I consider John Bogle to be the father of index investing. And for those who follow this blog, you know that I am a fan of passive investing utilizing index funds.
As founder of the Vanguard Group, Mr. Bogle has built a mammoth investment company over the years.
So when Mr. Bogle speaks, his comments are worth listening to. (more…)
In How to Rebalance an Investment Portfolio, I stated that it is generally preferable to reallocate future acquisitions rather than divesting existing assets to get back to your target asset allocation.
A big reason for this is to defer capital gains taxes payable from selling outperforming assets. The longer you keep your wealth in your possession, the better your compound returns will be. This is a problem when triggering taxes on asset sales. (more…)
Warren Buffet has done exceptionally well as an investor and businessman over the long run.
That said, I do not believe that the average investor can emulate Buffet’s approach.
But Buffet, in his folksy Nebraskan way, does offer some great advice.
This linked article from Business Insider shares 15 of his top short snappers.
A few thoughts from my side on some of the points Buffet makes. (more…)
If you are approaching retirement age, do you have enough capital to retire comfortably?
Or, if you are many years from retirement, do you have a proper investment plan in place? One that will ensure you have adequate retirement funds down the road?
In fact, many people about to retire do not have enough capital saved.
So this is a crucial issue for both older and younger investors. (more…)
In creating an Investment Policy Statement (IPS), you need to conduct a comprehensive investor profile. Who you are as an investor and what you want to achieve.
Part of this requires assessing your current financial situation, as well as investment related objectives and constraints.
But it is also important to factor into your analysis three key variables. These are: investment time horizon; current phase of life-cycle; risk tolerance level.
Let us take a look at these crucial areas . (more…)
But only if you are Canadian.
This Financial Post article discusses Gordon Pape’s book, The Ultimate TFSA Guide.
I strongly recommend taking advantage of the TSFA program if you are a Canadian adult.
Under today’s tax law, I see no downside for investors. Set one up soon.
In Compound Return Investment Lessons, we saw the significant impact taxes and transaction costs have on wealth accumulation.
The more you pay others, the less remains to compound. To maximize returns, you need to minimize expenditures.
In Minimizing Investment Costs – Taxes, we explored ways to reduce the impact of taxes. Today, let us consider how to reduce transaction costs. (more…)
For our American friends, here is a good article comparing a traditional IRA versus a Roth IRA.
My only criticism. The implication that it is only in your 40s and 50s that you need to focus on your retirement savings. As I think we have proved, the impact of compound returns is maximized the earlier you start saving. Perhaps if most baby boomers had begun an IRA when they were in their 20s, they would not be as concerned about retirement as they are in their 40s.
In my post, Compound Return Investment Lessons, we explored how the principle of compounding can impact portfolio returns.
One lesson; by minimizing money spent on taxes and transaction costs, the amount available for reinvestment increases. And it is the reinvested money that is critical to successful compounding.
So what can you do to try and maximize your cash return? Let’s look at reducing taxes first. (more…)
Want to become a millionaire?
Unless you are counting on that big inheritance or playing the lottery every week, your best shot is through investing. (more…)
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