Fundztrader is Closing Down

Unfortunately the team behind Fundztrader has stepped down and will no longer continue publishing new information.

There will be no new ratings posted, effective immediately!

We will leave the website up so that visitors have some warning time, but it will be taken down permanently some time in the future. When that date is determined, we'll update this message.

Asset Allocation

How Much Do You Need to Retire - It May Be Less than You Think

Recently we’ve gone series on risk management for our portfolios, it seems that it would be interesting to go back and look at how much you need to retire if you apply some of these techniques.

The full story on the assumptions behind the conventional wisdom can be found at our previous article on how much you need to retire.

How Much Do You Need to Retire? Adjust Your Portfolio to Need Less

If you’ve ever looked what kind of nest-egg you are going to need to retire, you’ve undoubtedly come across the standard rule of thumb only allows withdrawing 4% a year if you want to have your savings last at least 30 years.

So if you wanted to start withdrawing $80k a year, you would need to have $2 million dollars in savings. Now that is a mighty sum, and many may consider it out of reach, especially if you are starting late in the game.

Measuring Portfolio Risk - Risk Measurement for an Average Investor

In some other articles we discuss the impact that risk can have not only on your ability to invest with a system, but highlighted the fact that the risk of the portfolio can have more impact on the sustainable withdrawal rate than the actual average rate of return.

Building a Diversified Portfolio - The Best Mutual Funds

In another article we looked at managing risk (as measure by the standard deviation of returns) by combining funds in our portfolio that were uncorrelated, (that is they don’t track each other very well on a day to day basis.)

How does this work out when applying it to a typical mutual fund portfolio?

Let’s start by taking a quick look at one of the standard examples.

Finding the Best Mutual Funds for Diversification

Finding the best mutual funds for diverifying your portfolio is a little tricky these days. If you’ve done any reading or watched any TV on the topic of investing, you’ve undoubtedly run into the topic of diversification, and heard how important it is.

It’s often the only real form of portfolio risk management that is generally recommended in the popular press, but it seems to often that folks write about it without really comprehending what makes it work. While the math can get complex, the basic ideas behind diversification are simple enough to follow.

Fund Correlation Calculator to Build a Truly Diversified Portfolio

In another article we discussed measuring risk using standard deviation. Here we will spend just a little more time to introduce the magic of statistics and how understanding standard deviation and other simple statistical measures can reduce your portfolio risk.

What is correlation? Simply put, it’s a measure of how closely two investments track one another. The unit of measure is the correlation coefficient, which can vary in magnitude from 0 (not correlated at all) to 1 (exactly tracking).

Momentum Based Investing with Just Mutual Funds

You have studied the idea of momentum or trend following investing, and are convinced that it can work. You understand that it can provide above market returns with lower risk. But the idea of trading funds every few months seems like a lot of work, and you don’t seem to have the discipline to actually follow the trades, or you are reluctant to pull the trigger on making these trades.

There is an alternative that has over 20 years of real time results to back it up, and it’s not an advisory service, but a family of funds that anyone can buy.

Gold ETF Funds and Gold Mutual Funds - Diversifying Portfolios with Gold

Gold ETFs and gold mutual funds can add some needed diversification to your portfolio. In our series on building high return, low risk portfolios, we have learned that an asset class can be of value to our portfolio if it add to the return, or if it is sufficiently uncorrelated to the rest of the portfolio to reduce the risk without reducing the returns.

One common piece of investment advice is to add precious metals, often specifically gold, to your portfolio as a way to hedge or reduce the overall risk of the portfolio. The rationale, of course, is that gold often moves in the opposite direction of the overall market, as when there is a great deal of uncertainty, or the fear of inflation, or even something as severe as the threat of war, then gold will often move up in value.

Gold Mutual Funds - Are They as Good As Gold?

In a previous post, we talked some about the options mutual fund investors had for investing in gold mutual funds. It turns out there are several options we have, and they are a powerful vehicle for adding diversification to your overall mutual fund portfolio. We covered the diversification effects of gold mutual funds previously, but this study focused on funds using gold stocks, primarily gold mining stocks. But we often get questions related to the performance of gold funds, and how correlated they are to the actual price of gold.

Stocks vs Bonds - How Much Should You Invest in Stocks vs Bonds

In a previous article we examined whether stocks are riskier than bonds, concluding that they are, but it is also a function of how you hold bonds, whether individual bonds or bond funds. Given that there is a tradeoff of risk between stocks and bonds, the natural question to ask next is how much you should invest in stocks versus bonds. For example, the conventional wisdom is that it should be a function of your age, as we expect your appetite for risk to diminish over time.

Bear Funds - Bear Mutual Funds and ETFs

As we discussed in our previous article on our hedged mutual fund portfolio when the market is moving against the bulls as quickly as it has been recently, its time to take another look at risk management strategies, and in this case specifically hedging strategies. There are a number of ways to hedge your mutual fund or ETF position, but our favorite is the use of bear funds or bear ETFs.

ETF Correlation Calculator - Properly Diversify Your Portfolio

One of the things we cover in our discussion of building a low risk portfolio is the need to find investments that have a low correlation to one another and the overall market. This is probably the most powerful tool for reducing risk in your portfolio without the need to suffer a reduction in overall return. The problem is finding those high return but low correlation funds or ETF’s.

Oil Stocks - How to Invest in Oil Stocks

Should I invest in oil stocks?

That’s a question that a lot of investors have been asking themselves over the last couple of years. The fundamentals of the oil stocks story aside, the case can be made that investing in oil stocks is a reasonable way for the average investor to hedge his individual energy costs (like the price of a tank of gas or your electric bill) with part of their portfolio. It’s interesting that paying an extra $5 a tank at the pump doesn’t feel so bad if you have oil stocks in your portfolio that have just gone up 5% as well. And many average investors can’t trade crude oil directly.

Of course, these are some of the most volatile stocks around, and many of the penny stocks are associated with the energy industry as well. So, how best to invest in oil stocks?

Stocks vs Bonds - Are Stocks Riskier than Bonds?

One of the most common issues that you will have to deal with when building your investment portfolio is the tradeoff of stocks vs bonds in your investment mix. The conventional wisdom regarding stocks vs bonds is that stocks are riskier than bonds. Let’s take a look at the background information that supports that conclusion, and see if it applies to your investment portfolio.

The primary advantage to bonds is that they have a fixed maturity and, ignoring the potential for the company going bankrupt, you know exactly how much money you will be getting and when. But this is only true if you hold the bonds to maturity. For a 30 year bond, that’s quite a commitment. But this is the basic assumption that is underlying the ideal that stocks are riskier than bonds.