Technically speaking, the Ides of March is nothing more than a date on the Roman calendar. March 15th, to be exact. But it has sinister implications because it just so happens that the Roman emperor, Julius Caesar, was stabbed to death on March 15th 44 BC by the very senators who were supposed to serve him. It was in his play, Julius Caesar, that William Shakespeare wrote “beware the Ides of March.”

The Death of Caesar

So, what does any of this have to do with investing and the stock market?

I’m glad you asked.

Minyanville has an article that asks if March 2010 is going to be October 1987 all over again. For those of you who weren’t investing in 1987, let me share why this is a watershed moment in recent stock market history:

Monday, October 19, 1987 is known as “Black Monday” because it was the largest single-day crash in the post-Depression era.

So, according to the Minyanville article, hedge fund managers see a crash coming….

Jon Markman of Markman Capital Insight has been talking to a lot of fund managers, and they see a lot of similarities in the way the market (S&P 500) is behaving these days and how it behaved in the run up to the ‘87 crash.

“Now these managers think the next set of steps would be a sharp decline on Thursday or Friday, a series of 0.5% to 1% single-day declines next week, followed by a plunge, let’s say, next Friday and a crash around March 15,” Markman writes.

They have a scary looking chart to go along with this speculation.

But the managers that Markman has spoken with see many fundamental and economic similarities between then and now, so it’s more than just an eerie chart they say.

Here’s a list of those similarities:

• legislation that could cause investors to dramatically lower their estimates of stock values

• a lack of liquidity

• a sense of overvaluation after a steady recent advance

• revelations of a massive budget deficit

• expectations of a sharp fall in the value of the dollar and an expectation of higher interest rates

They also interviewed Mike O’Rourke, chief market strategist at BTIG, and he sees things differently.

“He doesn’t see any indications that this stock market is ready to take such an awesome tumble.

“I see the market as in a recovery rally,” the strategist tells us. “Liquidity has slowed down and dried up, but that’s because we had a nice rally and now we’re consolidating and building a base.”

Who’s to say who is right? Even Markman admits “There isn’t enough data.”

Time will tell who’s view is the correct one, but it’s never a bad idea to nudge your stop losses up a little to act as a safety net.

• 5 Energy Stocks To Invest In. Introducing the "new, pragmatic approach to energy investing" (as it is called by SmartMoney) - also known as the having it both ways approach. It's a new way to invest in energy stocks, and it mimics what the big oil companies themselves are doing. It's a hedge, really. It's investing......
• A Sample ETF Portfolio for Long Term Growth. Here's an all ETF portfolio that's sure to see some volatility. It's geared toward long term growth, and as such it invests heavily in small cap stocks, foreign markets and commodities. The fund total is 90% stocks, 10% commodities and is best left to investors with long time horizons and......
• Top Morningstar Bond Funds for July 2009. Morningstar has released their top 3 Bond Funds for June-July. Here's the list: High-yield bonds. T. Rowe Price Spectrum Income (RPSIX) This is a fund of funds. The management team invests in up to 9 T. Rowe Price funds in order to get exposure to all of the sectors of......
• 3 ETFs for the Bear Market Rally. When bear markets rally, it's often the small caps and technology stocks that lead the way. Here are 3 ETFs that may help you make the most of the current rally. iShares MSCI Emerging Markets ETF (EEM ). The EEM is comprised of 329 stocks from countries that have yet......
• Bears Make Money, Bulls Make Money, Pigs Get Slaughtered. I don't mean to get all Animal Farm on you, but have you ever noticed there are a lot of animal metaphors in investing? Most people have heard about bear markets and bull markets, but did you know there are also pigs in the market? Well, yeah, I suppose you......

• Top 20 List of the Biggest Canadian Gold Stocks With gold prices breaking through $1000/ounce (Sept. 2009), US dollar weakness and continued upside pressure on gold with the recent announcement by Barrick of the removal of its gold hedging books (a very bullish and self-assured call on gold), you might like to take a fresh look at some Canadian......
• Market Timing, still It was September that I last wrote about this. Yesterday, we were up 3.71% on the S&P 500, as you can see, 1320.65, up 47.28, the largest single day gain in nearly 5 years. I could go on a bit to talk about yesterday and the markets of today and......
• Weakon 238: Stock Beta Just like Wednesday, I’m on a statistics kick.  And like I told you yesterday, beta deserves its own post.  Beta is an interesting measure that you’ll often find listed among stock quotes.  But what is it? Before we start I must warn that while the first half of this post......
• Bonds and Your Retirement Portfolio Are bonds part of your retirement portfolio? If not, they probably should be. The question is how to properly use bonds in your portfolio. If you are closing in on retirement, now is a good time to learn more about the proper place for bonds in your nest egg, particularly......
• The Pros and Cons of Investing in ETFs In last decade, specialty ETFs (Exchange Traded Funds) are probably the hottest thing to hit Wall Street since the rise of the discount brokers in the mid 1990s. Initially, ETFs were not very popular because they only tracked the performance of a few stock market indices. However, in today's investing......

Famed investor and best-selling author Jim Rogers was interviewed by Yahoo!’s Tech Ticker back in October 2009, and he’s still bullish on commodities, but not so much on gold.

Here’s the 30-second takeaway from the video:

• Individual investors should focus on commodity ETFs, unless they have a deep understanding and interest in commodities futures trading.

• Forget gold, and invest in other material instead like lead, zinc, copper and silver.

• Agriculture is the next big crisis, with the Food and Agriculture Organization warning countries that the world is one disaster away from a major food shortage in much of the world.

“I think I’ll make money in other commodities that are more useful.”

Rogers owns gold, but he not very bullish on it. I think his argument against gold is a good one. He basically thinks that it has some intrinsic value, but only from a subjective point of view. It simply isn’t as practical a metal as lead, zinc or silver. And because gold “is mystical to many people”, it’s garnered the lions share of attention, but that also means there’s less upside potential than there is in more over looked, less attractive metals.

“most agricultural products are still depressed on a historic basis.”

Speaking of useful commodities, Rogers is quite bullish on agricultural commodities. Rogers sees a vast lack of supply, and calls it a looming catastrophe. He thinks that the world is in for a period ahead when some parts of the globe won’t be able to get food at any price.

“The story is not over, not for a while. I don’t see any reason it’s going to be over for a few years because no one is bringing new supply on stream.”

Is Jim Rogers right?

Who knows? But he was right when he called a global commodities rally in 1999. And he presents sensible arguments to support his views on various commodities, which is more than I can say for many of the gold pushers that have been crawling out of the woodwork in the past 3-5 years.

• Diversification Is A Scam, Really? I came across a quote by Jim Rogers in SmartMoney magazine yesterday that almost made me blow my chocolate milk out my nose when I read it. In this interview, Mr Rogers says: "Diversification is something that stock brokers came up with to protect themselves, so they wouldn't get sued.......
• Investing Term Tuesday: Commodity Index. A commodity index is an index that tracks a collection of commodities in order to measure their performance. Commodity indexes are often traded on exchanges, such as the Chicago Board of Trade (CBOT). By being traded on an open exchange, investors gain access to commodities without having to deal in......
• Investing Term Tuesday: Gold Fix. The Gold Fix is the act whereby the price of gold is set, twice daily, by the 5 members of the London gold pool. This price is used as a benchmark for most of the global gold products and derivatives pricing. This "fixing" of the gold price by the......
• Will Today be the Day the DOW Breaks 10,000? The Dow Jones Industrial Average got pretty close yesterday to breaking the 10,000 point mark for the first time since the '08 crash. It's no surprise that there has been much attention paid to this. It is, after all, a significant number, even if it's mostly psychological. Flash Player 9......
• Best Funds To Invest In Now. These are peculiar times we find ourselves in. Here's a list of funds from Kiplinger that not only cover just about every bogeyman bandied about in the financial press these days, but hit upon some classic needs in a mutual fund as well. Inflation protection Sooner or later, the reckless......

• EarthTalk: Are We Running Out Of Clean Water? Dear EarthTalk: I saw a cover line on a magazine that said, “The next world war will be over water.” Tell me we’re not really running out of water! Today fully one-sixth of the world’s human population lacks access to clean drinking water, and more than two million people—mostly kids—die......
• What Is Jim Rogers Buying Now? A couple of days ago, legendary investor, commodity bull and one-time partner of George Soros, Jim Rogers, was interviewed by Betty Liu of Bloomberg's Singapore office. It seems that Jim Rogers is also of the opinion that Fannie Mae is going to lose a lot of money along with other......
• Jim Furyk Wins Chevron World Challenge After a low-speed car accident that's prompted tabloid-esque speculation about Tiger Woods' private life, he cancelled his participation in the Chevron World Challenge in Thousand Oaks, California, the golf tournament that he sponsors and usually wins. His departure from the tournament led to a lucky invitation to Graeme McDowell, who......
• Another Gold Investing Update Regular readers will know that I've been investing in gold since gold was in $500/Oz. I advised some readers not to jump in at $720 but wait for a pull-back. Well it pulled back from $720 to around $570 and then jumped up a bit. Today it settled around......
• IS THE ENVIRONMENT IMPROVING BASED ON UN & AUTHORITIES PROGRAMS? UNEP did not actually contribute anything good to the world. Let us take for example the 3 specialized agencies of ECOSOC (namely FAO, WMO & WHO), which were not helped by UNEP. One of FAO’s purposes is to bring agriculture to maximum productivity. By repressing agriculture & forestry, it links......

Q. How much does it cost to own a mutual fund?

A. More than you think.

Most investors know about a fund’s expense ratio, and use that attribute for comparing various funds before buying. But there are a host of hidden costs that are much more difficult to uncover for many mutual funds.

That’s what this article from the Wall Street Journal is about.

These hidden costs are related to the buying and selling of the individual securities held by the mutual fund, and they can make a fund 2-3 times more costly than the expense ratio alone would imply. That can be a pretty significant amount on a fund with an expense ration in the 1-2%.

While the expense ratio is an important consideration when pricing a fund, it simple doesn’t capture all the costs. The reason is that every mutual fund and its associated expenses is different. Then there’s the complex nature of the costs not covered by the expense ratio, specifically: brokerage commissions, bid-ask spreads, opportunity costs and market-impact costs.

And since the SEC has yet to mandate any unified form of measurement, the individual is left to try and scrutinize the often inscrutable. Even most experts arrive at drastically different estimates of the true cost of mutual funds.

So how do you find the true cost of mutual funds?

While it is difficult to get at the information required to determine the exact cost of a mutual fund, it turns out that the fund’s Annual Holdings Turnover ratio is a pretty good clue. While it is an imperfect measure, it is a standard measure. So, every fund must report this data the same way.

A fund’s annual turnover ratio is the percentage of assets that were replaced over the past year. So if the fund’s manager sold half its stocks and replaced them with an equal value in new stocks would have turnover of 50%. This is an imperfect measure though because in some cases, a fund can take in a lot of new money and not have to sell any assets to buy new ones. In such a case, the fund would incur additional buying costs that would not be accounted for in the expense

• Mutual Fund Monday - 5 Things To Watch When Choosing A Fund. Picking a mutual fund can be a daunting task, but here are 5 things to look for that I hope will help make the process a little easier. This is part of my weekly Mutual Fund Monday post feature. If you find this interesting or helpful, please read more. 1.......
• 13 ETFs to Hedge Against Inflation. Inflation is in the news again, thanks to worries over the historic deficit spending in Washington today. If the Fed gets the timing wrong on the next round of interest rate hikes, then inflation could be a real problem. According to a recent working paper by the International Monetary Fund:......
• Mutual Fund Monday - Tips For Mutual Fund Investment. With thousands of mutual funds to choose from, picking the "right one" can be a daunting task. Most investors know not to fall for a short term hot streak - one or two years isn't a long enough track record to show superior skill of the management team over sheer......
• Mutual Fund Monday. I'm down with the flu this week, which means I'm taking it easy - but not too easy. I'm catching up on some reading and found some nuggets of knowledge regarding mutual funds that you may not already know about and you may enjoy reading. So, without further ado (because......
• A Possible Change to Mutual Fund Tax Implications on Capital Gains. Investors in U.S. mutual funds might want to keep an eye on this. The Committee on Capital Market Regulation (CCMR) has recently issued a report by Harvard professor John C. Coates which recommends that mutual fund regulators eliminate the requirement for yearly capital gains distributions. The change would only affect......

• What is a Mutual Fund? Mutual fund is a corporate body, which works as an intermediary and invests in financial markets. Mutual funds collect money from the public and invest in financial instruments like equity, government securities, bonds, debentures etc.Investing through mutual funds is good for people who do not have much knowledge about......
• Where To Find A Mutual Fund Expense Ratio It's been shown time and time again that of all a mutual fund's attributes, its mutual fund expense ratio is by far the best predictor of future performance.  Put simply, investment costs matter.  All else being equal, the mutual fund with the lowest fund expense ratio will tend to be......
• Mutual Funds - An Investment Vehicle For Small Investors Human beings from their very inception want to earn and save something for unwanted situations. In earlier stage he puts his earnings under the soil to keep it safe from being stolen. Later banking system was developed and subsequently different kind of instruments for investment is being used. Nowadays,......
• Index Funds 101 The most significant invention in the 20th century as far as investing goes is mutual funds, at least if you are a small individual investor with modest means. Thanks to mutual funds, the benefits associated with large scale international capital markets are now capable of being taken advantage by more......
• The Best Investing Strategy: Low-Cost Diversification Every so often a new "can't-miss" investing strategy becomes popular.  Dogs of the Dow, buy on the dips, only buy stocks trending above their 90 day moving averages, sell covered calls,  buy small cap stocks in December and sell in January, etc are all examples of mechanical investing strategies originally......

Enterprise Products Partners L.P. (EPD) provides services to producers and consumers of natural gas, natural gas liquids, crude oil, and petrochemicals. It’s clients are in the continental United States, Canada, and Gulf of Mexico. EPD also develops pipeline and other energy infrastructure, and it’s got a high yield and has been diversifying through acquisitions, which makes it worth looking into if you’re looking for income and growth.

Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now

Enterprise Products Partners L.P. (EPD) Dividend History.

Here’s a look at EPD’s dividend history over the past five years:

Even though the price has risen about 15.5% over the past 6 months, it still sports an attractive 6.90% yield and has a lot of upside potential if energy demand soars again like it did in the early part of 2008. After the fall in energy prices, Enterprise Products Partners saw its share price slashed with other oil and gas stocks even though it has a fairly limited exposure to commodity price changes of the underlying energy source. It is mostly an energy product transporter and facilitator, which means its costs are relatively fixed as compared with those of energy explorers.

• 5 Energy Stocks To Invest In. Introducing the "new, pragmatic approach to energy investing" (as it is called by SmartMoney) - also known as the having it both ways approach. It's a new way to invest in energy stocks, and it mimics what the big oil companies themselves are doing. It's a hedge, really. It's investing......
• Best ETF's For... Kiplinger has released their annual "best of" edition, where they rate the best of just about everything. One of the categories is ETF's. I thought I'd share the picks, and some thoughts on them here, but you should check out the complete issue if you get a chance. Best ETF......
• Top 5 Best Investors. Here are the top 5 Investors of all time, as picked by  Investopedia. But first, the criteria... The list is based on 4 factors: The investor is a long term performer - that is one with a long history of beating their bench mark index(es). The investor or manager must......
• Healthcare Stocks Ripe for Growth: MEDICAL RECORDS. This is a continuation of the Healthcare Stocks Ripe for Growth series this week. Yesterday, I profiled the Biotech company Gilead Sciences. This week is the medical record keeper, Quality Systems. Quality Systems (QSII) Regardless of whether the Obama administration gets public healthcare legislation passed, one thing you can count......
• 6 Tips For the Beginning Investor. Here's a list of some investing insight I've learned over the years that I hope will help accelerate the beginning investor's road to wealth. 1. Don't go all in at once. If you have a lump sum of money to invest and you are doing so when the market is......

• 10 Free Investment Credits From ShareBuilder (And $50 Signup Bonus) Online investment company ShareBuilder (owned by ING Direct) is offering up 10 free investment credits to new and existing customers who set up an Automatic Investment Plan before January 31st.  This is a great way to start investing for the New Year!  Normally automatic investments are $4 per trade. The......
• An Investment Average of 10% won't Guarantee Success An Investment Average of 10% won't Guarantee Success I saw a great advertisement released by my office's parent company today; I have never released what my office's parent company is...and I am not about to start now! Notwithstanding my obsession with privacy, I couldn't get over this info and felt like I......
• Stock Market Investment Outlook November 2009 Last Friday, the final trading day of October 2009, saw triple-digit losses following the previous day's excellent U.S. GDP numbers.  Are traders and institutional investors just taking money off the table for some profits?  Or will this be the beginning of the retrenchment that we didn't see in September or......
• Bad Energy Mojo From an Op-Ed piece in a recent New Your Times story titled, "Dumb as We Wanna Be": "Congress has been bickering over whether and how to renew the investment tax credit to stimulate investment in solar energy and the production tax credit to encourage investment in wind energy. The bickering......
• UK property prices to increase by twenty percent by 2014. According to a recent report by the Centre for Economics and Business Research (CEBR) UK house prices are liable to rise by about a fifth in the next four years. The forces that will push property prices up are increased lending levels by the banks and interest rates remaining......

With chatter about a bubble in bonds building, it may be a good time to look for alternative sources of investment income. One such source has long been dividend paying stocks, trusts and partnerships. Here are two such dividend plays – one is a Real Estate Investment Trust, and the other is an energy partnership.

Annaly Capital Management, Inc. (NLY)

Annaly Capital Management is a mortgage REIT (real estate investment trust), and as such the company is not subject to federal corporate income tax, provided it distributes at least 90% of its taxable income to its stockholders in the form of dividends. NOTE: The income generated by a REIT may be taxable at your income tax rate, and not at the capital gains rate. So check with your tax advisor if this is a point of concern.

Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now

What makes NLY attractive.

One of the things that makes Annaly Capital attractive is its low debt level compared to other REITs and owners of Mortgage Backed Securities (MBS). For example, Commercial banks are typically leveraged 30:1; thrifts – 25:1; hedge funds – 20-30:1; and Annaly – 8-12:1, or less than half that of a typical thrift.

Another thing is that the MBS that Annaly Capital invests in are backed by agencies of the U.S. government like Ginnie Mae, Fannie Mae and Freddie Mac. While these agencies are essentially bankrupt, the government is not likely to let them fail so they have a de-facto credit rating of AAA.

NLY dividend history.

NLY has increased its dividend from about $2.20 per share in 2008 to $2.4 in 2009, while the yield has declined from 16.6% to 13.4% as the price has risen. At the time of this post, NLY was yielding 16.80%, or $3 per share annually.

How safe is NLY dividend?

At first glance, there’s a lot of scary stuff to be seen in the summary of Annaly. After all, it was imploding Mortgage Backed Securities that began the current recession and market crash of 2008-2009. And Annaly is using leverage to purchase these securities, leverage which magnifies gains AND losses alike.

But upon further inspection, the credit risk for Annaly seems low because the MBS that it invests in are backed by the U.S. government and, as mentioned above, their leverage rate is lower than the industry average.

What can affect its performance (and dividend) is a major swing in interest rates. This is largely because of its use of leverage, or borrowing, to magnify its returns. But if management can keep ahead of rate trends it can limit the squeeze that variable interest rate MBS put on Annaly’s profits.

• SELL ALERT: 3 Stocks to Ditch While You Can? Here's a head's up for anyone holding these stocks - Fair Isaac, Boyd Gaming and Great Atlantic & Pacific Tea Company (A&P). A recent SmartMoney article has hilighted these 3 stocks as having garnered more "sell" recommendations than "buys" in recent weeks. Fair Isaac (FICO) Fair Isaac’s performance is dependent......
• A Sample ETF Portfolio for Maximum Income (and Fat, Juicy Yields). With the low fees and wide selection of ETFs, you can now build a portfolio for maximum and minimum fees relatively easily. Here's one such sample portfolio from Kiplinger that allocates 65% to bonds, 35% to stocks. The bond section is spread between conservative, laddered treasures and riskier junk bonds.......
• Morningstar Announces Their Best Fund Managers of 2009! Morningstar has released their picks for Best Mutual Fund Managers of 2009. It's important to remember that the competition is intended as an acknowledgement of past achievements, not as a recommendation for future performance.. That being said, the rankings are determined by a number of factors, not just best return......
• Mutual Fund Monday - 5 Things To Watch When Choosing A Fund. Picking a mutual fund can be a daunting task, but here are 5 things to look for that I hope will help make the process a little easier. This is part of my weekly Mutual Fund Monday post feature. If you find this interesting or helpful, please read more. 1.......
• Investing Term Tuesday - January Effect. In honor of just closing the books on January, I thought it might be nice to examine the January Effect. The January Effect is an investing term that refers to a general increase in the stock market during the month of January. This effect is typically attributed to an increase......

• Interest rate hike expected as inflation sores. With an earlier than expected rise in inflation, which soared to 2.9% in December, interest rates could be rising sooner than expected in 2010. The reading for the consumer prices index (CPI) came in well above the expected 2.4% figure making for the largest ever rise in inflation over......
• Is It A Good Time To Invest In Real Estate? Even though I've experienced phenomenal returns in real estate, I think its getting exceedingly difficult to invest in that asset class. If you're flipping houses and you have a good buying and selling system in place, then the story is different, but thats probably your full-time job. If you a......
• The Total Money Makeover Review Along with Your Money or Your Life, The Total Money Makeover really had a lasting impact on my life. I have been a fan of Dave Ramsey for as long as I can remember listening to talk radio. As a matter of fact, I listened to Dave before he was......
• The Day the Lending Lords Died This was first written last week, before the crazyness that happened on Monday.  Updates about everything else will come later in the week. What Happened? On Sunday, September 9, Treasury Secretary Henry Paulson pulled out his figurative "bazooka" and fired it down the street to Fannie Mae and Freddie Mac......
• Good Debt, Bad Debt and Flawed Investment Return Data I can't tell you how often I hear or read someone argue that they have "good debt."   This "good debt"  argument is made to rationalize having a car loan, a HELOC or second mortgage balance, and even credit card debt.  The argument goes something like this:  "The money I have borrowed......

Stock market analyst Robert Prechter is seeing what he calls “the Biggest Bubble in History”, and that’s not a good thing for investors.

According to The Wall Street Journal, Prechter told the Society of Technical Analysts in London that we are in the midst of a “grand, super-cycle top” and that all the signs are pointing toward a big market correction.

He’s got some street cred, given that he called the recent rally back in February of 2009. In fact, he said it would be “sharp and scary” for anyone shorting the market at that time.

According to Prechter, the most recent recovery gave all the text book signs and now he seeing text book signs again, but they foretell a big correction on the horizon. He points to the near record low levels of cash at mutual funds. He sees those levels approaching levels seen near major tops in 1973, 2000 and 2007.

As for the “Biggest Bubble in History”, he says that’s debt. Specifically, Corporate debt, municipal debt, mortgages and consumer loans which he speculates will get hammered by the deflationary period that began with 2005’s turnaround in home prices.

Time will tell if he’s right, but it may be time to put your stops in place and watch this video to see Prechter in his own words.

• Reliability of Income, the New ROI. The 2008-2009 market crash and resulting bear market have been absolutely brutal to new retirees and soon to be retirees alike. For those in my age set (about 30 years out from retirement) it serves as a poignant lesson of what can go wrong. To Mary Beth Franklin, editor of......
• Best ETF's For... Kiplinger has released their annual "best of" edition, where they rate the best of just about everything. One of the categories is ETF's. I thought I'd share the picks, and some thoughts on them here, but you should check out the complete issue if you get a chance. Best ETF......
• NLY, a Dividend Paying Trust Worth A Look. With chatter about a bubble in bonds building, it may be a good time to look for alternative sources of investment income. One such source has long been dividend paying stocks, trusts and partnerships. Here are two such dividend plays - one is a Real Estate Investment Trust, and the......
• Beware the Ides of March? Technically speaking, the Ides of March is nothing more than a date on the Roman calendar. March 15th, to be exact. But it has sinister implications because it just so happens that the Roman emperor, Julius Caesar, was stabbed to death on March 15th 44 BC by the very senators......
• Will Your 401K Match Return? What will it look like if it does? If you're like many workers still lucky enough to have a job during this recession, you've probably seen your employer cut or eliminate the contribution match on your 401k plan. Mine did. My company match on 401k contributions was the first thing......

• Good Debt, Bad Debt and Flawed Investment Return Data I can't tell you how often I hear or read someone argue that they have "good debt."   This "good debt"  argument is made to rationalize having a car loan, a HELOC or second mortgage balance, and even credit card debt.  The argument goes something like this:  "The money I have borrowed......
• Has anyone read this article? Good food for thought? Why the Dollar Bubble is about to Burst? IRAN HAS REALLY DONE IT...more deadlier than the nuclear.. The Voice (issue 264 -) ran an article beginning, ' Iran has really gone and done it now. No, they haven't sent their first nuclear sub in to the Persian Gulf . They......
• The Weakening Dollar - II Now we've seen some reasons for the Dollar's continued weakening, how do we profit from this knowledge? Here's a compendium of worthwhile investments that I've been researching. Invest in foreign currencies and foreign bonds If your bank allows you to make foreign currency deposits, that may be the simplest solution.......
• August 2009 update I didn't really do much of anything this month money-wise, except spend an awful lot. I was horrified when I glanced down at my running total of expenditures and realized that I spent more than I earned in August. Ow! I really don't like it when I do that. On......
• What is Debt Leverage? Leverage is a term that is often used synonymously with debt, and for this reason, it is important that people come to understand what debt leveraging actually means, and how it works in an ordinary financial transaction, such as buying a home for example. Let us suppose that you are......

When the calendar passed from December to January, we bid a not so fond adieu to 2009 as well as the rollover income limitation associated with transitioning a traditional IRA to a Roth IRA. This is a good thing if  converting to a Roth IRA makes sense for you.

The Roth IRA is one of the best retirement and estate planning tools available, and with the recent change in restrictions and tax payment scheduling, 2010 is the year of the Roth. Quite simply, if the Roth makes sense for you then 2010 is likely the year to make it happen.

Here are 8 ways not to screw it up.

1. Just Do it.

As many experts look at the mounting federal deficits and growing number of states in danger of bankrupting themselves, they see no choice but for taxes to skyrocket. Maybe, and maybe not. I’m not going to get on a political riff on the subject of reckless spending and taxes. I just want you to be aware that the chances are slim that tax rates will stay at their current rates, which are historically low.

So, the question for long term investors is not whether to fund a Roth, but how to fund a Roth IRA. Regarding a rollover from a traditional IRA, your choices are essentially:

1. Convert your IRA all at once.
2. Convert your IRA in stages, or segments.

Either way, if you don’t at least start to convert now, and you wait to do it later it may cost you dearly in terms of taxes. If you’ve decided that a Roth isn’t for you, then… why are you reading this article? Besides, since January 2010, all income limitations have been removed.

2. Understand the tax consequences.

Deciding to wait and do a conversion after taxes rise is a costly mistake, but so is jumping into a conversion without understanding the full tax implications.

For example, if you’re in a 15% income tax bracket today and you rollover a $250,000 IRA you will not pay 15% in taxes. You will end up paying quite a bit more because that $250,000 distribution can be counted as income, according to Barry Picker (who recently served as the technical editor of “100+ Roth IRA Examples and Flowcharts,” by Robert Keebler) and that will most likely bump you into a higher income tax bracket.

3. Know the direction of your tax bracket.

If you are the sole breadwinner today, but your spouse is likely to re-enter the workforce in a year or two, then you’re better off converted at today’s lower tax rate. On the other hand, if your spouse is considering staying at home with the baby that’s due in a few months, you’re better off waiting until she leaves the workforce and your combined income drops. Likewise if you file solo, but you’re thinking of tacking a pay cut to switch careers. Time your conversion when your tax rate is likely to be on the low side.

4. Don’t pay taxes with money from your transaction.

Paying the taxes with money you have withheld from the rollover transaction is a bad idea for a number of reasons, including:

Every penny you take out of the transaction is less that goes to work for you in the Roth.

The amount withheld goes to the IRS as an advance payment, and also reduces the total conversion amount. Hence, the amount withheld is considered a distribution and not part of the conversion and can impart further tax liabilities. For example, if you have a $100,000 IRA that you convert to a Roth IRA and withhold $20,000 (20%) for taxes, then the $20,000 is treated as a distribution and may be taxable in itself.

If you need to reverse the conversion (called a re-characterization – more on that below), then you can only reverse the amount actually converted. In the example above, you could reverse the $80,000 conversion, but you’d be out that $20,000 permanently – and you would still owe taxes on the $20,000.

The amount withheld for taxes is also subject to the 10% early distribution penalty, unless you are 59 1/2 when the conversion occurred.

5. Be a good judge of re-characterization.

If not converting is a mistake, not paying attention to your Roth after you’ve converted is a huge mistake. Here’s why – and incidentally, here’s one of the greatest aspects of the Roth IRA conversion. It’s called “re-characterization” and here’s how it works.

Re-characterization allows you to undo a conversion if the market value falls below your conversion amount. It’s the mulligan of the Roth world. Here’s an example:

You have $100,000 in your traditional IRA when you convert it to a Roth IRA. After a while, the your Roth is worth only $50,000. If you left your Roth alone, you’d owe taxes on the full amount at the time of conversion – $100,000. But, if you re-characterize your Roth (i.e. undo the conversion, you get your $100,000 back in a traditional IRA and you would owe taxes on the $50,000 re-characterization amount.

Of course, you have to do it before the next tax filing deadline after your initial conversion and if there are fees involved, you might want to makes sure you’ve lost enough value to make it worth your trouble.

6. Divide and conquer.

Besides the income limitations being dropped, you also get an extension on when you have to pay the taxes if you convert in 2010. For this one year only, you can spread your payment of the taxes you owe on the amount converted over the 2011 and 2012 tax periods; meaning you don’t have to actually pay them until 2012 and 2013!

7. Catch the early bird special.

If you convert early in 2010 and the market resumes its bull run, as some analysts think may happen, then you would have more time to catch those tax-free gains, while splitting the payment of the taxes owed over two year’s.

8. Hedge your bets.

You can split your conversions up into multiple conversions, by asset class for example. That way if your stocks perform well, but your bonds tank, you can re-characterize your bond conversion back into a traditional IRA and lessen the tax hit. In fact, many experts recommend slicing your IRA up into as many Roth IRA accounts as possible to gain maximum control over your taxes. This is probably only beneficial for very large accounts however.

• Dow Down as 10,000 Makes for Difficult Psychological Barrier. The recent market rally seems to have stalled. Is it because the Institute for Supply Management's index of national factory activity declined in September? Is it because U.S. Auto sales dropped again, once the artificial stimulus ended? Is it because the unemployment claims rose unexpectedly again? Is it because the......
• Rate Your 401(k) Plan With BrightScope. Have you ever wished there was a rating system for 401(k) plans? I've had a reason to in the past. I was looking at two job offers recently and one of the things that set the two apart was the benefit package. Obviously, a big part of any benefit package......
• 3 Tips to Make Your 401(k) Work for You. Morningstar has a terrific article (available to free members) titled Three Tips to Make Your 401(k) Work for You and I love it! Here's a brief sample of why: It's surprising there aren't many calls in the press to ditch the automobile. After all, think of all the dumb things......
• NLY, a Dividend Paying Trust Worth A Look. With chatter about a bubble in bonds building, it may be a good time to look for alternative sources of investment income. One such source has long been dividend paying stocks, trusts and partnerships. Here are two such dividend plays - one is a Real Estate Investment Trust, and the......
• 3 Options for College Saving Accounts. It seems counter intuitive, that choosing the wrong kind of savings account for your child's college fund could actually cost your child more, but that's the world we live in - make the wrong choice, and your child may lose thousands of dollars in financial aid come enrollment time. According......

• Delaying Roth IRA Contributions One Year Could Cost You $74,000 Last year was the first year I have been able to make the maximum contribution to my Roth IRA, thanks in large part to becoming debt free. I was also able to fund a spousal IRA for my wife, who stays home with our kids. Now that it is 2010......
• How to Plan for Tax Free Retirement Income Many experts tell us that when we retire, it can be important to have several options in income sources, some of which are tax free. Tax rates are going up for a lot of us, starting with the expiration of the Bush tax cuts at the end of 2010. Now......
• Deadline Extended for Returning Required Mininum Distributions Most retirees know by now that in the Worker, Retiree, and Employer Recovery Act of 2008, Congress waived required minimum distributions in 2009 from IRAs, 401(k) accounts, and certain other retirement plans. The intended benefit was to prevent retirees from being forced to sell invested assets during a severe market......
• A Roth Roundup I've been reading and writing about Roth IRAs for some time now, and it's time for a Roth Roundup, from both fellow bloggers and the usual sources. photo credit: therefromhere First, let's start with How to Convert Traditional IRA to Roth, at 70½ a question posed at the Wall Street......
• will the government raid Roth IRAs? Why does everyone love Roth IRAs so much? Is it the romantic ideal of a tax-free withdrawal in your old age?  Is it a vision of tax-free growth stretching off into the future? photo credit: The G-tastic 7 Let me paint a darker picture. Social Security has always been a......

ING is offering commission-free trades through its ShareBuilder service for the entire year, when you open an IRA with this promo code.

Here are the details:

• All IRA plans are no-fee plans; no fees for a low balance, no fee for inactive accounts, no annual fee for being a member.

• Open your IRA account before April 15th, 2010 and set up an Automatic Investment Plan (AIP) and all automatic investment trades are commission free for 2010.

• Select over 7,000 stocks and ETFs.

• Schedule (AIP) investments on a weekly or monthly basis.

• Invest any dollar amount on Tuesdays exclusively online.

Some caveats to the offer:

• Real time trade commissions still apply to all sales.

• You can only make commission free trades on Tuesdays, and online. If you aren’t comfortable using the web site then this isn’t for you, but ING’s web sites are very easy to use.

These limitations aren’t ridiculous when you consider that you probably should keep trading to a minimum in an IRA plan anyway, and you should also make contributions in it regularly so the Automatic Investment Plan is ideal for dollar cost averaging into your IRA over the long term. Why not save a few extra dollars on each contribution?

Open an IRA today at www.sharebuilder.com/2010ira.

• When it Comes to Investing, Simplicity Rules. There was a time when only the wealthy and well connected could invest in the stock market. Then IRAs and 401(k) plans ushered in a new era of the "common man" investor. Flash forward a bit more, to the Internet age, and we have a grand democratization of the stock......
• 3 Tips to Make Your 401(k) Work for You. Morningstar has a terrific article (available to free members) titled Three Tips to Make Your 401(k) Work for You and I love it! Here's a brief sample of why: It's surprising there aren't many calls in the press to ditch the automobile. After all, think of all the dumb things......
• 6 Tips For the Beginning Investor. Here's a list of some investing insight I've learned over the years that I hope will help accelerate the beginning investor's road to wealth. 1. Don't go all in at once. If you have a lump sum of money to invest and you are doing so when the market is......
• Beware Target-Date Funds! Target-date funds were supposed to be the ultimate idiot-proof investment vehicle for retirement savings. The idea is that asset allocation is the single most important factor in determining investing success, and most people get it wrong. Many others never even try because they find the concept too daunting. Many people......
• Investing Term Tuesday: Champagne Stock. Champagne Stock is slang for a stock that has appreciated dramatically. Champagne stocks make shareholders a great deal of money, usually relatively quickly. Champagne stocks are also commonly part of an industry or sector that is experiencing a bubble. This term derives its meaning from the habit of individuals who......

• Finovate Startup 2009 Live Twitter I am attending Finovate Startup 2009. It is an action packed 1 day format which I belive will lend itself perfectly to a live twitter. Stay tuned it should be an amazing day. http://twitter.com/BlogTrafficExch In the break I have scheduled some talks with SimplFi, Mint, and Calendar Budget. I am......
• A Better Way To Earn Money From Parked Domains Until recently, domainers used to park domains with nothing but ads on them. They tried to get traffic from mis-spelt URLs or people who'd directly type a URL in the location bar. There wasn't any content to attract the search engines, so unless they were paying to direct traffic to......
• ING Direct Announces Black Friday Deals If you recall, ING Direct is offering up some deals for Black Friday and Cyber Monday.  Well, they released what those offers actually are: - Electric Orange Checking Account: Open up an Electric Orange checking account on Black Friday and ING Direct will give you a $121 bonus!  Huh, $121......
• Roth vs. a traditional IRA Alright, I'll admit it, I don't have a Roth IRA. I have a regular IRA instead. I've been considering jumping on the Roth bandwagon, but wanted to check things out for myself first. So I went and took a look at the IRS's Publication 590, Individual Retirement Arrangements. Here is......
• 7 Online Discount Brokers That Offer Stock Trades for $7 Or Less This article comes from DR at The Dough Roller, a blog about how to make more money, spend less, and invest the rest. As investors have become more and more comfortable trading stocks and options over the Internet, a number of online discount brokers have entered the market. Zecco was......

Target date funds have been in the news quite a lot over the past few years, though the nature of the news seems to have gone from great to bad over that time. Consider that when target date funds were first introduced they were heralded as the pinnacle in the evolution of investment vehicles. They were the ultimate in “set it and forget” investing!

These funds were so universally praised by the investment community and politicians alike that when congress passed the Pension Protection Act (PPA) allowing companies to automatically enroll employees in 401(k) accounts, it was target date funds that were chosen most often as the default fund, or “qualified default investment alternative” (QDIA) in the lingo of the PPA.

Then the crash of 2008-2009 happened.

2010 Target date funds performed horribly in that crash. This gave target date funds a lot of bad publicity. After all, the idea of a 2010 target date fund was that it would be invested in less risky assets as 2010 got closer, right?

Maybe.

See, the problem isn’t really that these funds lost as much as the average stock fund, or even that they were tilted too heavily in the direction of stocks. There are really two problems at the root of all this:

1. The crash of 2008 was not a garden variety stock market crash.
2. People’s perspectives on retirement savings is skewed.

Problem One: The crash of 2008.

The crash of 2008 was a once in a lifetime kind of phenomenon, one in which almost every investment asset lost value. The problem for target date funds regarding this kind of crash is: where should the majority of assets held in a 2010 target date fund be allocated?

In a garden variety stock market crash, or correction of say 10-15% or even 20% loss in stocks, a hefty bond allocation is usually enough to provide proper ballast to limit the total losses for the fund. But in 2008, just about the only safe place was cash, or gold and in any normal investment environment a majority of holdings in cash or gold would be a money loser.

Problem Two: Investor perspective.

This problem affected target date funds because investors simply did not expect a 2010 fund to lose 35% -40% of its value so close to the target date. But I think this is really the result of an underlying mistake in expectation on the part of the investor.

Too many investors have it in their mind that they will be taking all their money out of the stock market when they retire.

Maybe it’s the way these funds are marketed, but I know a lot of investors think that the clock stops when they retire and that what they have in their investment account is what they have for the rest of their lives. This is simply not true. The average retiree today can expect to live another 15-20 years. The fact is that they will still need to be invested in stocks in order for their savings to last as long as they do.

Solutions.

I think just about the only solution one can have for the first problem (the unusual market crash) is to have a sizeable sum of cash saved up for immediate access if you have just retired or are about to retire when such a crash hits. Something along the 9-12 month of expenses range, maybe more if you tend to panic about finances. This ought to allow the investor to weather the crash and not have to deplete his investment account while it is suffering heavy losses.

The solution to the problem of investor perception is also covered by the huge sum of cash savings fix to the first problem, but there is also a long term mental shift that needs to happen. Investors and retirees need to consider post-retirement investing. Far too many people think about investing or saving for retirement as the end game, when in reality it’s just an inflection point where the nature of investing changes but the need continues; the only true end point is the end of life, after which you get into estate planning.

• Best ETF's For... Kiplinger has released their annual "best of" edition, where they rate the best of just about everything. One of the categories is ETF's. I thought I'd share the picks, and some thoughts on them here, but you should check out the complete issue if you get a chance. Best ETF......
• The One-Minute Portfolio. Here's the ultimate in super-simple investment portfolios, for those who don't have the time or inclination to pick and monitor individual stocks. The One-Minute Portfolio. The One-Minute Portfolio is comprised of just 3 asset allocations: Domestic Stocks, Foreign Stocks and Bonds. Here's a recommendation for each category: 1. Buy America......
• 3 Recommended Pimco Bond Funds. Bonds are an important part of any good asset allocation, and here are 3 bond funds from the Pimco firm as recommended in a recent Kiplinger magazine article. PIMCO bond total return (PTTAX). Manager Bill Gross sticks to investment grade, intermediate-term U.S. bonds for this fund. The expense ratio for......
• Beware Target-Date Funds! Target-date funds were supposed to be the ultimate idiot-proof investment vehicle for retirement savings. The idea is that asset allocation is the single most important factor in determining investing success, and most people get it wrong. Many others never even try because they find the concept too daunting. Many people......
• Mutual Fund Monday - 5 Things To Watch When Choosing A Fund. Picking a mutual fund can be a daunting task, but here are 5 things to look for that I hope will help make the process a little easier. This is part of my weekly Mutual Fund Monday post feature. If you find this interesting or helpful, please read more. 1.......

• how can I find a proficient day trader who will show me the ropes? I figure most guys who sell advice aren't making any money, so they have to sell books or CDs. The guys making the money are too busy trading to share their expertise. Also, why would they want to let the world in on their secrets? You can't always rely on......
• Open A ShareBuilder Investment Account, Get $25 I came across another top broker promotion, and this time, it’s from ShareBuilder, the online stock broker arm for ING Direct, a highly regarded online bank. At this time, they are offering a $25 cash bonus to new investors who would like to open an Individual, Joint or Custodial......
• Discussing Retirement with Parents: Is a Comfortable Retirement No Longer an Option? Yesterday, I had one of the most unpleasant conversations I've ever had on the subject of money. I had to tell a close friend of my family that, in all likelihood, he has not saved enough money for his retirement. This is a man I've known since I was a......
• New Loan Funded — cash for small business — $25,000 at 14.5% — AA Credit — DTI 1422125% A new loan funded (cash for small business — $25,000 at 14.5%).  I participated via a manual bid the loan was Autofunding.  The borrower had AA credit and 1422125% DTI (undocumentable income).  As a reminder my standing orders (and manual bids) only find loans with 0 current delinquencies, 10 or less delinquencies......
• A Detailed Look At TARP [/caption] TARP allows the United States Department of the Treasury to purchase or insure up to $700 Billion of "troubled assets", defined as "(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated......

It’s Mutual Fund Monday again, and I thought that I’d do something a little different this week. Rather than focus on a single fund or concept about funds, I’m focusing on a topic and sharing some of the interesting posts I’ve found on other blogs recently about that topic. The topic: ETFs.

ETFs, or exchange traded funds, first became available to investors in 1993 and have since evolved from being simple index trackers to being full blown portfolios or hedge funds of their own. There’s much mistaken knowledge about ETFs and much confusion. Hopefully these posts will help set you straight on ETFs. Even if you think you know all about them, there is probably a thing or two you didn’t know.

How to Choose ETFs for Your Portfolio from Oblivious Investor is a great place to start when beginning to add ETFs to your portfolio. He examines the usual suspects in regards to the important factors of an ETF, like expense ratio and which index it tracks; but he also covers some lesser known or often overlooked factors like the Bid/Ask Spread of the fund.

Not sure about ETFs, or too sure about them? Be sure to check out Ten Myths About ETF Investing from ETFdb before you make another decision about ETFs

Do you think Charles Schwab Might be the Best Choice for Passive Investors? Steadfast Finances does, and he explains why as well as why you should care. Very interesting post..

Lastly in our ETF posts this week is a post by Dividend Tree in which he reminds us of one of the single most important details about Investing in ETFs – Know What You are Investing In. Some of this is related I think to the 10 myths of ETFs from ETFdb above. Many investors think all ETFs are created the same and they invest in what the name suggests, but Dividend Tree shows that this is not always true.

• When it Comes to Investing, Simplicity Rules. There was a time when only the wealthy and well connected could invest in the stock market. Then IRAs and 401(k) plans ushered in a new era of the "common man" investor. Flash forward a bit more, to the Internet age, and we have a grand democratization of the stock......
• ShareBuilder: 20% OFF Real-time Trades - Today Only! Here's a Cyber Monday shopping deal for all you customers of ING ShareBuilder - 20% commission rebate on all Real-time Trades that execute on Monday, November 30. You can make as many real-time trades as you want and get 20% off on each $9.95 commission. Just add the promotion code......
• Mutual Fund Monday - What 2009 Trends Mean for 2010. Many investors take the change in calendar year as an opportunity to assess their portfolios and the future, and hopefully get their portfolios aligned with the future direction of the stock market. One way in which to do this is to look back on the year that's passed and see......
• Beware Target-Date Funds! Target-date funds were supposed to be the ultimate idiot-proof investment vehicle for retirement savings. The idea is that asset allocation is the single most important factor in determining investing success, and most people get it wrong. Many others never even try because they find the concept too daunting. Many people......
• The One-Minute Portfolio. Here's the ultimate in super-simple investment portfolios, for those who don't have the time or inclination to pick and monitor individual stocks. The One-Minute Portfolio. The One-Minute Portfolio is comprised of just 3 asset allocations: Domestic Stocks, Foreign Stocks and Bonds. Here's a recommendation for each category: 1. Buy America......

• Solid Mutual Funds With High Minimums. Those of you who have read this site for a while have probably realized that I am mostly a "set it and forget it" type of investor. While I have a regular brokerage account at Scottrade (more about this in an upcoming post), I no longer buy individual stocks -......
• Vanguard CEO Discusses Poor Performance of Index Funds During Last Decade Vanguard's CEO, Bill McNabb, gave a CNBC interview yesterday discussing the poor performance of his Vanguard index funds during the last decade after the recent stock market crash. If you have been reading this blog for a while, you would know I've been rather outspoken on index funds calling them......
• Ontario's HST (Harmonized Sales Tax) Might Mean Mutual Funds Cost You Even More And not just for investors in Ontario.  Because of the way mutual funds are sold and fees gathered, the new, higher tax proposals would affect all mutual fund investors in Canada. But recently, Ontario premier Dalton McGuinty said there might be some modifications to the Ontario government's plan to levy......
• Index Funds 101 The most significant invention in the 20th century as far as investing goes is mutual funds, at least if you are a small individual investor with modest means. Thanks to mutual funds, the benefits associated with large scale international capital markets are now capable of being taken advantage by more......
• The Pros and Cons of Investing in ETFs In last decade, specialty ETFs (Exchange Traded Funds) are probably the hottest thing to hit Wall Street since the rise of the discount brokers in the mid 1990s. Initially, ETFs were not very popular because they only tracked the performance of a few stock market indices. However, in today's investing......