Archives for December 2012
To Handle Hard Times, Plan for the Long Term
Want to be more prepared next time there is market turmoil and general panic sets in among investors? Try writing a financial plan. Research published this month by Advisor Impact Inc. shows that people who write a plan of how they will react when the going gets tough are more likely to deal better with market upheaval, says Michael Finke, professor of personal financial planning at Texas Tech University who is analyzing the survey data in conjunction with Advisor Impact. "Many individual investors tend to time the market badly," says Mr. Finke. "They feel more comfortable investing when the stock…
Income Isn’t Everything
Most people should invest for total return It is common these days for investors who call Vanguard Group to ask, "What mutual funds do you have that produce income?" The calls show many people only think of income as cash flow—such as the money generated by bond interest payments or stock dividends, says John Ameriks, who heads Vanguard's Investment Counseling and Research Group. But with interest rates low and bond yields falling, "it's unlikely that your portfolio can generate as much pure income now as it did five or 10 years ago," says Mr. Ameriks. Most investors, he says, need…