Global real estate grab
More Americans need to get over their provincial bias and allocate a bigger chunk of their investment portfolios overseas, said Reshma Kapadia and Elizabeth O’Brien in SmartMoney. Ratcheting up your international stock and bond exposure is one way to “trot the globe.” Another strategy: Take a look at real estate abroad, which generally “doesn’t move in lockstep with global stocks—or, for that matter, with property in other areas.” You could invest in individual foreign real estate stocks—or buy that long-dreamed-of house in Tuscany or castle in Romania. But, to ensure a truly global reach, “it’s far easier for most investors to buy mutual funds and their low-cost competitors, exchange-traded funds.”
Putting ETFs to work
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Sure, exchange traded funds are exploding in popularity, but are they merely a passing fad? asked Elizabeth Ody in Kiplinger’s Personal Finance. The ETF market’s current froth is due to short-term traders who buy and sell these baskets of securities throughout the day. Still, “serious-minded, long-term investors can find a lot to love, too.” ETFs have a low cost of entry, thanks to low expense ratios and trading costs, and different ones track everything from large U.S. companies to obscure foreign securities. But one reliable strategy is to use them to “build a solid core” of large domestic companies. Vanguard Total Stock Market (VTI) and iShares S&P 500 Index (IVV) are “superb options.”
Death or taxes
“Congress, quite by accident, is incentivizing death,” said Laura Saunders and Mary Pilon in The Wall Street Journal. As things stand right now, no estate tax whatsoever will be levied on the wealth of individuals who die in 2010. The estate tax will be back with a vengeance, though, in 2011—when the top rate bounces to a whopping 55 percent and the exemption sinks to $1 million from $3.5 million in 2009. “On a $5 million estate, the tax consequence of dying a minute after midnight on Jan. 1, 2011, rather than two minutes earlier could be more than $2 million.” Estate-tax attorney Ronald Aucutt anticipates some “truly gruesome” cases of dying individuals exploited by greedy family members, unless Congress closes the gap between 2010 and 2011 taxes—which seems unlikely.
