While a mutual funds site (like this one) is about building wealth, developing a grasp of the tax code can help preserve some of the wealth that you accumulate. I suggest you take a look at the About.com Tax Planning site.

Whether you are a professional tax preparer or you file your own taxes, William Perez, the Guide to Tax Planning at About.com, can help you. His latest piece on year-end tax tips is a must read.

I read an interesting blog the other day that included a post comparing a hypothetical investment  with Madoff to an investment in large cap US stocks. 

The post was making the point that you could have invested up to $500,000 with Madoff 10 years ago, lost all of your money, received a settlement from SIPC for $500,000 and been better off than if you had invested in US large cap stocks -- and would have endured less stress along the way.

I couldn't quite get the moral of the story, or maybe I fundamentally disagree with making rearview mirror assumptions.  Maybe if I try to find the next Ponzi scheme, then I will do better than buying US stocks? Well, because the large cap US stocks performed poorly for the last 10 years, doesn't mean that investors did not earn a reasonable rate of return on their investments  (think international equities, bonds).

I think I will continue to invest in a diversified mix of equities (US, international, etc.) and bonds (municipals, TIPS, etc.) and forgo the search of the next big Ponzi scheme -- for  a host of reasons.

I have written a couple of pieces outlining the basics of Treasury Inflation-Protected Securities (TIPS), but Vanguard's research note takes it to another level.

If you want to learn more about the fine details of TIPS, I suggest you read their piece entitled "TIPS and the nature of inflation protection."

TIPS are generally seen as a hedge against inflation. It should be noted that there is plenty of negative press about the reliability of the CPI as an accurate measure of the cost of living (or increase in the cost of living). So, keep in mind, the "inflation protection" in TIPS is protecting against a rise in CPI and not the buyer's rate of inflation -- or increase in living expenses.  

More on TIPS from About.com:

A Primer on Treasury Inflation-Protected Securities

Pros and Cons of TIPS Mutual Funds

Fund companies are notorious for rolling out new investment products at the peak of the new product's underlying investment strategy. Remember the tech boom in the late 90s? Internet funds were popping up by fund companies looking to get a piece of the action -- and then pop went the tech bubble.

How about these so-called 130/30 funds? What is the hype? I haven't been privy to the sales pitches of the 130/30 fund purveyors (fortunately), but my guess is they are lamenting the future returns of equity markets and attempting to convince investors (and those who sell funds to investors) that they should invest their hard earned money in funds where fund managers' stock picks are greatly magnified compared to an index or passively managed fund -- to the tune of 160% of investor assets.

In the next month we will take a look at specific 130/30 funds, but for now, read more about the basics of 130/30 funds.