The Argument For International Stocks

International Stocks Annual Returns BreakdownInternational stocks are a great way to diversify away from the U.S. But when a home country bias is alive and well, it’s easy to ignore everything else. U.S. stocks have performed admirably in the past, but international stocks have too.

Since 1970, the S&P 500 performed at a 10.40% annual clip (with dividends). Did you know that during that same time, international stocks practically matched it?

You can try to hand-pick countries based on expected returns or go with a basket of countries that captures all that missed opportunity. The tables below show how international stock returns breakdown. Hopefully, it makes the argument to stop ignoring the big opportunity outside the U.S. Continue Reading…

Look Beyond Dividends To Shareholder Yield

Shareholder YieldDividends are the easiest way to return money to shareholders. This draw a big enough following that there’s a label for it – dividend investing. For investors who proudly wear that label, I’d argue you should look for companies with a different type of yield appropriately called shareholder yield.

For me, a dividend is a nice addition to a great investment not a prerequisite. If you’re searching for great companies, there’s a good chance you’ll find one that pays a dividend now or down the road, because good companies deal with the same question eventually.

What To Do With All That Cash?

Just like people, some companies are better at managing money than others. Those that do it best use the five tools below to efficiently increase shareholder value: Continue Reading…

Index Fund Vs ETF: Does It Matter?

Index Fund vs ETF BattleGiven the choice between two funds – an index fund vs ETF – that meet the same goal, costs are a big deciding factor. The same principle works for the active vs index argument too. Why pay more for something when you get the same results for less somewhere else.

I think we can agree low costs matter. Once you decide on an all index portfolio, the next step is picking between similar index funds and ETFs. Both do the same thing, for the most part. So is one better than the other? Are there other factors to consider?

Index Fund vs ETFs Cost Debate

There are a number of ways to build a portfolio. For this exercise let’s use a sampling of asset classes to build two portfolios around – one with index funds and the other with ETFs. Continue Reading…

Wild West Investing In Frontier Markets

Frontier MarketsTales of the wild west were a glamorized version of reality. Stories told of great wealth of land and opportunity, but forgot to mention the hardship, the risks. Frontier markets are much the same.

Frontier markets are a subset of emerging markets. It’s made up of countries in the very early stages of economic development. But it also includes countries with limited stock markets (small number of stocks, shares, and market cap) and small economic footprints. In total, frontier markets make up a sliver of the global market value. Continue Reading…

Major Stock Market Indexes You Should Know

stock market indexesWhen you invest in funds, knowing the different stock market indexes is key to building a portfolio and tracking its performance. There are two basic reasons why you should know what each index measures:

  • to know how an index fund invests
  • to make a performance comparison

This is because you’re either invested in index funds or picking mutual funds that try to beat an index.

The first point is fairly straight forward. To better understand how an index fund works, just research the index it tracks.

The index tells you the type of stocks in the fund and how the fund invests based on the rules laid out. Just knowing those two things should give you a good idea if it fits in your portfolio or not. Continue Reading…