ETFs

Index funds are a great tool for investors of all ages. These vehicles, which track the broad market or sections of it, are relatively inexpensive and easy to understand. But even investing in index funds takes work, especially with the proliferation of new index products in the marketplace.

Since the financial crisis, many investors lost faith in mutual funds, especially actively managed ones with higher fees, and flocked to low-cost exchange-traded index funds. This isn’t a bad thing, but there is no reason to categorically exclude mutual funds from your portfolio.

Gold is in a slump. Should you own it? Yes. The prospect of inflation looms, given central banks’ stimulus campaigns, and gold protects you well if that happens. Besides, it’s cheaper now than before.

Over the long term – let's say longer than the rest of 2013 – gold has merit because printing more money historically leads to inflation, and the yellow metal is a good inflation hedge. Plus, gold is nice insurance in case military conflicts arise, or people are scared by other world events. 

The J.C. Penney fiasco shows how the retail business is an investor's graveyard. The recent ouster of chief executive officer Ron Johnson after just 17 months at the helm doesn’t come close to solving the department store chain’s problems. For investors, it offers lessons beyond itself.

No one wants to pay too much for stocks. But with the market climbing these days, how do you avoid that? Remedy: Use what’s called dollar cost averaging, buying a constant dollar amount of stocks on a continuous schedule, in bad markets and good.

Exchange-traded funds are often-unsung investments have many virtues, particularly tax efficiency and focus on market indexes, thus avoiding shoot-the-moon trading tactics. Alas, investors often confuse ETFs with things called exchange-traded notes, which carry too much risk.

Investing can be a lot of fun but can also be (and should be) a lot of work. At our firm, my team spends countless hours poring over balance sheets, charts and economic data to make sure our clients have the best investments for the appropriate amount of risk.

The U.S. economy is in slow motion and, sooner or later, interest rates will rise. How can a bond investor weather these problems? By diversifying into emerging markets.

Rising interest rates hurt bond prices. But there’s breathing room. For the time being, don’t expect jarring near-term interest rate jumps, given the Federal Reserve Bank’s continued rate suppression and a slow motion economy.

Are actively traded mutual funds good investments, given all the alternatives you have like index funds and ETFs?

We are in a golden age of frugality, when many people want bargains. Mutual funds cost more to own than exchange-traded funds, index funds or individual stocks. That being the case, why should anyone buy a mutual fund when they can buy an ETF that charges just a fraction in fees and expenses?

Exchange-traded funds are a cost-effective way to build a well-diversified portfolio, but don’t just assume that all are inexpensive and diversified. Sometimes, you need to look very closely at hidden costs to determine the real cost of the investment.

Although ETFs are generally cheaper and more tax-efficient than mutual funds, it’s important to count all the costs. Some newer ETFs, such as leveraged funds, appear to do a better job at boosting their managers’ fees than providing a healthy return to investors.

Football has its two-minute warning. Bonds have a two-percent warning. When it sounds, and the 10-year Treasury nudges past 2%, look out: Things are going to change, for the worse.

In professional football, the two-minute warning flashes when that much game time remain on the game clock, approaching the end of the second and fourth quarters. If the ball is in play when the clock reaches two minutes, officials call this warning immediately after the play concludes and declare the ball dead.