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Blueprint: Rebalancing

How I Rebalanced Through Perilous Times

“Benign neglect, bordering on sloth, remains the hallmark of our investment process." —Warren Buffett To rebalance, or not to rebalance? When? How? We’ve reviewed the sometimes conflicting and arbitrary advice of a number of experts. We’ve found a vague consensus in favor of rebalancing, but we’ve also seen studies by respected voices questioning whether rebalancing …

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Blueprint: Can I Retire?

Rebalancing: Should You Bother?

In my earlier post we analyzed when to rebalance your portfolio and discussed the mechanisms for how to rebalance. Now let’s take a contrarian step back and question the entire rebalancing process. Does rebalancing actually pay off in the real world? Should you even bother? William Bernstein: “0.5%” William Bernstein is one of the few …

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When and How to Rebalance Your Portfolio

Rebalancing your portfolio means adjusting the current asset allocation, moving it closer to some previously-chosen target. In theory, rebalancing captures a portion of the profits earned by your winning investments, and reinforces your losing investments so they can shine in their own time. The majority of financial experts advocate some form of rebalancing. And virtually …

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Diversification: Why Seeing Red Can be a Good Thing…

Can watching your investments go down ever be a good thing? To answer that, you need to know a little about my weekly investing routine.… For years I’ve tracked my investment portfolio on a My Yahoo page. It doesn’t take much space: currently just nine mutual funds and ETFs make up the entire portfolio across …

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A Guide to Retirement Health Care – How Will YOU Get It?

Health care is the single biggest obstacle to retirement for many Americans. My ongoing Reader Survey indicates that health care is also the most common concern for readers of this blog — trumping even running out of money, Social Security, the stock market, inflation, and taxes! Stories of individuals trapped in jobs because of their, …

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My Top Investment Picks for the Future…

I’m often asked where I think the economy or market is headed. Readers of my CNN Money interview, or my recent article on overcoming the fear of stocks, might think I’m especially bullish on stocks. But that’s not the case. I’m bullish on diversification. I like bonds too. As I write this, my allocation to …

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Is the 4% Safe Withdrawal Rate Obsolete?

One of the first questions that comes up when looking at modern retirement is “How much money do I need to save?” Amazingly, there was little hard research aimed at answering this question until about the mid-1990’s. Some of the first answers were shown to be overly simplistic, but for the last decade or so …

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Mastering the Fear of Stocks

“I won’t own stocks — I don’t want my savings to go down.” That seems to be the primary investing criteria for a number of people. But understanding and mastering this fear can be key to achieving financial independence. There are a select few high earners who can afford not to own stocks. And there …

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One Solution for Cheaper Retirement Travel: A Small RV

If there’s a common retirement dream across many personalities, budgets, and lifestyles, it’s probably traveling more. Though there are some retirees who prefer to stay on the home front during their golden years, the majority seem to envision traveling more often or further afield. Whether it be visiting children and grandchildren, taking a tour of …

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How Much is Too Much in a Single Investment?

A reader writes: “…what would you consider a safe percentage of one’s portfolio in brick and mortar real estate investments? Currently, approximately one third of my portfolio is in rental properties. I have pulled back on investing in the stock market for now and am considering increasing my percentages in the rental market versus other …

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Understanding the Two Sides of the Retirement Equation

It’s enough to make even a number-happy engineer dizzy: savings, expenses, interest rates, investment returns, inflation rates, tax rates, safe withdrawal rates…. I pity the prospective retiree who doesn’t like math! What are we talking about? The retirement equation: the essential relationships, now and in the future, between all the variables that determine how long …

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Passive vs. Active Investing: Will We Ever Learn?

Did you monitor the political and economic news of the past year with unease? Did you make any changes to your investments in response, or wish you had — or hadn’t? As much as I follow passive index investing, there are still vestiges of earlier philosophies in my portfolio. And the temptations to diverge from …

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How Investment Newsletters “Beat” the Market

You’ve probably seen the over-sized envelopes in your mailbox: “Get the Prognosticator’s Latest Picks,” “We Were Right About Company ABC – Buy XYZ Before It’s Too Late,” “Lock in Returns of 400% or More…” Inside you find a half-dozen various-sized pieces of paper extolling the virtues of yet another investing newsletter, complete with testimonials, a …

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Is Rebalancing the Achilles’ Heel of Passive Investing?

Pick up any mainstream personal finance publication and you’ll read about the benefits of passive or buy-and-hold investing — putting your assets in a few low-cost index funds or exchange traded funds (ETFs) that will capture market returns with less risk and expense over the long haul. It sounds like the easy, automated route to …

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Recurring Expenses: Why “A Dollar a Day” is Really $9,000

Whether your goal is retiring early, building wealth, or just making your dollars go farther — an effort that pays huge dividends is cutting recurring expenses. Here I’m talking about regular, usually monthly, charges such as phone bills, gym memberships, or property insurance. These are important, and insidious, for several reasons: They are often fully …

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How to Retire Early

Here are some of the core principles that can help you become financially successful, and retire sooner too. This list comes from the article How I Retired Early, written shortly after I retired, explaining how I became financially independent. That original article is pretty long, so here are just the action items…. I found that …

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An Early Warning System for Your Investment Portfolio

It’s every investor’s worst nightmare. You check your portfolio one morning and find it’s worth much less than you thought, or has lagged the market significantly. In my experience, that usually happens due to a lack of diversification. Imbalances of different kinds can sneak up on even the most experienced investor. (I’d categorize my most …

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How Can You Be Certain About the Retirement Decision?

You’ve worked a long career — several decades, possibly more. You’ve saved diligently, paid off the house, put the kids through college. Your investments have recovered from the latest downturn, and the world seems relatively sane again, for now. You’ve amassed more assets than you dreamed possible when you were younger, and yet you hesitate. …

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Your Retirement Roadmap

This blog is a useful format for a range of topics related to saving, investing, and retiring. But I’ve also been asked for a more structured approach to retirement. So, after a lot of writing and organizing — and quite a bit of living, in order to learn the lessons described — I’m pleased to …

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