How are my Investments Doing? Use These Methods for Better Data

This is a common question we receive. Over the years, a frequent method I’ve observed investors use to answer this question is a simple rate of return, or SRR. But there are two other methods available, and for various reasons I’ll show below, they are usually more appropriate to use.

Simple Rate of Return (SRR)

While straightforward, it is ineffective in telling an investor the total picture. It neglects to take into account the impact of time (did it take 1 year or 9 to earn the return?), and does not adjust for the impact of what dollars were invested, and when. It is generally reported as a cumulative, single return percentage.

Internal Rate of Return (IRR) Read the rest of this entry »

Current Market Valuations, What Global Deleveraging Looks Like

Would you be surprised if I told you stocks had another slow patch this quarter? Not likely. For the third year in a row, the middle part of the year has meant most stocks have been hit by a recurring set of concerns.

Some have called this occurrence the “new normal”, referring to the new economic growth rates, interest rates, correlations of stock returns to each other and limitations on total investment returns. While there is no shortage of economists willing to foretell what will happen next, we believe it is far easier to understand where you are today and where we could go from here (and what will be necessary as a catalyst of change). The most significant contributors to this new normal are:  Read the rest of this entry »

How Quickly Markets Can Change

Just a few months ago, we were talking about the decline in credit rating of U.S. Treasury debt for the first time and worries of a recession “spreading” to the U.S. from the ongoing crisis in Europe. Its impact was volatile and pronounced, causing 2011 to be a year of flat to negative returns for most stock investors. This caught many off guard, in particular, because things seemed to be going well since the great recession that hit the world’s economies in 2008. It was an excellent reminder of the volatile nature of the financial markets, even when things are moving in the right direction. Read the rest of this entry »

The Difference Between Mutual Funds and ETFs

This is a question we get a lot here at Callahan Financial Planning, and with all the recent news and new options, I thought it would be a good topic to revisit.

As a refresher, let’s start with a quick note on what Mutual Funds are:

• An Investment Company that invests shareholders money in a (usually) diversified portfolio of securities like individual stocks or bonds.
• Assets are held in custody at a third-party bank, and are subject to regular inspection by the SEC in addition to any independent auditors to the bank and mutual fund. Read the rest of this entry »

2nd Quarter Market Commentary 2011

One awakening in the final days of June might actually be under the impression things weren’t so shabby for the month, or the second quarter of 2011. Unfortunately, this increase at the end of June only provided a recovery towards previous losses for the month. The U.S. Stock Market as a whole lost 1.68% for the month of June, and was basically flat for the 2nd quarter, ending up a measly 0.14%. There were few safe stock havens to be had, although some asset classes performed better than others. European stocks struggled, with additional pressure in the form of a volatile Euro currency. While Asian currencies generally held up better, equities (stocks) struggled worldwide. Read the rest of this entry »

Selecting Investments or an Investment Advisor

This is the fourth in a four part series designed to help you determine the best way to proceed with your previous employer’s company retirement plans, including 401(k)s, 403(b)s and more. Part 1 | 2 | 3 | 4

Whether or not you choose to keep your previous employer’s 401(k) where it’s at, roll it over to your current employer or move it to an IRA, you will still be responsible for its management and investment direction.  As discussed in the previous post, that can be a challenge if investing is not your specialty.  Don’t worry – we can help.

Our investment management service, Conflict Free Planning, ensures that a Financial Planner can help you identify the advantages and disadvantages to holding your investments in a employer retirement plan or an IRA. Read the rest of this entry »

Should I Leave My 401(k) with My Previous Employer?

This is the second in a four part series designed to help you determine the best way to proceed with your previous employer’s company retirement plans, including 401(k)s, 403(b)s and more. Part 1 | 2 | 3 | 4

Are you one of the many people that still have company retirement plans (401(k)s, 403(b)s, etc.) held at your previous employer(s)?  As with all decisions we face, the decision to rollover a company retirement plan must be done with adequate information and disclosure so that you know in detail all of the advantages and disadvantages related to each possible choice.  With that in mind, lets discuss the pros and cons of keeping your retirement funds in your previous employer’s 401(k). Read the rest of this entry »