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VEU: Now Might Be A Good Time To Add Foreign Equity Exposure To Your Retirement Portfolio

Summary Investing for retirement can be as simple or as complex as you want to make it. One well diversified global ETF with a low expense ratio is a good start. Given the relative under-performance of foreign equities over the last five years, now might be a good time to add exposure to foreign equities to your retirement portfolio. This article reviews VEU, an ETF that can be added effectively to the core portion of most investors’ portfolios to increase exposure to foreign equities. Simply Investing – Philosophy Whether you are just starting to invest for yourself or your kids or are taking back control of your investments from an investment advisor, keep investing simple, consistent, diversified and low cost and you will significantly increase your chance of success. One well diversified global ETF with a low expense ratio is all that is required for many people starting to invest in equities, and an ETF that meets these criteria is the Vanguard Total World Stock ETF (NYSEARCA: VT ). As an investor’s experience, time dedicated to investing activities and desired risk, increases, investors can add ETFs to the core of their portfolio to gain exposure to new areas or increase exposure to areas that the investor believes will outperform. The next step for many investors is to allocate a percentage of their portfolio to “edge” positions, which offer additional risk and opportunity. Vanguard FTSE All-World ex-US ETF (NYSEARCA: VEU ) This article reviews VEU, an ETF that can be added effectively to the core portion of many investors’ portfolios to increase exposure to foreign equities. VEU – Regional allocation and investment synopsis Source: Vanguard (allocation as of 10/31/2015) VEU seeks to track the performance of the FTSE All-World ex US Index. It has holdings in approximately 2,500 stocks with broad exposure across developed and emerging non-US equity markets around the world. VEU’s broad global diversification helps to minimize volatility that any one region may experience. As can be seen above, VEU’s heaviest weighting is in European stocks. Investors looking to increase their exposure to foreign stocks should consider whether they want a heavy concentration of European stocks in their foreign stock ETF, when adding this ETF to their portfolio. VEU performance compared to the S&P 500 (click to enlarge) Source: Yahoo Finance (11/29/2015) As the chart above shows, the S&P 500 has significantly outperformed VEU over the last five years. There are a number of reasons for this including the relative strength of the US economy and the US dollar compared to foreign economies and currencies. While the out-performance of the US market may continue for some time, after such an extreme period of under-performance by foreign stocks, now might be a good time to start building or add to a core position in foreign stocks in anticipation that this under-performance will, at some point, at least partially reverse itself. VEU -Equity characteristics Source: Vanguard (as of 10/31/2015) As the table above indicates, VEU is very well diversified, holding 2,508 stocks. The median market cap is quite large at $28.5 billion. VEU’s current price/earnings ratio at 17.4 is high compared to historical levels for global markets. The high current price/earnings ratio is not unique to VEU. The price/earnings ratios for US markets and many global markets are currently higher than historical norms. These high price/earnings ratios are likely due to the low returns that alternative investments, such as fixed income, currently offer. Investing for retirement should be done on a consistent basis. A simple investment plan, makes consistent investment that much more likely to happen. The relatively high current price/earnings ratio of stocks suggests that if you have a large amount of capital to invest today, it is advisable to dollar cost average this investment into the market over a period of time. VEU – Top 10 holdings Source: Vanguard (as of 10/31/2015) VEU’s top ten holdings are dominated by European companies, with eight out of the ten holdings European. As previously indicated, European stocks make up 47% of VEU’s holdings, so they are somewhat over-represented in this list of VEU’s top ten holdings, but these top ten holdings make up only 8.9% of total net assets. VEU – Expense ratio and dividend yield VEU’s expense ratio is 0.14%, this is well below the average expense ratio of similar funds at 1.16%. Given the relatively high price of the market today, it is likely that future returns may be lower than those recently experienced. In this environment, it is important that the core of your portfolio is allocated to funds with low expense ratios like VEU. The forward looking dividend yield is 2.95% based on the last four quarters distributions. Conclusion Your chance of long term investment success increases significantly by keeping your investing simple, consistent and well diversified. Most investors can benefit by building a core position in a well diversified global ETF with a low expense ratio like the Vanguard Total World Stock ETF. After establishing an initial core position in a global ETF, then additional low cost, well diversified ETFs can be added to the core portion of your portfolio to gain exposure to areas under-represented or which the investor believes will out-perform. With the relative under-performance of foreign stocks compared to the US market over the last five years, now might be a good time to increase your exposure to foreign stocks by to adding a low cost, well-diversified foreign stock fund like VEU to the core portion of your portfolio.

9 Simple College Savings Tricks

Summary Why is saving for college so hard? How to co-opt your kid and work together to save all you need. Demand an adequate ROI and decide if it is really worth it. Why is saving for college so hard? How can I pay for my kids’ college? Like everywhere else, where the government has entered into a market as a massive, price-insensitive third-party payer, it has completely distorted the price system. If you have ever heard a politician say “_________ is not a privilege, but a right”, then it is probably a subject with significant malinvestment. Here is what has happened with some of the most distorted markets over the course of my lifetime: So that is the world we face when paying for college. Here are ten simple tricks for facing this daunting task. Long-term Goal While I want to have everything organized as efficiently and rationally as possible for my kids, my long-term goal is to nurture independent adults. I have a reminder on my Microsoft (NASDAQ: MSFT ) Outlook calendar to have the locksmith come to change the locks when the youngest kid turns eighteen. After that, I expect them to succeed under their own power. One: co-opt your kids First, co-opt your kids as active participants in the process of saving for college. Whenever they want to spend money, make sure that they denominate that expense in the length of time that it will take them to earn that money. Two of my favorite places for them to save include Toronto-Dominion Bank (NYSE: TD ) and MainStreet Bank. Each kid can make $10 per year at TD. TD offers a summer reading program in which kids can earn $10 each for reading 10 books. You can get the form here . In addition, our TD branch has a coin deposit machine. As it accepts only U.S. dollars, the rejects slot typically contains a few dollars’ worth of Canadian and other foreign coins for the kids to collect. Each kid can make $40 per year in interest from MainStreet Bank. Kids can each earn $40 per year in interest in a Junior Airsavings account . These accounts offer an annual percentage yield/APY of 4% for accounts up to $1,000 owned by depositors under eighteen years old. Each kid can make $50 per year from DFCU Financial. Deposits age 0-17 get $50 in cash per $100 account. If you have an account at DFCU or if you can open one (either via a family relationship or living in their region of Michigan), it might be worth getting your kids set up with accounts too. If you live in a state that offers refunds on beverage container deposits, kids can help collect bottles. My final step in co-opting each of my kids in this effort is to offer them $0.50 on the $1.00 for any merit or athletic scholarship (or any other kind they can find) that they earn. There is a ton of money out there and I want them to have the mentality of constantly looking for such opportunities to exploit. “Never, ever, think about something else when you should be thinking about the power of incentives.” – Charlie Munger Two: start them on credit cards Kids can make an average of $272 each year from Fidelity. The best credit card deal available is the Fidelity Investment Rewards American Express (NYSE: AXP ) Card. There is no age limit. You can co-sign the agreement, get cards in your kids’ names and start building their credit history. The average American kid’s expenses are $13,611 per year. With the 2% cash back on this card, that comes to a rebate of $272 each year. Once the kids are legitimately earning income from chores, they can start funding their IRAs with this card. Three: set up a family bank Kids can make about $109,565/ each year with a family bank. According to the IRS, the long-term adjusted Applicable Federal Rate/ AFR is currently 2.3%. In order to qualify as a loan, parents need to charge that amount of interest to each kid. However, parents can also gift the interest rate payment up to $28k . So, one can loan up to $1,217,391 from each couple to each of their kids per year without it costing them any net interest. If they can compound at 9% per year, that will come to just under $110k per year per kid. Four: Max out your 529 You can contribute $370,000 to each kid’s Nevada 529. Here is why I think Nevada’s is the best one. If you fail to max out any tax-advantaged saving and investing opportunity, you are stealing from yourself. Five: Odd Lots Throw around your (lack of) weight. With my kids, we focus on how small scale can be an edge. One tactic is to exploit odd lot opportunities. These have proved to be lucrative – a great relationship between risk and reward with a limited downside. For kids’ accounts with under a million dollars in them, they can be among the best opportunities. The question of how to make $10,000 out of $5,000 is very different than making $1 billion out of $500 million. You might as well take advantage of all of the quirky opportunities strewn around the capital markets to make money at small scales. However, due to capacity constraints, I am keeping all of my best odd lot opportunities here . Six: Dividends I do not expect much of a tailwind from the U.S. equity market over the next few decades based on the market multiples discussed here . So a substantial part of the total returns that one may expect will come from dividends. One example of a high dividend payer worth considering is Digirad (NASDAQ: DRAD ): While it has returned over 20% since it was first disclosed on Sifting the World, it remains an attractive opportunity. You can read more about their recent acquisition in M&A Daily . Seven: hire world-class asset allocators… for free There is only a small number of world-class asset allocators running publicly traded companies. Berkshire Hathaway’s ((NYSE: BRK.A )/(NYSE: BRK.B )) is the most famous. Whenever you can get them at a discount to their net asset value, it is as if you are hiring one of the greats for free. For example, from time to time, you can get the Tisch family for free by buying Loews (NYSE: L ) at a discount to NAV. Today, you can get John Malone for free when you buy Liberty Media (NASDAQ: LMCA ). Seize such opportunities. In investing, you get what you don’t pay for. Eight: demand a strong return on investment This formula doesn’t just work for your money, but works well for any constrained resource including your time, energy, and focus. Demand a strong ROI on everything that you do. “I don’t get out of bed for less than $10,000 a day.” – Linda Evangelista Well I don’t get out of bed for less than a 10% ROI. Some of the top ROI for undergraduate schools include Stanford, MIT, and Princeton. Many of the best educational ROIs are degrees in computer science, medicine, business, engineering, and law. While there are many subjects that may be intrinsically interesting, one should ask if it is worth piling up mountains of debt for them, especially if they are subjects that you can pursue on your own. Generally, hard subjects pay off. If you learn something quantitative, data-based, and difficult, you can probably pick up the qualitative, subjective, and easy stuff on your own later. However, if you slide through school working on easy subjects, then the hard stuff will torture you later in life. Nine: no one has to go to college Fayetteville State University notable alumni “Junkyard Dog” If your kid gets accepted to MIT and wants nothing more than to pursue computer programming, it is probably a worthwhile endeavor. But there are also many schools and many degrees that have substantially negative ROIs. If your best bet for college is Fayetteville State University or you want to study mime, then the annual return over the subsequent twenty years will probably be quite negative. Consider skipping college altogether. You can apply here for a $100,000 Thiel Fellowship to skip college and build new things. Some people, including some extremely wealthy people, cannot afford college. Even if they have the tuition bill in their petty cash drawer, they cannot afford college because the opportunity cost is too high for people with ideas worth acting on right away. Four years is a long time, especially if you have a great idea worth pursuing. Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Heads Up! – Warner Bros.

Heads Up! Warner Bros. Genre: Games Price: $0.99 Release Date: May 2, 2013 Heads Up! is the fun and hilarious new game that Ellen DeGeneres plays on her show — and now you can play it with your friends! From naming celebrities, to singing, to silly accents — guess the word on the card that’s on your head from your friends’ clues before the timer runs out! Features: – Play with one friend, or one hundred at the same time. – Draw a new card simply by tilting your phone. – Keep videos of your hilarious game play for your own amusement, or share them right to Facebook. – Diverse categories let you challenge your smartypants friends, and entertain your kids for hours, all from one app! With 18 themed decks to choose from, each packed to the brim with exciting gameplay cards, the fun will never stop! Decks include: – Celebrities – Movies – Animals – Accents – Characters – And lots more! Your next party, road trip or wait at the bank will never be the same. © © 2013 Telepictures Productions Inc.