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AGG vs TLT
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The S&P 500 is a reasonable choice for the stock portion of your asset allocation, but where to invest the bond portion of your portfolio. Below is a table with 20 year performance and volatility for 2 bond ETFs and the S&P 500 ETF. There are significant differences between the 2 bond funds, one is […]
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Bonds vs Cash
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Investing in the broad based US investment grade bond market is easily done with ETFs. Here are the performance figures for the 2 largest index based bond ETFs, AGG and BND, with a money market fund for comparison. ETF ExpenseRatio CurrentYield 1-yearreturn 3-yearreturn 5-yearreturn 10-yearreturn AGG – iShares Core US Bond 0.03% 3.41% -1.45% -3.53% […]
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Asset Allocation vs Stock Selection
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Assets are stocks, bonds, and cash. According to the 1986 landmark study “Determinants of Portfolio Performance” (Brinson, Hood, Beebower), 93.6% of a portfolios return variability was due to asset allocation, not stock selection or market timing. There is still debate on whether asset allocation should be fixed over time (static asset allocation) or should change […]
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Net Worth
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The Federal Reserve collects information about family finances every three years, the last survey was completed in 2022. Median (midpoint, not average) net worth surged 37% to $192,900 and mean (average) net worth increased 23% to $1,063,700. Retirement accounts were held by 54.3% of families with a median value of $86,900 and a mean value […]
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Great Bond Bull Market
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In September 1981, the 10-year US Treasury Bond yield peaked at over 15%. Over the next 39 years, from 1981 to 2020, yields declined leading to an increase in prices, the likes of which has never been seen before. Since the first half of 2020, yields have risen to a level not seen in15 years. […]
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Diversification
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Diversifying into multiple asset classes reduces risk/volatility, but may also limit overall performance. Some argue that 2 asset classes, stocks and bonds, is enough diversification, while others believe more is better and recommend diversifying into other subclasses such as gold, commodities, real estate, and international markets. These other subclasses generally have higher expense ratios, which […]
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History of Investing
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The New York Stock Exchange was formed in 1792 with the Buttonwood Agreement. There were only 30 stocks and bonds traded on a daily basis. By the end of the Civil War the number was up to 300. The stock ticker was introduced in 1867 allowing market information to be transmitted across the US. 1878 […]
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Index ETF vs Mutual Fund vs SMA
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There are many ways to invest in any individual asset category. They all have different expenses, returns, complexities, risks, and tax consequences. In the stock asset category, investing in individual company stocks, chosen by you and your financial advisor, is uncommon due to complexity, increased risk, and time required. Most advisors recommend investing in a […]
