Currently, rates in the fixed income market are very low. As of September 13, the yield on the five-year Treasury note was close to 1.5 percent. In a low-rate environment in particular, it is critical to understand the differences between and the concepts of coupon rate, yield and expected return on fixed income securities.
We believe that an educated investor is a better investor; and even with a well designed financial plan, investors are constantly receiving mixed messages from numerous places. With that in mind, starting today we’ll publish weekly updates with articles from various sources to help you make more informed investment decisions and to ignore the noise that surrounds the investment world.
One of our goals at Lauterbach Financial Advisors is to keep you informed about changes that may affect your accounts. To that end, we want to inform you of a change in IRS reporting requirements for Form 1099-B that begins in 2011.
The 2011 1099-Bs that you will receive in early 2012 from any custodian (for example, Schwab, Fidelity or TD Ameritrade) will report the cost basis and gain or loss on the sale of equity securities. This applies to equity securities that were purchased in your account after December 31, 2010 and then sold on or before December 31, 2011.
Some of our custodians will soon begin to publicize this topic via supplements included in your monthly statements. We are working closely with them and from time to time will provide you with more information on these changes. If you have any questions, please contact us.
One of the most common questions at the beginning of the financial planning process from prospects in El Paso and elsewhere is: what are your favorite stock picks? Our response is that stock picking or market timing doesn’t work, and we’re backed by decades of research. However, the hype and noise of Wall Street keep trying to persuade investors by pouring millions of dollars a year in advertising to showcase their “super star” managers and their latest “hot” stock picks.
Here’s further evidence that supports our belief that active management doesn’t work.
The media continues to be focused on budget and pension obligation problems within the municipal bond market. However, it is important to remember that default risk has been incredibly small in the municipal market. The following provides our take on the municipal bond market.
With all the news and fears about inflation and deflation, along with the possibility of rising interest rates and current market conditions, Jon Sonnen discusses with Larry Swedroe some ideas on how investors should focus their fixed income allocation. The discussion continues with the benefits of passive over active management in equity and fixed income portfolios.
You’re ready to retire and have paid a lot into the Social Security system. Now that you’re finally eligible for benefits, your advisor and other experts might be saying, “Not yet!” Why should you have to wait any longer?
Investors are faced with a perfect storm of information overload, human emotions and market volatility. Following is a discussion of those threats to investors’ portfolios and a way to avoid the storm.
We just added two articles to our article library:
The Risks of Fixed Income Investing
Current State of the Municipal Bond Market
You may download them directly from our article library.