February 5, 2012

The Kennon Retirement Insurance Plan

Retirement Insurance Plan

One of the Things That Helped Me ... From time to time, you may come across reference to my "stupidity" insurance or my "reserve" fund.  I've had a bunch of readers write me over the years and ask about various comments I've made so I thought it might be useful to explain it.  My parents, siblings, and Aunt Donna have always known about my investing but virtually no one else did when I was a child (by the time I got into high school, though, it was all I talked about so hiding it was no … [Read more...]

Tweedy, Browne Value Investing

Tweedy Browne The Little Book of Value Investing

For years, my family has maintained a substantial portion of our retirement accounts through Tweedy, Browne & Company, the oldest value investing firm in the world. Originally serving as stock broker to the father of value investing, Benjamin Graham, Tweedy, Browne & Company converted to a money management company and eventually launched several highly successful mutual funds that operated with the same value investing style for which they had become renowned.  After beating the … [Read more...]

Common Misconceptions About Dollar Cost Averaging

Dollar Cost Averaging Investing Strategy Stock Market

It is a common misconception that dollar cost averaging is merely the regular saving of money through automatic investment.  Technically, this is not dollar cost averaging, although it closely resembles it.  Instead, dollar cost averaging is the regular investing of a fixed amount of money as opposed to putting it in to the market in a lump sum.  If you were to win the lottery, receive a pension lump sum payout, or cash out of a real estate investment, dollar cost averaging would mean you … [Read more...]

How Investors Who Practiced Dollar Cost Averaging Were Richer Within Only 2 Years of the Credit Crisis Meltdown

Dollar Cost Averaging Your Retirement Account

Citing data provided by Vanguard, one of the premier mutual fund and 401(k) providers in the world, The New York Times recently reported that 60 percent of 401(k) accounts now have more money in them than they did before the stock market crash and worst recession since the Great Depression began two years ago. That may not seem possible given that the Dow Jones Industrial Average collapsed from 14,000+ to 6,000 and has only made its way back up to 10,000.  For those who know how dollar cost … [Read more...]

The Basics of Dollar Cost Averaging

Dollar Cost Averaging Stock Investments

Dollar cost averaging is an investing technique that can lower your risk, increase your profits, make market volatility less emotionally painful, and help put you on the road to financial independence.  When combined with asset allocation, it's a nearly unstoppable force that can grow your wealth far beyond what you ever imagined.  This guide to dollar cost averaging for new investors was created to explain why this technique works and how you can implement it into your own portfolio. What … [Read more...]

Tactical Asset Allocation and Your Portfolio

Tactical Asset Allocation Investing

Tactical Asset Allocation vs. Value Investing The difference between tactical asset allocation portfolio management and value investing is that tactical asset allocation only seeks to find undervalued asset classes - not individual securities or investments. That is important.  An investor that is using a tactical asset allocation approach may look at stocks, bonds, real estate, gold, oil, and fine art.  He may then decide when real estate prices are more expensive relative to gold prices … [Read more...]

International Asset Allocation 101

British Pound Sterling Banknotes

Most growth asset allocation model portfolios call for exposure to the international asset class. In fact, in the article Factor In Your Income Sources When Seeking Diversification, I explained that one of the ways my own family reduced the risk involved with having such a big part of our net worth invested in private businesses involved in domestic manufacturing was to park almost all of our retirement assets and plans in international stocks, bonds, mutual funds and real estate. What does … [Read more...]

Passive Income Asset Allocation Model Portfolio

Passive Income Portfolio Asset Allocation Model

Asset allocation models designed to generate passive income for investors remain among the most popular of all time because everyone wants to be able to live off their money.  Whether you are retired and need to augment your Social Security income, or you are wealthy and want to generate passive income without touching your principal, this asset allocation model may be a viable solution to your investing needs. Asset Classes in a Passive Income Asset Allocation Model The most popular asset … [Read more...]

Use ETFs to Make Asset Allocation Investing Even Better

ETFs Are Great for Asset Allocation

ETFs, or exchange traded funds, are like mutual funds only they trade on the open market as if they were stocks.  (I've written about them over at Investing for Beginners many, many times.)  This means ETFs can be shorted, or fall above or below the net asset value, unlike a traditional open-ended mutual fund.  ETFs often have very low cost structures and allow you to acquire very broad diversification for the cost of a brokerage commission, which is often below $10 today at most national … [Read more...]