Are You Covered? FDIC Consumer Highlights

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Monday, 30 August 2010 16:53 Written by Teresa Mitchell

New rules have limited the fees banks and other financial institutions can charge on some services, but in order to preserve their bottom line the costs of other services could go up. Here are some recent tips from the Federal Deposit Insurance Corporation (FDIC) to minimize increases. You can also visit their Website to find out more about FDIC insurance coverage basics including what it covers and account ownership categories http://www.fdic.gov/deposit/deposits/insured/basics.html. The FDIC just released its Summer 2010 Consumer News...highlights include:

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Are Markets Driven by Emotion?

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Wednesday, 30 June 2010 10:31 Written by Jason Gittins

Originally aired in April 2010, the highly regarded PBS program Nova presented an episode titled “Mind Over Money” which explored the financial markets, our psychological barriers when making financial/economic decisions, and how irrational behavior helps explain dramatic financial mood swings (greed vs. fear and bubbles vs. crashes). The focus on the real estate bubble, the stock markets decline, and our own day-to-day financial decision making provides interesting insights into human behavior.

The episode presented some basic economic principals, but also exposed how, in reality, many “economic assumptions” about people acting in rational ways do not necessarily hold true.

With interviews from some of the world’s most prominent economic thinkers including Eugene Fama (Board Member of Dimensional Fund Advisors), Richard Thaler and Robert Shiller an in depth analysis is given that explores the debate between ‘Behaviorists’ and ‘Free Market’ economic points of view.

You can watch the episode on PBS’s website. Go to this web address: http://video.pbs.org/video/1479100777/

Feeling Lucky?

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Tuesday, 29 June 2010 15:17 Written by Dave O'Rourke

U.S. News & World Report recently ran an article that demonstrates, yet again, that stock picking is most likely doomed to failure—unless you get lucky.

And luck has been in short supply. A recent study by a leading financial market research firm showed that the average U.S. equity investor underperformed the S&P 500 over the 20 years ending Dec 31, 2008 by 6.48% per year.

If you are wondering why, a study on luck vs. skill conducted by Eugene Fama from the University of Chicago and Kenneth French from Dartmouth will be published in the Journal of Finance later this year. Fama and French are on the board of directors of Dimensional Fund Advisors (DFA), a primary resource of investment funds utilized by Willow Creek Financial. You can find more of the economist’s work at http://www.dfaus.com/.

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The Hidden Source of Returns

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Thursday, 17 June 2010 14:56 Written by Bruce Dzieza

The biggest problem with investment returns is that they're posted daily--or, in the case of the recent “flash crash”, every hour or so.

Why is this a problem? Because it implies that what happened yesterday or the day before is meaningful to your financial life and is important information for future investment decisions. People all over the world struggle with figuring out the relevance of last week's, last month's or last quarter's investment returns. The cable investing channels and newspapers feed the confusion by trying to explain yesterday's downturn in terms of housing or unemployment data; they project tomorrow's returns based on interest rates and earnings reports. 

If you're one of those people who checks the market regularly and can't quite find the meaning in all this short-term information, then it’s time to relax. Because - there IS no meaning to be found there.

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Owning Real Estate without the Hassle

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Thursday, 29 April 2010 12:16 Written by Heather Cleland

You may have noticed real estate funds as part of the asset mix in some of your retirement accounts. Real estate investment trusts (REITs), are securities that sell like stock on the major exchanges and invest in real estate directly, either through properties or mortgages. A REIT mutual fund owns numerous publicly traded REITs. Equity REITs invest in and own properties (thus responsible for the equity or value of their real estate assets). Their revenues come principally from their properties' rents. Mortgage REITs deal in investment and ownership of property mortgages. These REITs loan money for mortgages to owners of real estate, or purchase existing mortgages or mortgage-backed securities. Their revenues are generated primarily by the interest that they earn on the mortgage loans. Hybrid REITs combine the investment strategies of equity REITs and mortgage REITs by investing in both properties and mortgages.

If you don’t know a lot about these investments you are not alone. Although REITS date back to the 1960’s they have only matured as common investment vehicles in the 1990’s. The attached article goes into the advantages of holding REITs - such as diversification, high yields compared to fixed income and a highly liquid method of investing in real estate.

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