Businesses should consider the objectives of their shareholders like you and me.  After all, we are the owners of the business. This article explores the dividend and suggests to businesses why the dividend may no longer be the best way to reward loyal shareholders like us. An upcoming newsletter will take a deeper look at an alternative, the stock buyback. How Investors Have Historically Used Dividend Dividend-producing businesses have long provided a steady stream of income to their investors. Historically, investors have depended on dividend income to fund their retirement and pay their monthly bills. Dividend production has also been [...]

We'll begin with a telling quote about investment cost. “Whether markets are efficient or inefficient, investors as a group must fall short of the market return by the amount of the costs they incur.” – John Bogle So what does Investment cost mean? It's the cost of investing or the fees associated with particular investments such as commissions paid and annual fees. Market returns are unpredictable but investment cost can be known. When investing, you shouldn't assume that because you're paying higher costs, it means you're receiving a better product. It's possible that the higher cost is made up for by an [...]

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”  ― Albert Einstein So what is the eighth wonder of the world, Compound Interest/Growth  Simply put, compounded interest is interest on top of interest and compounded growth is growth on top of growth. If you invested $100 today and the stock market grew at an average compounded annual growth rate of 9.11% your investment would be worth: $100 with a 9.11% compounded annual growth rate invested for 10 years = $239 $100 with a 9.11% compounded annual growth rate [...]

Why am I investing? What is my Time Horizon? What is my Risk? What is my Liquidity Requirement? These are all thought-provoking questions meant to aid in building a firm investing foundation. Once you've built the foundation, you can start choosing your investment goals. Investment goals are split into four categories based upon the risk/return tradeoff. This tradeoff infers that higher returns are associated with higher risk investments and lower returns are associated with lower risk investments. While this may not always be true with respect to any single investment, the risk/return tradeoff has generally been proven true over time [...]

Mutual funds may not have the same pizazz as choosing your own stocks but they do allow average investors to take advantage of low costs, diversification, and access to professional management. There is no legal definition of “mutual fund” but the term is most commonly applied to investment funds regulated and sold to the public. The four most often referred to mutual funds are: Open-end funds (OEF), Closed-end funds (CEF), Unit Investment Trusts (UIT) and Exchange traded funds (ETF). Open-end funds $17.1 trillion in holdings are currently the most popular choice for Americans followed by ETF’s $1.7 trillion, Closed-end funds [...]