Fiduciary Responsibilities of Stock Brokers

                       

Stock and bond brokers effectively now have to observe fiduciary rules when discussing investments with clients. In the past, all they were obligated to do was see that investments were suitable for their clients.

                       

Under fiduciary rules, brokers could be sued by tort lawyers for any imagined infraction and/or lack of explanation. This makes the broker’s job too scary for any practitioner to contemplate keeping.

                       

It’s a scary possibility even for efficient stock brokers, that can keep them ever alert. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Living With Inflation Using Corporate Bonds

                       

There is a possible solution to the quandary of bond ownership amidst inflation.

                       

The bulk of investors tend to overlook the principle of duration.

                       

Yet, they can overcome inflation with the wise use of bonds and the reinvestment of their dividends, using low-cost mutual funds or ETFs (Exchange Traded Funds).

                       

The proper implementation of duration should suit the

investor’s personal holdings horizon. That is, how long the bond fund will be held before the funds will be needed.

                       

Certainly, corporate bonds can help overcome inflation and the dearth of income and potentially limited growth from stocks. Despite what most investors believe.

                       

But they must be sure to invest in a low-cost bond mutual fund or ETF where interest earned is automatically reinvested in shares of the same fund each month.(See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Future Investment Earnings

                       

There’s a major disconnect among investors on Main Street and Wall Street about what they expect to earn from their securities portfolio over the next ten, twenty, even fifty years, after tax and inflation.

                       

Admittedly, that is a tough prediction because investors must take income taxes and inflation into account, along with projected securities’ yield and market returns. None of that is simple.

                       

In one survey, net/net/net predicted return by a number of experts, over the next fifty years, predicted  returns ranged between 2% and 3% annually.

                       

That is unusual and shocking. Investors’ experience from the past would have had expectations of close to 6%.

                       

In other words, many securities market observers believe that potential, along with taxation and inflation bites, will reflect dismal future market returns. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Expensive Financial Advisers

                                        

Financial and business insights can make it easier to invest without having to hire an advisor whose fees will take 15%, 20% and more of your investment earnings every year.

                       

That’s what it costs when you pay a 1 1⁄2% management fee each year on your assets, and you’re getting earnings of 6% a year on average.

                       

The lessons result from observing the successes, failures and foibles on Wall Street. You probably have seen my  comments on this subject many times in the past.  (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Ways Most Investors Select Stocks

                 

I have found and investigated over 1,600 investment strategies.There are many an average investor can use, in which he or she imagines buying into a business. An investor can take the same attitude as any owner would. The strategy can revolve around what an owner wants a company to accomplish. Everyday business worth never enters an owners’ consideration, just making a decent profit while the business is on a growth path.

                   

As for the rest of the stock-pickers in the market who think otherwise: They’re the short-term, quick-buyers and sellers. Most are trading company names. They really have no clue about what the businesses they are buying and selling. Most of the financial reports they see are little more than hearsay and gossip from Wall Street pundits looking over each others’ shoulders.

                   

There are lots of strategies to choose from. Know them thoroughly before you invest.(See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Really Diversify Securities Portfolios

                   

Studies show approximately how many securities  need to be in a portfolio for practical diversification. This pursuit is actually a vague effort for most investors.

                   

Diversification to overcome risk varies by investor needs and characteristics. It has relatively little to do with the number of securities in a portfolio,whether there are thirty or 100 or more invested.

                   

Moreover, investors also tend to seek diversification by purchasing several mutual funds. In doing so, they may be duplicating a good amount of their holdings. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Corporate Bond Investing, Using Duration Principles

                   

Worrying about corporate bonds you own, with the specter of inflation? What will happen to the value of the bonds when interest rates go up?

                   

You get that protection in the form of diversified, low-cost bond funds with shorter duration, while  reinvesting their income.

I’m referring to duration, which the financial media unfortunately and ignorantly tends to overlook.

                   

Remember: Bond fund holdings ought to be held longer, or at least match the duration of those funds. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)