Think Twice About Direct Real Estate Investing

Written by Rob Copeland | 13 June 2013

Many of my clients are interested in investing in rental real estate. They see it as a reliable source of retirement income and believe it may be a good alternative to historically low CD and annuity rates, and bond yields.

My advice to would-be real estate investors: Slow down and think carefully about what you're getting in to. If you have experience in the business of real estate, then investing in rental properties might be a good idea. But if your professional experience is in another field, I strongly advise caution.

Buying rental real estate definitely looks attractive on the face of it. Clients have told me that they've done the math and figured out that they can earn high yields by renting residential properties or vacation properties. They might be able to buy a house for $100,000 and lease it for $1,000 a month. On paper, it looks like they'll be earning a 12% yield.

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When Your Advisor Can’t Protect You

Written by Rob Copeland | 14 May 2013

You know what an investment advisor’s job is: To try to make you money while also protecting you against losses.

What many clients don’t know, however, is that there are times when certain kinds of advisors may not be able to protect you. Because their hands are tied by regulations, they may be prevented from taking action to shield your portfolio from significant—and completely unnecessary—losses.

Specifically, we’re talking about brokers, whose business model involves being paid commissions for selling you stocks, mutual funds and other investments. Brokers’ business model is different from the Registered Investment Advisor (RIA) model that’s used by firms like ours. RIAs typically charge an ongoing fee rather than sales commissions, and that minimizes or eliminates the temptation to sell clients something that’s not right for them.

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Should You Turn to Stocks for Income?

Written by Rob Copeland | 12 April 2013

One of the most dependable places for investors to find income has traditionally been investment-grade corporate bonds—think the bonds of such blue-chip companies as AT&T, Kellogg or Eli Lilly.

But investment-grade corporates, particularly short-term notes, are paying historically low interest rates. Investing in longer-term corporate bonds will give you a little more income, but with a lot more risk. If interest rates rise—which many experts expect will happen in the next few years—your bonds will plunge in value.

And that's put many retirees and others who need income in a bind. One solution worth considering is to pass over those bonds completely, and buy stock shares in the same company. The current environment is one of those rare times when this can make sense.

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Who’s Afraid of the Sequester?

Written by Rob Copeland | 13 March 2013

The stock market’s response to the “sequester”—the $85 billion reduction in annual spending by Washington that took effect March 1—wasn’t quite what many expected.

After the nation’s leaders failed to reach a budget deal that would have averted the painful budget cuts, the market might have fallen like a rock. Instead, it didn’t do much of anything—investors basically shrugged. Then a few days later, with signs that the economy was strengthening, investors pushed the Dow Jones Industrial Average to an all-time high.

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