ARK Wealth Insights

Understanding Bond Yields and the Yield Curve's Effect on Retirement

Posted by Matthew_Hanshaw-CFP on Oct 24, 2017 8:00:00 AM

Understanding Bond Yields and the Yield Curve

When it comes to investing in bonds, one of the first factors to consider is yield. But what exactly is "yield?" The answer depends on how the term is being used. In the broadest sense, an investment's yield is the return you get on the money you've invested. However, there are many different ways to calculate yield. Comparing yields can be a good way to evaluate bond investments, as long as you know what yields you're comparing and why.

Current yield

People sometimes confuse a bond's yield with its coupon rate (the interest rate that is specified in the bond agreement). A bond's coupon rate represents the amount of interest you earn annually, expressed as a percentage of its face (par) value. If a $1,000 bond pays $50 a year in interest, its coupon rate would be 5%.

Current yield is a bit different. It represents those annual interest payments as a percentage of the bond's

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Topics: Retirement, Economy & Investing

Separately Managed Accounts: Tailored to Suit Your Retirement Goals

Posted by Matthew_Hanshaw-CFP on Oct 5, 2017 8:00:00 AM

Separately Managed Accounts: Tailored to Suit You

Mutual funds have been one alternative for many investors seeking professional money management. But when you buy shares of a mutual fund, your assets are pooled with those of other fund shareholders. You gain professional money management, but the fund's manager certainly can't tailor its portfolio to meet your individual requirements.

For investors who want or need a more customized approach--for example, in order to better manage their tax liability or control individual stock holdings--separately managed accounts (SMAs) have become popular. Historically used by institutional investors and high-net-worth individuals, SMAs are now available to a wider group of investors as an alternative to mutual funds, though SMAs typically still require a higher minimum

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Topics: Retirement, Economy & Investing

Weighing the Choice Between Taxable and Tax-Free Bonds

Posted by Matthew_Hanshaw-CFP on Oct 3, 2017 8:00:00 AM

Weighing the Choice Between Taxable and Tax-Free Bonds

If you're considering the purchase of an individual bond or even a bond mutual fund, one of your first concerns will be its yield. However, when comparing various yields, you need to make sure you're not comparing apples to oranges. The yield on a tax-free bond may be lower than that paid by a taxable bond, but you'll need to look at its tax-equivalent yield to compare them accurately.

What's taxable? What's not?

The interest on corporate bonds is taxable by local, state, and federal governments. However, interest on bonds issued by state and local governments (generically called municipal bonds, or munis) generally is exempt from federal income tax. If you live in the state in which a specific muni is issued, it may be tax free at the

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Topics: Economy & Investing

Holding Equities For The Long Term: Time vs. Timing

Posted by Matthew_Hanshaw-CFP on Sep 26, 2017 8:00:00 AM

Holding Equities for the Long Term: Time vs. Timing

Legendary investor Warren Buffett is famous for his long-term perspective. He has said that he likes to make investments he would be comfortable holding even if the market shut down for 10 years.

Investing with an eye to the long term is particularly important with stocks. Historically, equities have typically outperformed bonds, cash, and inflation, though past performance is no guarantee of future results and those returns also have involved higher volatility.

It can be challenging to have Buffett-like patience during periods such as 2000-2002, when the stock market fell for 3 years in a row, or 2008, which was the worst year for the Standard & Poor's 500* since the Depression era. Times like those can frazzle the nerves of any investor, even the pros. With stocks, having an

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Topics: Financial Planning, Economy & Investing

Handling Market Volatility During Your Retirement Years

Posted by Matthew_Hanshaw-CFP on Sep 21, 2017 8:00:00 AM

Handling Market Volatility

Conventional wisdom says that what goes up must come down. But even if you view market volatility as a normal occurrence, it can be tough to handle when your money is at stake. Though there's no foolproof way to handle the ups and downs of the stock market, the following common-sense tips can help.

Don't put your eggs all in one basket

Diversifying your investment portfolio is one of the key tools for trying to manage market volatility. Because asset classes often perform differently under different market conditions, spreading your assets across a variety of investments such as stocks, bonds, and cash alternatives has the potential to help reduce your overall risk. Ideally, a decline in one type of asset will be balanced out by a gain in another, though

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Topics: Financial Planning, Retirement, Economy & Investing

Bonds, Interest Rates, and the Impact of Inflation on Retirement

Posted by Matthew_Hanshaw-CFP on Sep 5, 2017 9:12:23 AM

Bonds, Interest Rates, and the Impact of Inflation

There are two fundamental ways that you can profit from owning bonds: from the interest that bonds pay, or from any increase in the bond's price. Many people who invest in bonds because they want a steady stream of income are surprised to learn that bond prices can fluctuate, just as they do with any security traded in the secondary market. If you sell a bond before its maturity date, you may get more than its face value; you could also receive less if you must sell when bond prices are down. The closer the bond is to its maturity date, the closer to its face value the price is likely to be.

Though the ups and downs of the bond market are not usually as dramatic as the movements of the stock market, they can still have a significant impact on your overall return. If you're considering investing in bonds,

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Topics: Retirement, Economy & Investing

Growth vs. Value Investements: What's the Difference?

Posted by Matthew_Hanshaw-CFP on Aug 29, 2017 8:00:00 AM

Growth vs. Value: What's the Difference?

With the wide variety of stocks in the market, figuring out which ones you want to invest in can be a challenging task. Many investors feel it's useful to have a system for finding stocks that might be worth buying, deciding what price to pay, and identifying when a stock should be sold. Bull markets--periods in which prices as a group tend to rise--and bear markets--periods of declining prices--can lead investors to make irrational choices. Having objective criteria for buying and selling can help you avoid emotional decision-making.

Even if you don't want to select stocks yourself--and many people would much prefer to have a professional do the work of researching specific investments--it can be helpful to understand the concepts that professionals use in evaluating and buying stocks.

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Topics: Economy & Investing

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