Articles

Vanguard is killing it. They’re now the biggest money manager in the world, with a whopping $4 trillion in assets under management.

It’s a feel-good story for a lot of investors, since the low-fee index fund juggernaut has marketed itself as the humble alternative to the high-rolling Wall Streeters who have become the target of public ire since the global financial crisis.

The feel-good story is simple. Vanguard has low overhead, pays its executives relatively modestly and passes those savings on to investors. Because of lower fees, the investors win; because of economies of scale, Vanguard wins; and because of the efficient-market hypothesis, which says hot-shot analysts can’t consistently outperform the stock market in the long run, the only people who don’t win are those evil banksters.… Read more

There hasn’t been a better time to buy real estate investment trusts (REITs) since July 2009. That was the last time this “simple signal” flashed B-U-Y.

Investors who bought on this signal then have enjoyed 223% returns since. And those gains didn’t require any fancy stock picking – just a one-click purchase of the Vanguard REIT ETF (VNQ).

The signal? VNQ itself paying 5%:

Highest REIT Yields Since the Financial Crisis

Most income hounds get it wrong. They pile into REITs when their yields are low because they are desperate for any positive income stream. That’s a bad idea because there are only two ways REITs can pay you:

1. With today’s dividend, and
2. With tomorrow’s (hopefully higher) payout.

Plenty of investors buy corporate bonds because they think they’re safe investments.

That makes sense. After all, you do get your principal back at maturity. But corporates still have plenty of risks—particularly now, with interest rates arcing higher.

That’s why I’m recommending another asset class that’s set to deliver even higher yields and fatter capital gains—with much less to fear from interest rates. More on that in a moment.

First, let’s unpack these ideas one by one, starting with why so many investors just can’t kick their corporate-bond habit: corporates tend to offer higher yields than stocks while giving you exposure to the same companies.… Read more

In a crazy bull market like this, you may feel like it’s impossible to lose.

That’s a dangerous feeling. Because there are a few loser stocks out there—although admittedly there are far more winners than losers.

Still, if you’re holding on to one of the big loser stocks right now, you can’t be blamed for feeling bad about it. How can you be losing money when the S&P 500 is up a whopping 18% from a year ago?

You might even be thinking about giving up on stocks. You might think the market is rigged and there’s no way for anyone off of Wall Street to compete.… Read more

I know I don’t have to tell you that risk management is one of the keys to successful long-term investing.

But here’s the strange thing: most responsible, risk-conscious investors underperform the market—and not by a little.

Why?

Because the reality of risk management is not the conventional wisdom frequently peddled by financial advisors. They warn that taking on too much risk will threaten your life savings, so you need to choose an extremely conservative fund and invest for the long term.

That’s close enough to the truth to sound convincing—but unfortunately it’s wrong. (I’ll show you two funds that upend the “conventional” wisdom—and deliver consistent market-beating gains—in just a moment.)… Read more

Dividend stocks are different animals. If you practiced “buy and hope” in your previous investing life, there are some habits you should leave behind.

Using a “stop loss” is one of them. In theory, stop losses limit downside while letting winners run higher. If a stock closes below a certain price, or drops a certain percentage, the “stop” will make you sell before things get worse. Instead of holding a stock all the way to zero, you’re forced to book gains (or at least cut losses) early.

It sounds like a no brainer. Why wouldn’t we want downside protection on all of our positions?… Read more

One question I field all the time is, “Should I own preferred stocks?” and my answer is always the same: “Yes, yes and yes.”

But after that, things get tricky.

When most investors think of investing in preferred stocks, they think about popular funds like the iShares U.S. Preferred Stock ETF (PFF) or the PowerShares Preferred Portfolio (PGX). But despite yields near 6%, these mainstream preferred stock funds are the wrong way to go. Instead, I suggest you take my lead and look at outside-the-box preferred-stock options like the three high-yield picks I have in store for you today.… Read more

Most investors still don’t understand dividend stocks.

Why?

Because they spend way too much time obsessing over one figure—the dividend yield—and ignore stocks with payouts below some arbitrary number, say 2%, which is about what the SPDR S&P 500 ETF (SPY) pays.

Consider Visa (V), a stock that gets zero love from the dividend crowd, no thanks to its 0.69% trailing-twelve-month yield, which has gone nowhere for five years:

Visa’s Dividend Downer

But if you’ve ignored Visa because of its low yield, you’ve missed out big time—this “boring” chart is actually a sign of powerful growth.

Because what it’s really showing us is that investors have been bidding up V’s share price in lockstep with its payout hikes (because you calculate yield by dividing the annual dividend by the current share price).… Read more