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.

In August, I highlighted that Vanguard registered seven new bond index funds (Vanguard's New Funds -- Not For You). These bond funds, offered in Signal and Institutional Shares (available in financial advisor accounts, retirement plans, corporate accounts, etc.), with minimum investments of $5 million and $1 million respectively, are also available in the ETF structure. So what's the problem? Well, strangely, the investor share class is missing from the mix.

Vanguard defines the investor share class as:  "Traditional shares for individual investors. Investor Shares typically feature low minimum initial investments."

So, why is Vanguard not introducing the new bond funds in the Investor Share Class -- allowing more do-it-yourselfers to invest in the funds? Initially, I thought Vanguard was making a statement about the use of mutual funds and ETFs for the individual investor. But I was wrong, according to the public relations folks at Vanguard.

Josh Grandy, with Vanguard's public relations department, was kind enough to answer my questions when I called the firm. Apparently, Vanguard's reasoning for excluding the Investor Shares is that they believe the bond funds will be of more interest to advisors and institutions and hence the reasoning for offering the share classes that are being offered.

Josh also pointed out that individual investors can invest in the new bond funds through the ETF structure. For an important caveat of the ETF structure (particularly when it comes to bond funds), see Vanguard's press release.

It seems like yesterday that Y2K was making the headlines. Now the roaring 2000s (that one is for Harry Dent) are coming to a close.

We will soon start seeing a deluge of "mutual funds of the decade" accolades and "portfolio managers of the decade" awards.  Morningstar is already out with "The Fund Manager of the Decade Finalists."

Does it mean you should buy these top funds of the last decade? Well, I'm not sure what Morningstar is telling you, but the research indicates that investors shouldn't buy last year's, or last decade's, top performing funds.

Mutual fund investors know that if they make money, they pay taxes. Unfortunately, mutual fund investors are also faced with a potential tax liability whether they make money or not.

In my latest article about cap gains distributions, I have posted a few helpful links about these "phantom gains" that are known as capital gains distributions. I have also linked to select mutual fund companies that have listed expected capital gains distribution estimates.

Fortunately, 2009 won't be a very taxing year for many mutual fund investors (in terms of distributions, that is).

You asked for it. You got it. The ETF vs. mutual funds debate from all angles. Only this time you get the facts from the ETF Guide and the Mutual Fund Guide (that's me).

I couldn't say it better myself, so here's what the ETF Guide writes on his blog, "Mark Kennedy meet Lee McGowan. ETF Guide meet Mutual Fund Guide. Lee and I collaborated on our latest article comparing ETFs to mutual funds. The new piece gives you the story from both sides. Is an ETF better than a mutual fund or is a mutual fund better than an ETF? We both have our opinions, as you will see."

Mark goes on to say, "But wait, there's more! We also give you the inside scope on the tax implications of each product, the benefits, the risks, the whole enchilada. So without further ado..."

Is An ETF Better Than a Mutual Fund?

Just like any writer, I receive both positive and negative emails and comments from readers. You should see the latest zinger.  I have to admit, I wish the statement would have included some evidence backing up his comments. Rather than deleting what he wrote, I've decided to share it.

A couple of lines from Guest Dan's comments include telling me that I "don't know anything" and that I should let "someone write an article that doesn't like mutual funds." You can read Guest Dan's entire statement (and a few other readers' statements) in "Readers Respond."

While I would like to find Dan and ask him what he means by "tell the truth" and ask him why I would want a biased person to write an article, I think the more productive question would be to ask him to comment on my original question that he didn't answer: "As with any investment structure, mutual funds have their advantages and disadvantages. What do you think are the most disadvantageous features of mutual funds?"

So why am I bothering highlighting this comment when, until now, I didn't highlight the fact that my blog was named a "Top Investment Blog" by an ETF blogger (yes, an ETF blogger of all people)? Well, I, selfishly, want to highlight a blog post that might have helped Guest Dan understand my views on mutual funds and ETFs.

Vanguard is cutting edge. They have a Facebook page, a blog, e-newsletters and now, an iPhone/iPod Touch application. So, if you have an account with Vanguard and you're compelled to view your account online and on the go: "There's an app for that."

Tell us if you are interested in viewing your investment accounts on your phone: