Even pros make mistakes
When it comes to investing their own money, some financial wizards make rookie mistakes, said Jason Zweig in Money. A survey of more than 600 finance professors at major universities found that most of these experts do practice what they preach: They keep diversified portfolios and avoid chasing returns. Still, about a third of those surveyed make amateurish moves. “How do they decide when a stock is a buy? By doing a discounted cash flow analysis? Or consulting the capital asset pricing model?” Not likely. Instead, they make the same mistake inexperienced investors do, and “zero in on how much the price has risen lately.” A better strategy, for the pros and for the rest of us, is to invest 90 percent of your money in low-cost index funds. If you must speculate, do so with no more than 10 percent of your portfolio.
Food for your portfolio
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You could have made more money last year by investing in bread than by investing in the stock market, said John Waggoner in USA Today. The price of bread increased nearly twice as much as the Standard & Poor’s 500 stock index, percentagewise, due primarily to rising energy prices and higher grain costs. “Short of taking up farming, how else can you benefit from rising grain prices?” One strategy might be to invest in farm-related stocks, such as John Deere or Monsanto. You can also buy into an exchange-traded fund that tracks these sorts of stocks or, better yet, the commodities themselves. But don’t go wild. “Because these are narrowly focused funds, think of them as a side dish, rather than a main course in your portfolio.”
Retiring to a foreign shore
A few graying retirees are heading permanently offshore to see the world
and stretch their nest eggs, said Jeff Opdyke in The Wall Street Journal. They’re moving to Belize, Panama, Uruguay, and even South Africa. “But retiring to a foreign land can present a number of challenges, from opening a local bank account to avoiding being gouged for services.” To deal with banking hassles, for example, many expatriates keep the bulk of their money in the States. Periodically, they wire money to a local account. Health care is obviously another consideration. In some countries, residents are privy to national health-care systems or can pay for health care out of pocket. But “few U.S. employers offer health-care coverage to expat retirees, and U.S. carriers typically don’t provide individual coverage to Americans living abroad.” Before making any decisions, spend some time in your dream destination and learn the laws of the land.
