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Friday, April 23, 2010

Schwab YieldPlus Fund Case

Must read: Investing Guy .

Fund overinvested in mortgage-backeds to jack up the yield. The scary part, to me, is that this is exactly the type of fund that appeals to retirees (damn the younger people--they have to learn like we did! --just kidding) as they go on a desperate search for yield.

Retirees who are drawing down their "nest eggs" should set up a system where their income needs over a certain period are in investments that do not fluctuate much in value. This lowers the probability that they'll have to sell equities or longer term bonds in a depressed market.

Notice in this story that Schwab reps actively recommended switching to the yieldplus fund to pick up yield!

1 comment:

  1. A career could be made from just pointing out how the financial industry misrepresents itself and its products to the consumer.