Happy Hour: Worst Real Estate Investment

The idea of being a landlord doesn’t appeal to me. That’s not to say real estate can’t be a good investment. It can. Like every other type of investing, it takes time to learn which investments work – be it a multi-unit building, condos, commercial property, land, or stocks, bonds, funds, etc. – so you actually make a decent profit over time.

I bring this up because a recent Gallop poll came out showing real estate, of all things, is seen as the best long term investment…again. I guess it’s easier to get over a housing market crash than a stock market crash. Continue Reading…

The Benefit of International Diversification

Keynes QuoteWhat happens if you only invest in the U.S. stock market and it goes no where over a longer period of time, say a lost decade? Your stock allocation, built to grow your money, just failed. Something needs to pick up the slack. And there’s no guarantee your bond allocation will come through.

Enter international stocks.

At first sight, it may not seem like it matters when you compare the long term returns of U.S. stocks (S&P 500), international stocks (MSCI EAFE), and a 50/50 split since 1970. As the table below shows, having a portion of your stock allocation diversified internationally doesn’t improve your returns, but you don’t really lose much either. Continue Reading…

Happy Hour: Impulse Finances

People feel better about their finances. That’s what a recent Gallup poll says. Their bank accounts look fuller. Their retirement accounts look bigger. Their debt feels under control. Their monthly budget has money left over.

A funny thing happens when people feel better about their finances. They’re willing to spend more money then they were in the past. And they buy stuff they want, not need. The feel good nature around money makes it easier to scratch the constant itch to upgrade your lifestyle. Impulse purchases are now on the table. Continue Reading…

What Type Of Investor Are You?

Investor BehaviorThere has been a growing upheaval in investing as we throw out overused theories and reintroduce behavior, redefine risk, and question labels that have been used for decades.

None of this is new. It was simply ignored or written off for decades thanks to a faulty belief in efficient markets. Ben Graham offered up behavior’s role in investing back in 1949 with the story of Mr. Market. Since then, emotion was magically removed from the markets and common sense has brought it back.

Those dark ages weren’t all bad. It brought index funds and low-cost investing to the masses. There’s the tiny issue that masses bring more emotion to the markets, but hey, it’s not perfect.

Still, index funds are another label – index investor and passive investor – used at a time when investing should be simplified. Continue Reading…

Happy Hour: The Rate Question

There’s one question that’s been asked since last year and still hasn’t been answered – when will the Fed raise rates? Nobody has the answer, not even the Fed. Still, we ask the question because when it does happen, it will affect most asset classes.

If you’re living under a rock, interest rates are at all time lows. That’s not a big secret but we’re stuck with this reality…for the moment.

From different angles this is either good or bad news. Continue Reading…