May 9, 2013
Written by Chloe Lutts Jensen
Master limited partnerships, or MLPs, are a unique type of business allowed under the U.S. tax code. They’re similar to a “regular” limited partnership, with a few differences.
In addition to a limited partner or partners, who provide the MLP with capital and get a share of its cash flow in return, MLPs also have a general partner that runs the business.
In addition, MLPs are publicly traded, by definition. The limited partners are the public shareholders—in this case called unitholders. Read More »
May 8, 2013
Written by Chloe Lutts Jensen
Can I hold MLPs in my IRA? This is a common question from investors considering buying MLPs for income.
While you are allowed to hold MLPs in a tax-advantaged account like an IRA, it is unwise.
That’s because the IRS considers MLP distributions paid into an IRA “unrelated business taxable income,” or UBTI. And if your IRA earns over $1,000 in UBTI (total from all sources, including distributions from different MLPs) in a single year, your IRA will be liable for paying tax on that income, at corporate tax rates. Read More »
September 14, 2012
Written by Jack Bowers
“You’ve just retired, and your portfolio is your main source of income. How should you invest, and how much can you safely withdraw from your nest egg? Bill Bengen, a California advisor, attempted to answer that question 20 years ago: Maintain a mix of 53% stocks and 47% bonds, and rebalance annually. Start by liquidating 4% of your portfolio balance the first year, then adjust that dollar amount upward by the rate of inflation (CPI). With that approach, Bengen contended, odds are high that your portfolio will last at least 30 years. Read More »
September 7, 2012
Written by Chloe Lutts Jensen
As retired investors are quickly learning in today’s super-low-interest-rate environment, there are lots of ways to create a fixed income portfolio without using the traditional bonds. I’ve already discussed REITs, utilities, MLPs and a variety of other investments here, and today I add one more vehicle to the list: preferred stocks. Read More »
August 17, 2012
Written by Bob Carlson
“Investors are pouring money into an old investment: life insurance. That’s right. Life insurance can be an investment. Before interest rates were deregulated a few decades ago, life insurance and pass-book savings accounts at the local bank were a major vehicle for saving and investing for many people. It became less popular after money market funds and other high-yielding alternatives became available. Read More »
July 6, 2012
Written by Steve Christ
CEFs, also called closed-end investment management companies, are different from mutual funds and ETFs because they issue a limited number of shares. That actually makes them more similar to ordinary publicly-listed companies than funds: when a new investor buys into a CEF, they have to buy from someone else who is selling their shares, like with a stock. ETFs and mutual funds, by contrast, regularly issue new shares and buy back old ones (through bank intermediaries).
Being “closed-end” means a few things for CEF investors. Steve Christ, editor of The Wealth Advisory, has explained these consequences well, so I’ll let him take over: Read More »
June 29, 2012
Written by Chloe Lutts Jensen
Investors hate being told to do nothing. And when the market is chopping up and down like a roller coaster, it’s especially hard. Maybe you want to pick up some screaming bargains, or maybe you’re itching to sell everything at any price. But those times, when the market has no clear trend, and when it’s most important to ignore those fear- and greed-driven urges, and simply do nothing. As Ron Rowland, Editor of All Star Fund Trader, wrote, “Time will tell whether buying or selling is the better decision right now. Doing nothing is also a decision–and can sometimes be the best one.” Read More »
Written by Chloe Lutts Jensen
Have dividend-paying stocks become too popular? Mark Deschaine recently asked just that in Deschaine & Company’s Viewpoint, which has long focused on dividend-paying stocks:
“In a world of zero interest rates and another mediocre year for stocks, dividends are garnering more investor and press attention. As a result, we’re increasingly asked if the dividend ‘craze’ has run its course. Or if it’s too late to consider dividends a part of one’s investment strategy. It’s hard to argue that dividend stocks haven’t become too popular when they appear in major features in the New York Times and Barron’s within a week of one another. Read More »
Written by Ingrid Hendershot
Hendershot Investments is a quarterly newsletter focused on conservative, high-quality (or HI-quality, for Hendershot Investments) companies for the long-term investor, many of which pay dividends. Editor Ingrid Hendershot wrote the following essay on the importance of free cash flow (or FCF) in the March, 2012, issue:
“Seeking to build an investment stash, folks need to decide how to invest their hard-earned cash. There are three broad-based investment categories for investors to consider: fixed-income investments, such as bonds, CDs or U.S. Treasuries; commodities, such as gold; and stocks. Read More »
Written by Steven Check
Steven Check, editor of The Blue Chip Investor, studied the newsletter’s gain on its position in McCormick & Company (MKC), the spice company, to demonstrate the importance of investing when stocks are trading at low valuations.
“As of this issue, we’re selling our position in McCormick. This is a trade that worked out as we hoped, and since there are many lessons to be learned in reviewing it, we will do so in this letter. Read More »
