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What Happens When You Fail at Market Timing

The impact of missing just a few of the market’s best days can be profound, as this look at a hypothetical investment in the stocks that make up the S&P 500 Index shows. A hypothetical $1,000 turns into $138,908 from 1970 through the end of August 2019. Miss the S&P 500’s five best days and that’s $90,171. Miss the 25 best days and the return dwindles to $32,763. There’s no proven way to time the market—targeting the best days or
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It’s Open Enrollment Season. Have You Taken a Good Look at an HSA?

For high-income investors who are maxing out other tax-sheltered accounts, the high-deductible healthcare plan/HSA combo is close to a no-brainer. In one of the biggest changes to employee benefits in decades, high-deductible healthcare plans are appearing on more and more benefits menus, and these plans are experiencing dramatic growth in enrollment as a result. Thirty percent of workers were covered by a HDHP in 2019, according to data from the Kaiser Family Foundation; in 2014 20% of workers were covered by
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Value Judgments: Viewing the Premium’s Performance Through History’s Lens

There’s a misconception in the markets: value stocks have lost their vigor. Value stocks have underperformed growth stocks over the past decade. In the US, the annualized compound return has been 12.9% for value stocks, or those trading at a low price relative to their book value. That contrasts with 16.3% annualized compound return for growth stocks, or those with a high relative price.1 LESSONS OF THE PAST Value underperforming growth by 3.4 percentage points a year over a decade is indeed
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3 Steps to Protect Your Financial Identity

Beginning in 2016, the United States Department of Homeland Security (DHS) has designated every October Nation Cybersecurity Awareness Month (NCSAM), in an effort to raise awareness of safer online activities. Here are 3 simple steps to protect your financial identity: Prevent Prevent criminals from obtaining confidential information by taking the following steps: Freeze your own Social Security number, plus have others within your span of care (spouse or partner, children, elderly parents) do the same. Store financial documents in a
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A Tale of Two Decades: Lessons for Long‑Term Investors

The first decade of the 21st century, and the second one that’s drawing to a close, have reinforced for investors some timeless market lessons: Returns can vary sharply from one period to another. Holding a broadly diversified portfolio can help smooth out the swings. And focusing on known drivers of higher expected returns can increase the potential for long-term success. Having a sound strategy built on those principles—and sticking to it through good times and bad—can be a rewarding investment
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Why Dismissing Social Security in Your Retirement Plan Is a Mistake

When the subject of Social Security comes up during retirement planning conversations, both younger and older investors often greet it with a healthy dose of cynicism. Such discussions tend to include comments like, “Oh yeah, sure. If there’s even anything left for me” or “Isn’t Social Security going bankrupt?” Sometimes I hear a more draconian stance, like, “I just plan on it not being around when I’m retired.” This last viewpoint actually is quite common. According to a study by AARP,
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Invest in the S&P 500 and forget it? Hope you have a strong stomach!

Invest in the S&P 500 and forget it: Every so often, this advice becomes more and more popular from the media and well-intended TV personalities with the intent to simplify investment management. I’m a huge fan of simplifying; however, this advice can also be misleading, dangerous, and rob you of proven and disciplined long-term opportunities. Why is this so popular now? It just so happens that over the past 10 years, the S&P 500, which we show as Asset Class
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Why Is Inflation So Low? (And What to Do About It)

Ronald Reagan famously described inflation as being “as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” While the inflation experienced under President Reagan was all those things, inflation over the past decade would struggle to get a ticket for jaywalking. Since the global financial crisis of 2008 and 2009, inflation has been low. The Federal Reserve, the government agency responsible for keeping unemployment down and prices stable, has been formally targeting a
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Timing Isn’t Everything

Over the course of a summer, it’s not unusual for the stock market to be a topic of conversation at barbecues or other social gatherings. A neighbor or relative might ask about which investments are good at the moment. The lure of getting in at the right time or avoiding the next downturn may tempt even disciplined, long-term investors. The reality of successfully timing markets, however, isn’t as straightforward as it sounds. OUTGUESSING THE MARKET IS DIFFICULT Attempting to buy
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The Randomness of Global Equity Returns

Investment opportunities exist all around the globe. Across more than 40 countries, there are over 15,000 publicly traded companies. If you listen to the news, however, some countries may seem like better places to invest than others based on how their economies and stock markets are doing at the time. Fluctuations in performance from year to year only add to the complexity, providing little useful information about future returns. Daunted by the prospects of sorting it out, some investors look
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