you’ve already figured out that you’re best off ignoring the garden-variety talking heads like Jim Cramer and his ilk as more flash than substance. But what about those super-powered Federal Reserve chairmen and chairwomen? If anyone could see what’s coming in the market, shouldn’t it be they, who not only have their finger on the pulse but are actually responsible for regulating the...
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2910 Hits

Can You Handle the Truth About Tracking Error?

To a point, I'm glad that the current market climate (at least as we write) has caused some investors' globally diversified portfolios to underperform the familiar S&P 500 Index this year. Why might this make me happy? It could be the best, "tough love" learning experience ever if you can handle the truth, which is as follows: The difference between planning for the atypical market risk inherent to diversified investing and experiencing the actual pain when it occurs reminds me of a quote from heavyweight champion Mike Tyson (who certainly knows his way around pain): "Everybody has a plan until they...
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3178 Hits

Mass Market-Timing Mania

Scanning The Wall Street Journal just after the recent quarter-end market dip, the following title caught my eye: "Bad Stock-Market Timing Fueled Wealth Disparity." Speaking of a gap between the haves and the have-nots, you've got to have a paid subscription to read the complete article. But even the teaser is intriguing: "Millions of Americans inadvertently made a classic investment [market-timing] mistake that contributed to today's widening economic inequality: They bought high and sold low." Considering issues related to the rich getting richer and the poor getting poorer can put a financial advisor on thin ice. But what is a blog...
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3234 Hits