Allan Roth
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Long-time hourly advice only financial planner and accidental journalist. Will never be confused with Mad Money's Jim Cramer.
Articles by Allan Roth
These Money Illusions Can Cost Investors Dearly
Money illusions in one’s financial planning can be quite costly. Monte Carlo simulations almost always use unrealistic assumptions, making them dangerous to use. People are also prone to nominal thinking, and they often consider the return of principal as income. Here is how the three common illusions manifest and how investors should reframe their thinking. First, one must use realistic assumptions in planning.
Why Low Dividend Yields Are Actually Good News for Investors Seeking Income
US stock dividend yields are now extremely low. The Securities and Exchange dividend yield of the US stock market is now about 1% annually. I happen to think that’s a wonderful thing, as it’s now easier to build a far more tax-efficient 2.5% income portfolio. Before explaining how, I’ll explain it with one stock using a simplified example. Let’s say you own 1,000 shares of ABC, which has 100,000 shares outstanding. You bought it at $10 a share, and it’s now worth $13.
Five Signs It’s Time to Reduce Equity Exposure
Concerned about an AI bubble? Sign up for The Daily Upside for smart and actionable market news, built for investors. Is it time to reduce your equity holdings? I suspect it is for the vast majority of investors. That's not to say I have a clue of how stocks will perform next week or even next year. I don't. It's because I believe that investing involves discipline. Here are five warning signs that it's time to dial back on equities.
Five Signs It’s Time to Reduce Equity Exposure
Is it time to reduce your equity holdings? I suspect it is for the vast majority of investors. That’s not to say I have a clue of how stocks will perform next week or even next year. I don’t. It’s because I believe that investing involves discipline. Here are five warning signs that it’s time to dial back on equities. I’m a believer in setting an asset allocation target and sticking to it. That means reducing stocks when they have been hot and buying more when they turn cold.
The index fund turns 50: How Jack Bogle changed investing forever
On Aug. 31, the first index mutual fund will celebrate its 50th birthday. On that day in 1976, an upstart fund company by the name of Vanguard run by the late John C. Bogle launched the first publicly available S&P 500 index mutual fund. A half-century later, all share classes of the fund, including the investor share class of Vanguard 500 Index, have $1.67 trillion in assets.
The Index Fund Turns 50: How Jack Bogle Changed Investing Forever
On Aug. 31, the first index mutual fund will celebrate its 50th birthday. On that day in 1976, an upstart fund company by the name of Vanguard run by the late John C. Bogle launched the first publicly available S&P 500 index mutual fund. A half-century later, all share classes of the fund, including the investor share class of Vanguard 500 Index VFINX, have $1.67 trillion in assets.
Is the equity risk premium dead?
This article was provided by a third-party and the opinions expressed here are the author’s. Morningstar values diversity of thought and publishes a broad range of viewpoints. Stocks are riskier than bonds, especially Treasury bonds. The theory goes that we are rational beings and want to be compensated for taking on more risk. That extra amount of risk is known as the equity risk premium. The formula is as follows: Equity Risk Premium = Expected Return on Equity – Risk-Free Rate.
Has Index Investing Gone Too Far?
Concerned about an AI bubble? Sign up for The Daily Upside for smart and actionable market news, built for investors. Blame it on Bogle. John "Jack" Bogle launched the first publicly available index fund, which became the Vanguard 500 Index Fund, 50 years ago (in August 1976). Today, according to the Investment Company Institute, US stock index funds, comprising both mutual funds and ETFs, hold 50% more assets than active funds.
Has Index Investing Gone Too Far?
Blame it on Bogle. John “Jack” Bogle launched the first publicly available index fund, which became the Vanguard 500 Index Fund, 50 years ago (in August 1976). Today, according to the Investment Company Institute, US stock index funds, comprising both mutual funds and ETFs, hold 50% more assets than active funds. While critics say markets become less efficient when too much money floods into indexed products, that doesn’t tell the whole story.
Is the Equity Risk Premium Dead?
Stocks are riskier than bonds, especially Treasury bonds. The theory goes that we are rational beings and want to be compensated for taking on more risk. That extra amount of risk is known as the equity risk premium. The formula is as follows: Equity Risk Premium = Expected Return on Equity – Risk-Free Rate. For example, if a 10-year Treasury bond yields 4% and investors expect a 10% return on stocks, the equity risk premium is 6%.
10 Signs Your Client Is About to Make a Bad Investment
Some products accurately disclose it with surrender schedules, while others hide it somewhere in that 372-page disclosure. Today, some very sophisticated investors thought they were investing in safe private credit funds with promised liquidity only to find most of their money trapped. These semi-liquid products generally stay liquid until performance is poor and investors want their money back. Leverage Used to Juice Returns. Leverage is good as long as you are on the right side of things.
10 Signs Your Client Is About to Make a Bad Investment
When it comes to investing, it’s the Wild West out there. Consumers, especially those who are less experienced, are constantly bombarded with so-called opportunities to make a bundle. We’re not talking about outright fraud, but rather perfectly legal sales pitches. It’s not only new investors who fall prey; sophisticated, accredited investors do so as well.
Diversification Is Better than a Free
Concerned about an AI bubble? Sign up for The Daily Upside for smart and actionable market news, built for investors. Clients often ask about a particular stock or what the next hot stock sector will be. (My response is always a rendition of: "I don't know the future and neither do you.") Luckily, arithmetic is much more foreseeable, however, and we know that investors as a whole will earn the market return minus costs.
Diversification Is Better than a Free
Clients often ask about a particular stock or what the next hot stock sector will be. (My response is always a rendition of: “I don’t know the future and neither do you.”) Luckily, arithmetic is much more foreseeable, however, and we know that investors as a whole will earn the market return minus costs.
The Hidden Risks of ‘Income for Life’ in Target-Date Funds
More and more target-date funds are coming with annuities advertising “income for life.” Issuers include BlackRock and Vanguard. I’m going to explain why I’m recommending that clients not buy these either inside or outside of a target-date fund. Rather than just criticize, I’ll provide two better alternatives. Morningstar’s Samantha Lamas and Jason Kephart wrote about the pros and cons of these annuities within the funds.
Instead of Chasing Alpha, Here Are 4 Ways to Pick the Low-Hanging Apples
If you want apples, you have to shake the trees. Many investors deploy sophisticated strategies (that will likely underperform) while leaving the low-hanging fruit to rot. These investments are simple things that can almost certainly result in higher return without one iota of extra risk. Tactics like moving cash around to higher-yield products, or paying down debt, are simple areas where advisors can provide great advice to clients, who may be missing the investing forest for the proverbial trees.
Instead of Chasing Alpha, Here Are 4 Ways to Pick the Low-Hanging Apples
If you want apples, you have to shake the trees. Many investors deploy sophisticated strategies (that will likely underperform) while leaving the low-hanging fruit to rot. These investments are simple things that can almost certainly result in higher return without one iota of extra risk. Tactics like moving cash around to higher-yield products, or paying down debt, are simple areas where advisors can provide great advice to clients, who may be missing the investing forest for the proverbial trees.
Active Versus Passive ETFs: Why Lower Fees Still Win
Decades ago, there was a fierce debate on the virtues of active versus passive mutual funds. The debate has now evolved into the realm of exchange-traded funds. Which are better: active or passive ETFs? Here’s some background on the mutual fund debate before I move to the subject at hand: the ETF space. The arguments for active mutual funds were: Markets are inefficient, and alpha persists. Managers may get defensive in bad times and simply hold more cash.
How to Invest During Geopolitical Uncertainty Original
You’d have to be living under a rock not to know what a hot mess the world is right now. Perhaps the hot messiest at the moment would be the closing of the Strait of Hormuz after the US attacked Iran, cutting off 20% of the world’s oil supply. Iran is trying to develop nuclear weapons and missiles to carry nuclear payloads. Then, there’s the Russia-Ukraine war now entering its fourth year, with no real prospect of resolution.
The one bond alternative you should consider. It isn't what you think.
Allan Roth Lately, I'm hearing a lot of people bashing bonds and recommending alternatives to them . The logic is that the growing debt and deficit will cause interest rates to surge. The Fed will have to issue more Treasury bonds to fund the deficit and pay the interest on the ever-increasing debt. And let's face it, no politician has any incentive to tackle the deficit because the only solution is to either increase taxes, cut benefits, or both.
Is Your Index Fund Really Diversified?
A total stock index fund owns thousands of individual stocks. For example, the Vanguard Total Market Index Fund ETF VTI owns 3,498 companies, and the Fidelity Total Market Index Fund FSKAX owns 3,741 companies. Most nonindex funds own between a few dozen and a few hundred companies. For most of my career in financial planning, I’ve been saying these total US stock index funds are as diversified as one can get in US stocks. I’m now rethinking my position due to market concentration.
How to Find Investing Insights from Tax Returns
Among the copious data advisors require from clients, tax returns are mission critical. The documents are necessary to better design the plan, because taxes are fees, too, making tax alpha a priority. (While I’m still a licensed CPA, you don’t have to be one to find savings from tax returns.) The alpha from taxes is paramount because building tax-efficient portfolios and strategies is often a better way to add alpha than trying to beat the market.
How to Find Investing Insights from Tax Returns
Among the copious data advisors require from clients, tax returns are mission critical. The documents are necessary to better design the plan, because taxes are fees, too, making tax alpha a priority. (While I’m still a licensed CPA, you don’t have to be one to find savings from tax returns.) The alpha from taxes is paramount because building tax-efficient portfolios and strategies is often a better way to add alpha than trying to beat the market.
Don't be fooled by these 3 investing tricks
Allan Roth Over more than two decades as a financial planner, I've seen many people fall for some misleading investing tactics. Here are three very common tricks of the trade that you should guard against. “Our firm has bested the S&P 500 over the last decade.” The S&P 500 is a very good measure of the US stock market, although I believe total market indexes like the Dow Jones US Total Stock Market Index and the Morningstar US Market Index are better.
The Risk of Taking on Too Much Risk
After the third year in a row of double-digit stock gains, statements like “Just buy VTI and chill,” are getting louder. Jason Zweig wrote in The Wall Street Journal, “Should You Just Buy Stocks Until You Die?” And in a predictably irrational way, clients are wanting very little fixed income, saying that stocks always bounce back quickly.
The Risk of Taking on Too Much Risk
After the third year in a row of double-digit stock gains, statements like “Just buy VTI and chill,” are getting louder. Jason Zweig wrote in The Wall Street Journal, “Should You Just Buy Stocks Until You Die?” And in a predictably irrational way, clients are wanting very little fixed income, saying that stocks always bounce back quickly.
Gold is on sale. Should you buy?
Gold has been hot, rising 65.2% last year and 168.2% over the past three years. Shockingly, gold has bested US stocks since the beginning of the year 2000. For the 26 years ended Dec. 31, 2025, gold has had an average annual return of 11.0% while the S&P 500 is up around 8.1% annually, including dividends. These dates start near the top of the tech bubble and include the global financial crisis. Reasons to buy gold Gold and other precious metals have been on a tear.
Gold Is on Sale. Should You Buy?
Gold has been hot, rising 65.2% last year and 168.2% over the past three years. Shockingly, gold has bested US stocks since the beginning of the year 2000. For the 26 years ended Dec. 31, 2025, gold has had an average annual return of 11.0% while Vanguard Total Stock Market Index VTSMX returned 8.1% annually, including dividends.
Why International Stocks Still Matter: Diversifying Beyond US Winners in 2026
I’ve long been a proponent of portfolio diversification, including holding international stocks. Yet international stocks have badly trailed US stocks over the past decade, and many have given up on international investing. Over the decade ended Dec. 31, 2025, US stocks clocked an annual 14.42% return, nearly quadrupling in value, while international stocks returned 8.54% annually or only about 2.3 times the original investment.
Think Equity Investing Can’t Be Risk Free? Think Again
Want to earn much of the upside of the stock market without any risk? Sounds impossible, but it isn’t, and we’re not talking about an equity-indexed annuity (rebranded as a fixed indexed annuity). It’s actually quite simple and can be done with ultra-low fees and high tax-efficiency. Here are two ways, and both involve buying a single Treasury Bond and investing in a stock index fund. Let’s take a $100,000 portfolio as an example, and a long investment horizon of 20 years. Away we go.
Think Equity Investing Can’t Be Risk Free? Think Again
Want to earn much of the upside of the stock market without any risk? Sounds impossible, but it isn’t, and we’re not talking about an equity-indexed annuity (rebranded as a fixed indexed annuity). It’s actually quite simple and can be done with ultra-low fees and high tax-efficiency. Here are two ways, and both involve buying a single Treasury Bond and investing in a stock index fund. Let’s take a $100,000 portfolio as an example, and a long investment horizon of 20 years. Away we go.
4 Investment Predictions for 2026
During this season where predictions are made for the coming year, one always feels a little left out. That’s probably because it’s easy to recognize the folly of trying to predict the S&P or other market indices when no one can know with certainty. (Personally, I just know I don’t know.) However, that is not to say there aren’t predictions to offer, as well as some advice based on those predictions, that might actually help increase returns in the new year.
4 Investment Predictions for 2026
During this season where predictions are made for the coming year, one always feels a little left out. That’s probably because it’s easy to recognize the folly of trying to predict the S&P or other market indices when no one can know with certainty. (Personally, I just know I don’t know.) However, that is not to say there aren’t predictions to offer, as well as some advice based on those predictions, that might actually help increase returns in the new year. It’s as predictable as the sunrise.
Worried About Record Stock Market Concentration? Us, Too
The big are getting bigger, and the small are growing much more slowly. That’s according to Bryan Taylor, the chief economist at the financial data firm Finaeon, who has over 200 years of financial data upon which to base this statement. The stock market has simply never been this concentrated. In fact, the 10 most valuable US companies had a market capitalization of nearly $24.4 trillion as of October 23, according to CompaniesMarketCap.com.
Worried About Record Stock Market Concentration? Us, Too
The big are getting bigger, and the small are growing much more slowly. That’s according to Bryan Taylor, the chief economist at the financial data firm Finaeon, who has over 200 years of financial data upon which to base this statement. The stock market has simply never been this concentrated. In fact, the 10 most valuable US companies had a market capitalization of nearly $24.4 trillion as of October 23, according to CompaniesMarketCap.com.
3 Ways to Build an Inflation-Adjusted Pension. Yes, There’s Even an ETF for That
Advisors sometimes envy clients with a US government pension. They are protected from inflation, which is a major concern. It’s not that anyone can tell what future inflation will be, but high inflation over the next decade (or three) could compound and make any non-inflation-adjusted annuity virtually worthless. But, there are ways to build something similar to a pension.
3 Ways to Build an Inflation-Adjusted Pension
Advisors sometimes envy clients with a US government pension. They are protected from inflation, which is a major concern. It’s not that anyone can tell what future inflation will be, but high inflation over the next decade (or three) could compound and make any non-inflation-adjusted annuity virtually worthless. But, there are ways to build something similar to a pension.
3 Ways to Build an Inflation-Adjusted Pension. Yes, There’s Even an ETF for That
John Schneider Breaks Silence on Max Scherzer Meltdown With Candid Confession No One Saw Coming What a series this ALCS has turned out to be! The Blue Jays looked down and out after dropping the first two games, with the Mariners seemingly on …
When to Dump that Expensive Investment Fund
Mistakes? We’ve all made a few. (OK, many). But as financial advisors, we’re also in the business of helping clients correct past errors, and that includes an analysis of when to dump the more expensive, less-diversified mutual funds and ETFs in order to develop a more diversified ultra-low-cost portfolio. Now, that doesn’t mean blindly selling everything.
When to Dump that Expensive Investment Fund
Mistakes? We’ve all made a few. (OK, many). But as financial advisors, we’re also in the business of helping clients correct past errors, and that includes an analysis of when to dump the more expensive, less-diversified mutual funds and ETFs in order to develop a more diversified ultra-low-cost portfolio. Now, that doesn’t mean blindly selling everything.
3 Reasons to Keep Politics Out of Portfolios
From a politics perspective, the past few months have been tough for clients. Some have even been chattering about how they want to bail on stocks — or at least reduce exposure. Common themes in client emails have been: “We’re freaking out over here. Now that Trump is trying to cook the books as feared earlier in the year.” Or, “Given red flags like our mushrooming national debt, one would be crazy to invest.” Yet, this mindset isn’t unique to this administration.
Uncommon Common Sense Considerations to Keep in Mind When Investing
The views presented here do not necessarily represent those of Advisor Perspectives. When it comes to investing, I’ve learned that common sense isn’t all that common. In fact, I’ve seen brilliant people lose millions of dollars on investments without using one ounce of common sense. They have acted purely on emotion. Here are a few examples as well as some simple ways of deploying logic when faced with statements meant to make you react in an emotional way: 1.
Playing the Benchmarking Game With Allan Roth
Benchmarking portfolios to evaluate their performance versus the market sounds simple enough, right? Think again. That’s because benchmarking is part science and part judgment. With judgment comes bias, which allows portfolio managers to pick benchmarks that make them look good. It isn’t necessarily dishonest – it’s just human. Take, for example, an email from a fund wholesaler who was touting his fund’s performance: “7.1% return over the past year vs.
Here's What the 10 Largest US ETFs Have in Common
The 4,494 ETFs traded in the United States have accumulated total assets under management of $10.8 trillion. The simple average expense ratio was 0.92% at the end of 2024, according to Morningstar. But the 10 ETFs with the largest assets under management hold about a third of those total assets. That is to say, 0.2% of the ETFs control 33% of all U.S.-based ETF assets. Largest U.S. ETFs as of July 8, 2025—Source: FactSet It’s no coincidence that these ETFs gathered so much of the ETF market share.
What’s Going on With Muni Bonds?
Nearing the mid-point of the year, it’s been a relatively good period for most investment grade bonds. Not so much for municipal bonds. The iShares Core US Aggregate Bond ETF (AGG) gained 2.85% while the iShares National Muni Bond ETF (MUB) lost 1.29% through June 17. That’s a differential of 4.14 percentage points. Both numbers include dividends paid.
Advice on Life and Money from Jonathan Clements
What would you do if you found out you had 12 months to live? Jason Zweig recently wrote in The Wall Street Journal how the legendary personal finance writer, Jonathan Clements, actually answered the question when he received such a prognosis. His answer was to help other people get going financially. No one has taught me more about money and life than Jonathan. He wrote 1,006 columns for the Journal and continues to write on his Humble Dollar website and other media.
Allan Roth: 50 Years of the Vanguard Experiment
- Vanguard celebrates its 50th anniversary today. - Earlier this year, Vanguard had its largest fee reduction in history. - Vanguard has continued Jack Bogle’s relentless quest to lower fees. On May 1, Vanguard will celebrate its 50th anniversary. Second only to BlackRock, Vanguard manages about $10.4 trillion for over 50 million investors as of January 31, 2025. I’ve been following what the Vanguard founder, John C. Bogle, termed "the Vanguard experiment" for the vast majority of its 50-year history.
Vanguard, Blackstone, Wellington Partner on Private Assets
Fund giant Vanguard is teaming up with alternative asset manager Blackstone and Wellington Management to develop multi-asset investment solutions that integrate public and private markets to investors. The goal is to build “fully diversified portfolios that incorporate private assets and pursue higher returns,” according to a Blackstone news release.
Bonds Get a Bad Wrap. But They Thrived During Their ‘Great Depression’ of 2022.
High-quality bonds, and bond funds, just get no respect. They’re the Rodney Dangerfield of asset classes, (although they may get more attention if stocks continue their recent plunge). After a terrible 2022 for bonds, a paper by the Retirement Income Institute argued bonds have no place in a portfolio and should be replaced by annuities. I disagreed.
7 Deadly Investing Sins Clients Make
In over two decades of financial planning, I’ve seen many investment mistakes, but one story has always stuck with me. This investor’s error cost him upwards of $1 million over the course of his life, and yes, I’ll even share with you his real name. Al graduated college and was given money by his parents. Rather than blow it on a trip around the world, he bought 10 ounces of gold in 1980 for $6,684. He waited until gold had a 20% pullback, so as not to buy at a record high price.
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