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The 4% Retirement Spending Rule: Is It Still Relevant?

7,099
by Mark Hebner and IFA Contributors
Monday, March 31, 2014

The 4% retirement spending rule was developed 20 years ago by William P. Bengen, a financial planner who published his results in the Journal of Financial Planning. Essentially, the 4% rule says that retirees who begin with spending 4% of their portfolio and increase their ...Read More

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  • International Diversification vs. Home Bias

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    by Mark Hebner and IFA Contributors — Tuesday, March 25, 2014

    In a recent article on the concept of advisor's alpha, Vanguard emphasized the importance of advisor’s putting their clients into portfolios that they are unlikely to trade under varying market ...Read More

  • Confessions of an Active Manager

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    by Mark Hebner and IFA Contributors — Monday, March 24, 2014

    Recently, one of our fans in India sent us a fascinating article by his fellow countryman, Mehrab Irani who has had the responsibility of managing active mutual funds for a large fund family. As we have noted ...Read More

  • How Smart is Your Beta?

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    by Mark Hebner and IFA Contributors — Sunday, March 23, 2014

    At Index Fund Advisors, we are always keeping an ear out for new terminology that appears in the investment marketplace. Recently, there has been a lot of talk about “smart beta”. Recall that beta, ...Read More

  • A New Low for CNBC

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    by IFA Contributors — Friday, March 21, 2014

    With nothing better to do the other night, I decided to try out CNBC’s new series, Money Talks, a reality show that follows the antics of one Steve Stevens and his company VIP Sports of Las Vegas which ...Read More

  • Consumer Price Index and Consumption

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    by Mark Hebner and IFA Contributors — Tuesday, March 18, 2014

    Economists discuss the choices people make with their income as some allocation of consumption and savings. They remind us that we apply our human capital (our skills and time) to earn financial capital (our ...Read More

  • The Continuing Wisdom of the Oracle of Omaha

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    by Mark Hebner and IFA Contributors — Monday, March 17, 2014

    “Games are won by players who focus on the playing field -- not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on ...Read More

  • Capturing Portfolio Returns: Simple but not Easy

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    by Mark Hebner and IFA Contributors — Friday, March 14, 2014

    Throughout the IFA Website, you will find long-term historical returns of the IFA Index Portfolios and the asset classes that make up those portfolios. One example is the table of Simulated Passive Investor ...Read More

  • Pension-Gate Continues: North Carolina is on Notice

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    by Mark Hebner and IFA Contributors — Thursday, March 13, 2014

    Those of you who are long-time followers of ifa.com are probably aware of the attention we have given to the very large problem of mismanagement of public pension plan funds. Thanks to diligent research that ...Read More

  • The Big Tease Continues

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    by Mark Hebner and IFA Contributors — Tuesday, March 11, 2014

    Take a walk past the financial section of your local newsstand, and you are likely to be greeted with headlines like “Ten Hot Stock Picks for 2014!” or “The Top Ten Mutual Funds to Buy ...Read More

  • A Brief History of the Efficient Markets Hypothesis

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    by Mark Hebner and IFA Contributors — Monday, March 10, 2014

    In 2008, Nobel laureate Eugene Fama delivered a brief lecture to the American Finance Association. The entire 30-minute video is included above, and it is well worth an investment of your time. Fama was ...Read More

  • When It Pays to Be Patient

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    by Mark Hebner and IFA Contributors — Tuesday, February 25, 2014

    One of the reasons that Index Fund Advisors advises the use of Dimensional funds is their patient and opportunistic approach to trading which differentiates them from traditional index fund providers. All too ...Read More

  • The Tax Treatment of Investment Management Fees

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    by Mark Hebner and IFA Contributors — Thursday, February 20, 2014

    Around this time of the year, we are frequently asked about the tax deductibility of investment management fees. The answer, like most things related to the tax code, is not a simple one. In general, when paid ...Read More

  • The Golden Ticket Trap

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    by Jim Parker — Thursday, February 6, 2014

    In a popular children’s story, the young hero pins all his hopes on finding one of a handful of “golden tickets” hidden among millions of candy bars. It seems many people approach investing ...Read More

  • 2013: A Record Year for Indexing

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    by Mark Hebner and IFA Contributors — Friday, January 31, 2014

    At Index Fund Advisors, we are always delighted to see articles such as this one from Bloomberg.com which shows the unabated march of indexing across the investment universe. For 2013, investors poured in a ...Read More

  • Q4/2013: Quarterly Market Review Summary

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    by Mark Hebner and IFA Contributors — Thursday, January 30, 2014

    Overall, it was a very good quarter for equities, the one exception being real estate investment trusts (REITs) which were down 1%. U.S. bonds were down slightly, but Global bonds showed a gain of 0.44%. ...Read More

  • SEC Issues Risk Alert on Alternative Investments

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    by Mark Hebner and IFA Contributors — Tuesday, January 28, 2014

    At Index Fund Advisors, we have never advised our clients to engage with alternative investments such as hedge funds, private equity funds, or funds of private funds. A recent alert from the Securities and ...Read More

  • Advisor Alpha: The View from Vanguard

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    by Mark Hebner and IFA Contributors — Monday, January 27, 2014

    At Index Fund Advisors, we have repeatedly cautioned investors to avoid getting ensnared in the never-ending pursuit of alpha by either picking stocks or hiring an active manager to pick stocks on their ...Read More

  • Morningstar's Fund Managers of the Year

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    by Mark Hebner and IFA Contributors — Wednesday, January 22, 2014

    Can you hear it? That is the sound of millions of index fund investors yawning in response to Morningstar’s announcement of its Fund Managers of the Year for 2013. That recent performance weighs very ...Read More

  • Comments on Barron's Dimensional Fund Advisors Profile [VIDEO]

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    by Mary Brunson and Mark Hebner — Friday, January 17, 2014

    "Active management is a zero-sum game, and that's before costs. That's not opinion, that's math." --Eugene Fama, 2013 Nobel Prize in Economics, Professor of Finance, Chicago Booth, as quoted in Barron's, ...Read More

  • A Fascinating PBS Frontline Documentary

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    by Mark Hebner and IFA Contributors — Thursday, January 16, 2014

    For the past year, we have been following the story of billionaire Steven Cohen’s SAC Capital, particularly its unprecedented indictment followed by a guilty plea and a record $1.8 billion ...Read More

  • 2013: Another Dismal Year for Hedge Funds

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    by Mark Hebner and IFA Contributors — Saturday, January 11, 2014

    “We active folks have done a horrible job of beating the benchmarks.” So says Bob Doll of Nuveen Investments who was recently interviewed by Jeff Macke of Yahoo! Finance’s Breakout. For 2013, ...Read More

  • Asset Location

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    by Mark Hebner — Friday, January 10, 2014

    An additional way that a passive advisor can add value is not just asset allocation but asset location. Specifically, for a client that has a mixture of taxable accounts, traditional IRAs, and Roth IRAs, it is ...Read More

  • Liquidity: Is It a Risk Factor?

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    by Mark Hebner and IFA Contributors — Thursday, January 9, 2014

    According to Investopedia, liquidity is defined as the degree to which an asset can be bought or sold in the market without affecting the asset’s price. If you have ever attempted to sell a large block ...Read More

  • Surprise! No Selloff in 2013

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    by Weston Wellington — Wednesday, January 8, 2014

    The unusually strong performance of US stocks in 2013 was a welcome surprise for investors who are following a simple buy-and-hold strategy and a source of exasperation for many professionals caught flatfooted ...Read More

  • Barron's Article on Dimensional Fund Advisors

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    by Mark Hebner and IFA Contributors — Monday, January 6, 2014

    Beverly Goodman of Barron’s was accorded the high honor of being the first reporter to attend one of DFA’s Financial Advisor Colleges. The article that she wrote about her experience, A Different ...Read More

  • The 2013 4th Quarter and Year-End Review

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    by Mark Hebner and IFA Contributors — Thursday, January 2, 2014

    In the fourth quarter of 2013, risk was rewarded for all classes of equities except REITs, and fixed income remained essentially flat. Once again, there was a lot of discussion surrounding future Fed policy, ...Read More

  • Mark Hebner

    Selecting Investments Part 1

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    by Mark Hebner — Thursday, January 2, 2014

    As a fiduciary for its clients, IFA only receives compensation from its clients and is therefore unbiased in its choice of ...Read More

  • Selecting Investments Part 2

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    by Mark Hebner — Thursday, January 2, 2014

    IFA has known the DFA leadership since 1999 and they have remained committed to fostering a culture of learning, teamwork, innovation, and dedication to always doing what’s right for ...Read More

  • Probability In Motion

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    by Mark Hebner — Wednesday, January 1, 2014

    "The probable is what usually happens." - Aristotle Say "HELLO" to Francis, IFA’s newest probability machine, named after Francis Galton, an English mathematician who was an expert in many scientific ...Read More

  • Standard Deviation

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    by Mark Hebner — Wednesday, January 1, 2014

    In the field of finance, standard deviation represents the risk associated with a security (stocks or bonds), or the risk of a portfolio of securities (including actively managed mutual funds, index mutual ...Read More

  • President Index Funds Advisors

    The Resilience of Capitalism

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    by Mark Hebner — Wednesday, January 1, 2014

    As of the end of 2013, the S&P 500 Index has not only fully recovered from the 51% drop that began in late 2007 and lasted through March of 2009, it has actually gained 37% beyond the high point in 2007, ...Read More

  • A Retrospective on 2013 Predictions

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    by Mark Hebner and IFA Contributors — Tuesday, December 31, 2013

    “Prediction is very difficult, especially if it’s about the future.” -Nils Bohr   “Stocks are about to plunge, Wells Fargo warns.” According to strategist Gina Martin Adams, ...Read More

  • A Difficult Year for Gold and Silver

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    by Mark Hebner and IFA Contributors — Thursday, December 26, 2013

    Although we haven't seen too many of them lately, it is easy to recall the advertisements and doomsday books touting gold and silver as investments that inundated ...Read More

  • A Banner Year for Dimensional Fund Advisors

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    by Mark Hebner and IFA Contributors — Monday, December 23, 2013

    According to Morningstar’s most recent monthly U.S. Open-End Asset Flows Update, 2013 is shaping up to be DFA’s strongest year ever in terms of net cash flows. As of November 30th, DFA’s ...Read More

  • The Myth of Fund Ratings

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    by Anonymous — Monday, December 23, 2013

    At least 80% of actively managed funds underperform the S&P 500 in any 10 year period—and there are indexes that perform better than the S&P 500. If risk-adjusted returns are taken into account, funds lose out ...Read More

  • Many Happy Returns

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    by Jim Parker — Monday, December 23, 2013

    It’s that time of the year when the talking heads of television and the prognosticators of print issue their sage outlooks for the coming 12 months. While this crystal ball gazing is always entertaining, ...Read More

  • Weston Wellington Talks Nobel Laureates

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    by Mark Hebner — Monday, December 23, 2013

    IFA.tv Show 17-Weston Wellington Talks Nobel Laureates MH: Hi, I am Mark Hebner, President of Index fund Advisors and welcome to IFA.tv! Today I am here with Weston Wellington-Vice President over at ...Read More

  • Merton Miller

    Two Contrasting Views of Stock Markets

    5,859
    by Merton H. Miller and Charles W. Upton — Friday, December 20, 2013

    The casino view sees the stock market as largely a place where investors place bets on the near future prices of stocks rather than on the numbers on a roulette wheel or the spots on a pack of ...Read More

  • Reality Show for Investors: "Survivor"

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    by Weston Wellington — Friday, December 20, 2013

    Anyone studying the long-run history of American business cannot help but observe how many of the prominent firms of one era fail to make it to the next. Free-market economies are characterized not only by ...Read More

  • The Net Investment Income Tax of the Affordable Care Act

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    by Mark Hebner and IFA Contributors — Thursday, December 19, 2013

    At the beginning of 2013, the 3.8% Net Investment Income Tax of Obamacare went into effect. It applies to individuals, estates and trusts that have investment income above certain threshold amounts shown in ...Read More

  • PIMCO: Just How Consistent is Consistent?

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    by Mark Hebner and IFA Contributors — Wednesday, December 18, 2013

    In Bill Gross’s December 2013 Investment Outlook letter, he joined the ranks of Warren Buffett and Peter Lynch in giving a solid endorsement to indexing while reminiscing about his younger days when Jack ...Read More

  • Roth IRA Conversions

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    by Mark Hebner and IFA Contributors — Wednesday, December 18, 2013

    For younger investors who expect to be in a higher tax bracket in their retirement years, a Roth IRA can be a very attractive proposition for their retirement savings because the growth is not just ...Read More

  • Harry Markowitz Reflects on Eugene Fama's Nobel Prize

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    by Harry M. Markowitz — Wednesday, December 18, 2013

    After Scholes and Merton won the Nobel Prize in Economics for their and Fisher Black’s work on option pricing, whenever I was asked who among financial economists I thought would get the Prize next, Gene ...Read More

  • Fiduciary Duty

    Who is Your Fiduciary?

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    by Mark Hebner — Sunday, December 15, 2013

    From Wikipedia, the free encyclopedia A fiduciary (from Latin fiduciarius, meaning "[holding] in trust"; from fides, meaning "faith", and fiducia, meaning "trust") is a legal or ethical relationship of trust ...Read More

  • The History of Finance in Four Minutes [VIDEO]

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    by Mark Hebner and IFA Contributors — Wednesday, December 11, 2013

    Anyone who has paid attention to us at IFA is fully aware of how excited we are about Eugene Fama being awarded the 2013 Nobel Prize in Economic Sciences.  Yesterday, the event reached its culmination in ...Read More

  • Beating the Market—What's Luck Got to Do with It?

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    by Mark Hebner and IFA Contributors — Tuesday, December 10, 2013

    The answer to that question is quite a bit actually, at least according to Nobel Laureate Eugene Fama1 and Ken French. Contrary to the protestations of Robert Olstein as featured in this New York Times ...Read More

  • Eugene Fama's Nobel Prize Lecture [VIDEO]

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    by Mark Hebner and IFA Contributors — Monday, December 9, 2013

    This past Sunday (December 8th), Eugene Fama (along with Robert Shiller and Lars Peter Hansen) delivered his Nobel Prize lecture titled “Two Pillars of Asset Pricing.” This lecture should not to be ...Read More

  • Interest Rate Expectations

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    by Jim Parker — Thursday, December 5, 2013

    Interest rates around the world are at historic lows. They can only go in one direction from here, right? And aren’t rising interest rates bad for bond investors? The truth might surprise you. Central ...Read More