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The BlueCollarDollar was designed as personal finance center where
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Order your copy of Building Wealth in a Paycheck-to-Paycheck World by Paul Petillo. It is packed with safe, proven wealth-building strategies that cover all the major components of a balanced financial plan, including:
- Straight talk on mutual funds, bonds, real estate, and annuities
- Techniques for avoiding financial disasters
- Tools to help readers track their debt and create a plan for staying out of it
- Road maps to buying a home and saving for college and retirement
Head Smart Investing
Does Size Matter?
It is often thought that size is better. If you are small, you have a greater perceived agility and are able to move quickly. This agility created a small cap effect, and gave the appearance of better performance than their large cap brethren.
more...
Hidden Fees
It is absolutely amazing. No matter how much the mutual fund industry tries to reinvent themselves as the friendliest investment vehicle for small investors, there seems to be an ongoing attempt at making it harder and more difficult to not only compare funds but to also assess their overall costs. What is a simple investor to do? We have uncovered some outrageous fees at the very fund family who championed low costs.
Focus on Risk
It is important to remember that volatility tells us nothing about risk, amounting to a statistic that is more probability than fact. The real risk, according to Robert Jeffery is "in holding a portfolio that might not provide its owner...with the cash he requires to make essential outlays."
On a Scale of One to Ten
Mutual Fund Rank of Risk |
| Growth Stock | | | 10 |
| Sector Investing | | | 9.5 |
| Exchange Traded | | | 9.3 |
| Index (Domestic Equity) | | |
6.9 |
| Index (US Diversified) | | |
6.7 |
| Value Stock | | |
6.5 |
| Balanced | | |
5.5 |
| High Yield Bond | | |
4.5 |
| High Grade Corporate Bond | | |
3 |
| Index (Bond) | | |
3 |
| Government Bonds | | |
2.8 |
| Short Term Bond | | |
1.9 |
| Money Market | | |
1 |
Indexing Opportunity
Long relegated to the category of boring, these passive, usually inexpensive investments have found their niche among investors. Investors whose concerns for their accumulated wealth, or simply, their conservative attitude toward the whole idea of preparing for the future, has lead them to look for indexed funds to keep their money involved in the market, but spread among many stocks or bonds.
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Hot
Topics
New to the BlueCollarDollar
All indexes are the same? True or False.
In all likelihood, this year will suffer the same fate as the previous two have, finding itself classified as a loser from a return standpoint. Should you abandon dollar cost averaging in an effort to save you from any further losses?True or False.
Originally allowed back in the 1980s by the SEC, in some mutual funds they have become a permanent fixture. Are 12b-1 fees necessary for the operational profitability of a fund? True or False.
Performance can often mean not losing as much. Four years ago, that would have meant you were getting strange looks from friends, family and co-workers. Has that statement finally come to pass?
True or False
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Buy and Hold
The chart above shows how a longer term strategy will outplay the markets
Stocks and the equity funds that hold them will always go up if held long enough. Recent downturns in the market have not been so outlandish as to cause concern if you look at figures dating back to the late twenties. The average return annualized over that period was 11.3% and this despite the wide range of returns during that period for the S&P500 from a minus 9% to a plus side number slightly greater than 31%. This range was most active during almost 65% of the time. I arrived at these figures using the mean and subtracting the annualized return from those years. For example, if you took 11.3%, which is the mean and subtracted that from the loss, say 20%, you actually have a figure that is much more palpable.
Truth be told, you have a 75% success rate in stocks over a five year period than if you had held the money in a money market fund, commonly looked upon as a near riskless investment.
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