A while back we discussed the flaws with an age based approach to your asset allocation decisions. We would like to expand upon that thought by looking at how a balanced portfolio can lower your volatility and potentially improve your investment results no matter what cycle of life you are in.

 It has been a long time coming and we are very happy for them.  This has nothing to do with finance, we are just happy for them.

 Normally, we find Paul Farrell a little annoying, however his recent commentary on Marketwatch.com is right on.  It is time that we all wake up and realize that we have many problems that need to be addressed right now.  As Mr. Farrell points out, and we completely agree, there are many ticking time bombs out there right now and any one of them could take down our way of life.

The concept of fixed income is enormous and extremely complicated.  We will attempt here to give you a quick look at what the concept means, and why it is important to you.  If there are any fixed income geeks reading this you may be offended by the simplicity with which we deal with this subject; however, please keep in mind that the intricacies of the yield curve are beyond the scope of this piece. 

We hear a lot of talk out of Washington these days about how they want banks to lend.  They supposedly passed TARP, and still pass money out under this vehicle, with the idea that they would put money in the banks so they can lend money and stimulate the economy. On one hand we have the folks in Washington stomping their feet and scratching their heads unable to fathom why their efforts have not worked.

As promised here is more on Roth IRA conversions. Whether or not to convert your traditional IRA to a Roth IRA is not an easy question and there are many factors involved. We cannot give you specific advice for your situation, but we can lay out some key signs that a conversion may be right for you. Below is our ideal conversion candidate.

  As we put to bed another wacky financial year it is important to start planning for 2010.  You will soon start to catch the buzz of converting your IRA to a Roth IRA.  In 2010 there is a unique planning opportunity in that no matter what your income you are capable of converting your traditional IRA to a Roth IRA.  Normally this is restricted to taxpayers with a modified adjusted gross income below $100,000.  There are a few other key advantages, such as being able to spread out the tax burden over two tax years.  This being said a conversion is not for everyone.  When deciding if you should make the conversion here are a few of the key points we think you should consider.  

  Most consumers have the idea that a financial planner can give you answers regarding; e.g., whether you will have enough money for retirement or college funding.  While financial planners do have suggestions, they cannot truly give you complete answers.   

  Traditional financial planning dictates that you allocate your investments based upon your age, or the time you have until you need the funds.  Generally speaking, younger people are supposed to be cramming away as much money as they can for long term goals such as retirement or college costs (often parents saving for young children).  Traditional planning would hold that the farther away the goal the higher the equity exposure should be; up to 100% for those with extremely long time horizons.  We believe that this concept is not entirely accurate. 

  Recently, in a bank, we overheard a woman exclaim I only put money in things with FDIC insurance – I lived through the Depression – I learned that lesson.  Have you ever talked with a person who has lived through the Depression about money or investing?  In many cases you will find that these people are very conservative with their money and very distrustful of uninsured investments.  They prefer to put their money in CD-like products and usually look to institutions with FDIC coverage.  Suggesting an investment in stocks to these people would be like suggesting they put all of their money in salad oil futures.