SELLING COVERED calls can sound like a winning investment strategy, especially to yield-hungry investors frustrated by today’s low interest rates. Wouldn’t you know it? There are exchange-traded funds (ETFs) designed to mimic the strategy.
For background, covered calls are a yield-enhancement play that involve selling call options against stocks that you own. The call option gives you extra income, but—during the life of the option—your gains are capped at the call option’s strike price.

JUST HOURS INTO the new year, I received an email from a concerned investor. His worry: the state of the market—the S&P 500, in particular. With hundreds of constituent companies, the S&P index has the veneer of broad diversification. But scratch the surface, and it seems to carry more risk than investors might like. The issue: It’s top heavy.

As a group, the top 10 companies in the S&P 500 account for more than 30% of its overall value.

TOO MUCH FREE TIME, coupled with easy access to the internet, create a problem for this retiree. I obsessively check my IRA at least once—and often several times—each day.
I retired two years early with an above-average Social Security payment and a decent state pension, but not a whole lot in my IRA, which is my only retirement savings. Experts say I need much more, but a job loss in my late 50s, and the inability to find an equivalent position in my field and at the same pay level,

ONE OF THE GREAT pleasures of having grown children is seeing them do things better than you ever did.
My son, who’s in his mid-20s, is already well beyond me in terms of investments. When I was his age, I was still bouncing around in grad school, living off teaching stipends and dreaming of one day being a novelist. I had no concept of what a mutual fund was, how to trade stocks and bonds,

TARGET-DATE FUNDS from Vanguard Group are, I believe, fantastic products. My first investment was a $3,000 purchase of Vanguard Target Date 2045 Fund (symbol: VTIVX) in late December 2005, shortly after I turned age 18. That was also my first Roth IRA contribution.
A target-date fund is an off-the-shelf globally diversified portfolio that automatically becomes more conservative over time. You don’t have to do any fiddling with the allocation, such as rebalancing or adjusting down your portfolio’s risk level.

“WHEN THE FACTS change, I change my mind. What do you do, sir?” Those words are sometimes attributed to Paul Samuelson, one of the the 20th century’s most influential economists. Due to a litany of cognitive biases—especially status quo and confirmation bias—letting go of cherished beliefs is easier said than done.
Which brings me to the topic of bonds and, more specifically, their role in the classic balanced portfolio of 60% stocks and 40% bonds.

AMONG THE MANY people around the world who can impact our success as investors, two rank as the most important to know and understand. Yet many investors fail to recognize this reality.
Sure, Warren Buffett and Janet Yellen and Burt Malkiel are well worth listening to and learning from. There are also many others at home and abroad who are important. But all serious students of investing would agree that the two I have in mind are much more important.

YOU MIGHT ASK, “What makes an exchange-traded fund the best?” While it’s hard to say for sure which are the right funds to own, it’s often easy to spot a fund that should be tossed to the curb.
Take the iShares suite of exchange-traded index funds (ETFs). Did you know iShares offers two nearly identical emerging markets funds, iShares MSCI Emerging Markets ETF (symbol: EEM) and iShares Core MSCI Emerging Markets ETF (IEMG)? The only material difference is what you pay.

LAST WEEK, I REFERRED to the stock market as a hall of mirrors. That was perhaps too kind. With its erratic and often illogical movements, the market also has elements of a pinball machine, a rollercoaster and maybe a clown car. This has always been the case, but it feels especially true this year. There’s one silver lining, though. The market’s recent behavior highlights many of the behavioral biases we read about in textbooks.

I WAS WRITING magazine stories back in 1996, recommending stocks and mutual funds. Privately, I worried that readers might think I had some genuine insight—and they might even invest in the ways I suggested.
Propelled by that fear, I favored safe stories, like the best electric utility stocks or the outlook for U.S. savings bonds. I ransacked the library, looking for sure-fire, can’t miss investments. Surprisingly, I found one—something called an index fund.
Twenty-five years ago,

INVESTMENT RESEARCH has overwhelmingly shown that active stock strategies perform poorly over long periods compared to buying index funds and simply collecting the market’s return.
There’s still some debate about whether the best active managers are a smart bet—and whether we can count on them continuing to perform well. But there’s no question that active stock management, on average, has destroyed value for clients.
Yet active strategies remain popular with both individual investors and their wealth managers.

INTEREST RATES HAVE been low for years, with 10-year Treasury notes now yielding some 1.4%. How about dividend-paying stocks instead? Many pay twice what Treasurys currently yield, though obviously with more risk. My strategy: Instead of a classic 60% stock-40% bond mix, I’ve landed at roughly 70% stocks, with another 15% to 25% in individual stocks against which I’ve written call options.
By selling call options, I give the buyers the right to purchase the underlying stock from me at a specified price—the so-called strike price—at any time between now and when the options expire.

TIME IS IMPORTANT in investing—far more important than most of us seem to appreciate when we structure our portfolio’s asset mix.
Regular readers may remember that I believe we tend to focus too much on one part of our total portfolio, the securities we own. We often ignore other important parts of our total portfolio, such as Social Security, any pension plan, our homes and—particularly for the young—the present value of our future earning power.

EVEN AS I’VE WRITTEN regularly for HumbleDollar over the past year, I’ve also learned a lot from the other writers. There have been specific tips I’ve picked up, as well as more general strategies that have influenced my thinking.
For instance, John Lim and others have touted the benefits of Series I savings bonds, with their virtually risk-free interest rate, currently set at a whopping 7.12%. My wife and I took the plunge,

I OWN JUST TWO individual stocks. One is Wells Fargo, which I’ve discussed before. The other is Total, recently renamed TotalEnergies, a major oil company headquartered in France.
I was initially attracted to Total by its generous dividend and enormous underperformance in 2020. Yes, great underperformance—not outperformance—often piques my interest. Of course, declining stock prices and generous dividend yields go hand in hand. As the price of oil stocks cratered in 2020, their dividend yields soared.