Sun05012016

Business & Real Estate

Consequences of negative interest rates vary

Since the crisis of 2008, the U.S. Federal Reserve has used quantitative easing to stimulate the economy. This approach involves purchasing a significant volume of bonds to drive up bond prices and reduce interest rates, with the expectation that lower rates will stimulate demand for more borrowing and consequently more liquidity flowing throughout the economy.

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It's better to be a good – rather than a great – investor

Cliff Asness, co-founder of AQR Capital Management, once stated on Bloomberg Television, “I used to think being great at investing long-term was about genius. Genius is still good, but more and more, I think it’s about doing something reasonable, that makes sense, and then sticking to it with incredible fortitude through the tough times.”

In other words, you’d be better off long term by following a consistent, well-diversified investment strategy, regardless of what the markets are doing.

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Subtracting the truth from tax deductions

Since we are currently in the midst of tax season, just for fun I thought I’d share some of the more creative deductions taxpayers have attempted to get away with. Warning: Do not try this at home.

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Don't believe everything you believe

Among all the various cognitive biases that cause human beings to think and act irrationally, one of the more insidious ones is known as “confirmation bias.” Simply put, it means we tend to favor information that supports previously existing beliefs and tend to reject anything that does not.

How much of a problem is confirmation bias when it comes to investing, and how can we recognize and avoid it?

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The return of the tontine: A means to diversify retirement income

Prior to the 1990s, a retiree could typically count on guaranteed income from company pensions lasting until he or she passed away. But by 2015, few private companies still offered them.

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Maximizing financial aid for college using 529 plans

I wrote in 2014 about a strategy involving 529 plans designed to maximize the financial aid a college student could receive. To summarize the original strategy: If you split your savings into two 529 plans – 75 percent in one owned by the student’s parents and 25 percent in one owned by the student’s grandparents – you will minimize the impact the funds in those plans will have on your expected family contribution each year and consequently maximize the financial aid your student potentially may be offered throughout his or her college career.

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Five ways to extract the equity in your business

If you own a small business, chances are you expect to use the equity you’ve accumulated over the years to fund all or part of your retirement. The challenge is to structure the transfer in a manner that provides sufficient retirement income while minimizing both income and estate/gift taxes.

With these potentially conflicting goals in mind, following are a few approaches you might consider.

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