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A Dollar Is a Dollar Is a Dollar. Except in Our Minds.

Jan. 10, 2021 6:56 pm ET
Do you care if a clerk at the drugstore gives you change in one $10 bill or two $5 bills?
Are you more reluctant to spend hard-earned dollars than windfall dollars?
Do you distinguish the “income” dollars paid as dividends on your stock from the “capital” dollars of the value of stock itself?
Rational investors answer “no” to each of the three questions. After all, money is money, and rational investors can easily distinguish between the substance of money and its form. Hard-earned dollars and capital dollars are no greener than windfall dollars and income dollars.
Normal investors, however, are likely to answer “no” to the first question, but many are sure to answer “yes” to the second and third questions.

Journal-reports , Investing-in-funds , Funds-amp-etfs , Etfs , Investing , Investing-in-funds-amp-etfs , Fundsreport , Trusts-funds-financial-vehicles , Unit-trusts-mutual-funds , Financial-services , Investing-securities

Are Tax-Efficient Funds Worth It?

We crunched the numbers. The upshot: The returns may not be worth the tax savings.
Some mutual funds may claim to be tax efficient on average, but once the higher annual fees are paid, you as an investor might be disappointed.
Photo:
Daniel Acker/Bloomberg News
By
Derek Horstmeyer
Jan. 10, 2021 6:43 pm ET
Investors whose top concern is minimizing taxes often turn to “tax managed”—or “tax efficient”—mutual funds. But the returns they get may not be worth the tax savings.
In recent research, we found that tax-managed funds underperformed similar funds that weren’t tax managed by about 0.09 percentage point a year on average, over the 10 years ended Dec. 1, 2020. That is largely due to the higher fees the tax-managed funds carry, but in many cases their managers also performed significantly worse than their peers at the other funds.

Daniel-acker-bloomberg , Mike-brynda , Michael-braaten , Derek-horstmeyer , George-mason-university , George-mason-university-business-school-in-fairfax , Dow-jones-company-inc , Stock-fund , Bloomberg-news , Managed-stock-fund , Non-tax-managed-fund , Year-annualized

What Is the Brobdingnagian Base?

Updated Jan. 10, 2021 9:00 am ET
When investors first read or hear the term “Brobdingnagian base” they might be taken aback. Not only is “Brobdingnagian” a mouthful to pronounce, it is a literary reference that at first glance might seem unrelated to finance.
But understanding what the phrase means could be beneficial because some analysts use it to describe potentially large profit-making opportunities in markets.
Coined in the early 2000s by John Roque, now a technical analyst at Wolfe Research in New York, the term combines two words: one from the world of letters (Brobdingnagian) and the other from the realm of finance (base).

New-york , United-states , John-roque , Wolfe-research , Jonathan-swift , Journal-reports , Investing-in-funds , Funds-amp-etfs , Etfs , Investing , Investing-in-funds-amp-etfs , Fundsreport

The 'Small-Cap Effect' Isn't Dead, After All

Jan. 8, 2021 8:58 pm ET
Contrary to reports in recent years that the small-cap effect has disappeared, itâs actually alive and well. Weâve just been looking for it in all the wrong places.
The small-cap effect refers to the long-term tendency of small-capitalization stocks to outperform the large-caps. Since the mid-1920s, according to data from Dartmouth finance professor Kenneth French, the 10% of stocks with the smallest market caps have beaten the largest 10% of stocks by an annualized margin of 2.4 percentage points.
Much of the past two decades have been an exception to this long-term pattern, however. Over the past 15 years, for example, the Russell Microcap Index (containing 2,000 of the tiniest exchange-listed stocks) lagged behind the Russell Top 50 Mega Cap Index (containing the 50 largest-cap stocks) by 2.5 annualized percentage points.

California , United-states , Irvine , Hao-jiang , Dimitri-vayanos , Lu-zheng , Kenneth-french , University-of-california , London-school-of-economics , Michigan-state-university , Russell-microcap-index , Russell-top

Some Public-Service Workers Can Miss Out on College-Loan Help

Public-service loan forgiveness for college loans: How it works and why some borrowers are missing out
Employees of a U.S. federal, state, local or tribal government or nonprofit organization can be eligible for public-service student loans. Shown, the campus of UCLA on Dec. 3.
Photo:
Image Of Sport/Zuma Press
By
Cheryl Winokur Munk
Updated Jan. 9, 2021 9:00 am ET
Many student-loan borrowers are confused by the basic requirements of federal Public Service Loan Forgiveness, which could lead to missed opportunity.
The program, established by statute in 2007, has gotten a bad rap because of its complexities and because many student-loan borrowers thought they were on the path to forgiveness but weren’t. Instead, they learned, years later, that their payments didn’t qualify or that they were further away from forgiveness than they had thought.

Public-service-loan-forgiveness , Institute-for-college-access-success , Institute-of-student-loan-advisors , Michele-streeter , College-access , Betsy-mayotte , Student-loan-advisors , Journal-reports , Investing-in-funds , Funds-amp-etfs , Etfs

Think Twice Before Refinancing a Student Loan

Think Twice Before Refinancing a Student Loan
Federal student loans carry benefits that will disappear if the borrower refinances with a private lender
More than 43 million Americans owe a collective $1.6 trillion in federal student loans. WSJ’s Josh Mitchell explains how President-elect Joe Biden plans to help borrowers tackle that debt. Photo illustration: Carlos Waters
By
Cheryl Winokur Munk
Updated Jan. 9, 2021 9:00 am ET
Low rates are causing many people to consider refinancing mortgage and other debt. But one type of debt you shouldn’t touch right now is federal student loans.
Refinancing a student loan could help borrowers lower their monthly interest rate, decrease their monthly payment and pay off their loans faster. However, borrowers who refinance a federal student loan with a private lender lose out on consumer protection and repayment programs that federal loans offer, including income-driven repayment and loan forgiveness.

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When to Tap Social Security: The Sometimes Surprising Answer From Online Calculators

When to Tap Social Security: The Sometimes Surprising Answer From Online Calculators
The conventional wisdom is to wait as long as possible. But that isn’t always the best advice.
By
Neal Templin
Jan. 8, 2021 5:23 pm ET
One of the most complicated and consequential decisions in retirement—when to start collecting Social Security—has been transformed by online calculators.
The conventional wisdom says that you should wait to claim benefits as long as possible, to maximize your payments. But one size doesn’t fit all, and people’s circumstances are often different than the standard assumptions about expected lifespan and career plans.

Security-solutions-or-maximize-my-social , Social-security , Open-social-security , Social-security-solutions , Maximize-my-social , Journal-reports , Investing-in-funds , Funds-amp-etfs , Etfs , Investing , Investing-in-funds-amp-etfs

Financial Issues to Consider When an Elderly Parent Moves In With You

Ask Encore: Make sure you understand the many budget and tax implications.

New-jersey , United-states , Journal-reports , Investing-in-funds , Funds-amp-etfs , Etfs , Investing , Investing-in-funds-amp-etfs , Fundsreport , Healthcare-life-sciences , Residential-care

U.S.-Stock Funds Rose 19.1% in a Grueling 2020

U.S.-Stock Funds Rose 19.1% in a Grueling 2020
The average is less than it was in 2019, but it could be seen as more impressive considering what the economy and markets had to overcome last year
Stock-fund investors are enjoying gains, but are also cautious. That’s why they have been sending billions of dollars to bond funds.
Illustration:
Giacomo Bagnara
By
William Power
For a second straight year, stock-fund investors pocketed big gains. But their fingers are crossed.
Powered by a 19.0% rally in the fourth quarter, the average diversified U.S.-stock fund rose 19.1% for the year, according to Refinitiv Lipper data. That wasn’t as strong as the average 28.3% gain in 2019, but it could be seen as more impressive considering what the economy and markets had to overcome last year.

Giacomo-bagnara , Russ-koesterich , Refinitiv-lipper , Blackrock-global-allocation-fund-in-princeton , Bonds , Investment-company-institute , Blackrock-global-allocation-fund , Putnam-investment-management , Investment-company , Journal-reports , Investing-in-funds , Funds-amp-etfs