FREE NEWSLETTER

Investing is an argument between what we think an investment is worth—and what the market says. It’s an argument the market usually wins.

Danger Ahead

I’LL NEVER FORGET my first interaction with Wall Street. I was in my early 20s and just getting started in my career, when I was introduced to a stockbroker—let’s call him Eddie. He was a pleasant fellow with a good reputation and all the trappings of success, including a DeLorean in the driveway. He seemed like a safe choice.
My interactions with Eddie were straightforward. He would call from time to time with stock ideas.

Read more »

Great Debates

IN THE FINANCIAL world, making money is the most popular pastime—but having a good argument is a close second.
What do folks argue about? HumbleDollar’s online money guide has always included a handful of sections labeled “great debates.” I decided to expand that collection to 12—and gather them together in their own chapter. Below you’ll find one of the new sections, plus links to the other 11.
Debate No. 8: Is Indexing Dangerous?

Read more »

Making a Mesh

THERE ARE AREAS in my life where I’ve spent too much money and time trying to be cheap. My reward: steady aggravation—until I spent a bit more to get the right solution.
Which brings me to home networking technology. Most of us spend some $500 a year or more for internet broadband service. The problem: Many families are still living with old networking gear that’s slower than it should be, sometimes unreliable or provides poor wi-fi coverage in parts of their house.

Read more »

Crying Poverty

I HAVE BEEN accused of being too critical of America’s spending habits. I’m not in touch with families who live paycheck to paycheck, or so I’m told. I was roundly attacked by folks on Facebook, who claimed I lacked sympathy for the federal workers who ran out of money during the government shutdown—even before they missed a payday.
We all know there are Americans who struggle to get by on very low incomes. But that’s the minority.

Read more »

Not My Priority

SOME YEARS AGO, I had a health scare—and it taught me an important lesson about my relationship with money. My primary care physician wanted me to see a hematologist. “Your white blood cells have been trending lower for the last five years,” he opined. “We need to find out what’s causing it.”
After a number of tests, the hematologist thought I might have a rare blood disease. He said the test results were inconclusive,

Read more »

Insult to Injury

IN DECEMBER, I fell head first onto the bathroom floor. The doctors agreed I had a mild concussion. These typically heal in four-to-six weeks, but it’s now been five months. In March, I dislocated my left knee cap during an afternoon stroll. I was suddenly unable to put any weight on my left leg.
These two unrelated injuries have required me to see an array of medical professionals and undergo multiple tests, including two magnetic resonance imaging (MRI) scans,

Read more »

Money Guide

Put Retirement First

OUR HUNTER-GATHERER ancestors were focused on surviving until tomorrow. We need to focus on retiring decades from now. Not surprisingly, this isn’t something that comes naturally. Often, our inclination is to deal with life’s goals consecutively, rather than concurrently. In other words, we might save for the house down payment in our 30s, pay for the kids’ college in our 40s and then finally turn our attention to retirement in our 50s. But if we do that, we could find ourselves in financial trouble. It’s awfully tough to amass enough for retirement if we start saving in our 20s, let alone beginning at age 50. Indeed, even as your attention is drawn to more immediate goals, don’t shortchange retirement. Maybe you can’t save 12% to 15% toward retirement in your 20s and 30s. But try to save at least some money every month. The earlier you start saving, the longer your time horizon will be. In addition to having more years of saving regularly, you can take the risk of investing more in stocks and potentially earn higher returns. You may also get the chance to fund your employer’s 401(k) plan and collect a matching employer contribution. That’s free money—and you don’t want to miss out. If you save a healthy sum from your 20s onwards, you will give yourself options. You may reach your late 40s or early 50s and discover that you are comfortably on track for retirement. At that point, you might opt to work fewer hours, switch to a less lucrative but perhaps more fulfilling career, and possibly even retire early. Our Humble Opinion: While we aren't advocating a life of self-imposed poverty, we would strongly suggest saving as much as you reasonably can whenever you can. In today’s turbulent job market, you don’t know when your ability to save may be disrupted by a bout of unemployment or if you might be forced to retire earlier than planned by ill health or layoffs. It might be ideal to save just enough every month for the retirement we want. But the reality is considerably messier: We retire with whatever we have managed to amass by that juncture—and the more we have, the easier our retirement will be. Next: Financial Calculators Previous: Life Stage No. 1: Your 20s, 30s and 40s Blog: Yes, It'll Happen
Read more »

Archive

Fake News

A CLIENT WAS in our offices the other day, grilling one of my fellow financial advisors about some investments in his diversified retirement portfolio. He just couldn’t understand why we’d keep certain securities that hadn’t recently performed well. He kept citing “stuff I read” and “all the experts” as the basis for his concerns. I wasn’t part of the conversation. But here are three points I would have made: 1. Those experts don’t know a thing about you or your situation. They don’t know your age, health, marital status or personality quirks. They don’t know where you live or how much your house cost. They don’t know how much you spend on groceries or hobbies, or that you were forced into early retirement by an ungrateful employer. They know none of this. Nada. 2. Virtually every expert you encounter online or on television is being paid for those opinions. If they’re discussing gold, real estate or master limited partnerships, you can be certain that their wallet or purse stands to gain from your interest in any of them. If they are recommending stocks, bonds or unit trusts, it is a sure thing that those products generate profits for them or their company. If they are discussing annuities, well, just run away as fast as you can. 3. Don’t be impressed by their purported qualifications. Not one of those so-called experts is any more expert than my colleagues and me. They’ve been in The Wall Street Journal? I’ve been in The Wall Street Journal. They’ve written articles for financial and trade industry magazines? I’ve written hundreds. They're on television? I’ve been on television. I may not be right all the time. But I’m just as much an expert as these talking heads—and probably more so. Dan Danford is a Certified Financial Planner and founder of the Family Investment Center in St. Joseph, Mo. His most recent book is Stuck in the Middle.
Read more »

Numbers

THOSE AGES 45 to 59 typically say they’re on track for retirement if they have at least $250,000 saved—but only 27% of this age group have that much socked away, found a Federal Reserve survey.

Home Call to Action

Manifesto

NO. 33: WE HAVE two great financial advantages: time and our income-earning ability. To grow wealthy, we should take a slice of each month’s earnings—and invest it for as much time as possible.

Truths

NO. 76: TAX DEFERRAL lets you use dollars that’ll eventually go to Uncle Sam to earn extra gains for yourself. An example: If you invested $1,000 at 6% a year and paid 22% in taxes every year, you would have $3,944 after 30 years. But if you put off the 22% tax bill for 30 years by funding a retirement account, you’d have $4,700.

Act

SET UP TWO-FACTOR authentication. If a thief gets online access to your financial accounts, your life’s savings could be at risk. What to do? If your bank, brokerage firm or fund company offers it, set up two-factor authentication. The firm will text you a special access code every time you log on or when you log on from an unrecognized computer.

Think

IMPUTED RENT. Folks love to boast about their home’s price appreciation. But after deducting maintenance costs, property taxes and insurance, we might barely break even on the price gain. Instead, often the biggest return comes from the imputed rent—the fact that we get to live in the place. Each year’s imputed rent might equal 6% or 7% of a home’s value.

Danger Ahead

I’LL NEVER FORGET my first interaction with Wall Street. I was in my early 20s and just getting started in my career, when I was introduced to a stockbroker—let’s call him Eddie. He was a pleasant fellow with a good reputation and all the trappings of success, including a DeLorean in the driveway. He seemed like a safe choice.
My interactions with Eddie were straightforward. He would call from time to time with stock ideas.

Read more »

Great Debates

IN THE FINANCIAL world, making money is the most popular pastime—but having a good argument is a close second.
What do folks argue about? HumbleDollar’s online money guide has always included a handful of sections labeled “great debates.” I decided to expand that collection to 12—and gather them together in their own chapter. Below you’ll find one of the new sections, plus links to the other 11.
Debate No. 8: Is Indexing Dangerous?

Read more »

Making a Mesh

THERE ARE AREAS in my life where I’ve spent too much money and time trying to be cheap. My reward: steady aggravation—until I spent a bit more to get the right solution.
Which brings me to home networking technology. Most of us spend some $500 a year or more for internet broadband service. The problem: Many families are still living with old networking gear that’s slower than it should be, sometimes unreliable or provides poor wi-fi coverage in parts of their house.

Read more »

Crying Poverty

I HAVE BEEN accused of being too critical of America’s spending habits. I’m not in touch with families who live paycheck to paycheck, or so I’m told. I was roundly attacked by folks on Facebook, who claimed I lacked sympathy for the federal workers who ran out of money during the government shutdown—even before they missed a payday.
We all know there are Americans who struggle to get by on very low incomes. But that’s the minority.

Read more »

Not My Priority

SOME YEARS AGO, I had a health scare—and it taught me an important lesson about my relationship with money. My primary care physician wanted me to see a hematologist. “Your white blood cells have been trending lower for the last five years,” he opined. “We need to find out what’s causing it.”
After a number of tests, the hematologist thought I might have a rare blood disease. He said the test results were inconclusive,

Read more »

Insult to Injury

IN DECEMBER, I fell head first onto the bathroom floor. The doctors agreed I had a mild concussion. These typically heal in four-to-six weeks, but it’s now been five months. In March, I dislocated my left knee cap during an afternoon stroll. I was suddenly unable to put any weight on my left leg.
These two unrelated injuries have required me to see an array of medical professionals and undergo multiple tests, including two magnetic resonance imaging (MRI) scans,

Read more »

Free Newsletter

Numbers

THOSE AGES 45 to 59 typically say they’re on track for retirement if they have at least $250,000 saved—but only 27% of this age group have that much socked away, found a Federal Reserve survey.

Manifesto

NO. 33: WE HAVE two great financial advantages: time and our income-earning ability. To grow wealthy, we should take a slice of each month’s earnings—and invest it for as much time as possible.

Home Call to Action

Act

SET UP TWO-FACTOR authentication. If a thief gets online access to your financial accounts, your life’s savings could be at risk. What to do? If your bank, brokerage firm or fund company offers it, set up two-factor authentication. The firm will text you a special access code every time you log on or when you log on from an unrecognized computer.

Truths

NO. 76: TAX DEFERRAL lets you use dollars that’ll eventually go to Uncle Sam to earn extra gains for yourself. An example: If you invested $1,000 at 6% a year and paid 22% in taxes every year, you would have $3,944 after 30 years. But if you put off the 22% tax bill for 30 years by funding a retirement account, you’d have $4,700.

Think

IMPUTED RENT. Folks love to boast about their home’s price appreciation. But after deducting maintenance costs, property taxes and insurance, we might barely break even on the price gain. Instead, often the biggest return comes from the imputed rent—the fact that we get to live in the place. Each year’s imputed rent might equal 6% or 7% of a home’s value.

Money Guide

Start Here

Put Retirement First

OUR HUNTER-GATHERER ancestors were focused on surviving until tomorrow. We need to focus on retiring decades from now. Not surprisingly, this isn’t something that comes naturally. Often, our inclination is to deal with life’s goals consecutively, rather than concurrently. In other words, we might save for the house down payment in our 30s, pay for the kids’ college in our 40s and then finally turn our attention to retirement in our 50s. But if we do that, we could find ourselves in financial trouble. It’s awfully tough to amass enough for retirement if we start saving in our 20s, let alone beginning at age 50. Indeed, even as your attention is drawn to more immediate goals, don’t shortchange retirement. Maybe you can’t save 12% to 15% toward retirement in your 20s and 30s. But try to save at least some money every month. The earlier you start saving, the longer your time horizon will be. In addition to having more years of saving regularly, you can take the risk of investing more in stocks and potentially earn higher returns. You may also get the chance to fund your employer’s 401(k) plan and collect a matching employer contribution. That’s free money—and you don’t want to miss out. If you save a healthy sum from your 20s onwards, you will give yourself options. You may reach your late 40s or early 50s and discover that you are comfortably on track for retirement. At that point, you might opt to work fewer hours, switch to a less lucrative but perhaps more fulfilling career, and possibly even retire early. Our Humble Opinion: While we aren't advocating a life of self-imposed poverty, we would strongly suggest saving as much as you reasonably can whenever you can. In today’s turbulent job market, you don’t know when your ability to save may be disrupted by a bout of unemployment or if you might be forced to retire earlier than planned by ill health or layoffs. It might be ideal to save just enough every month for the retirement we want. But the reality is considerably messier: We retire with whatever we have managed to amass by that juncture—and the more we have, the easier our retirement will be. Next: Financial Calculators Previous: Life Stage No. 1: Your 20s, 30s and 40s Blog: Yes, It'll Happen
Read more »

Archive

Fake News

A CLIENT WAS in our offices the other day, grilling one of my fellow financial advisors about some investments in his diversified retirement portfolio. He just couldn’t understand why we’d keep certain securities that hadn’t recently performed well. He kept citing “stuff I read” and “all the experts” as the basis for his concerns. I wasn’t part of the conversation. But here are three points I would have made: 1. Those experts don’t know a thing about you or your situation. They don’t know your age, health, marital status or personality quirks. They don’t know where you live or how much your house cost. They don’t know how much you spend on groceries or hobbies, or that you were forced into early retirement by an ungrateful employer. They know none of this. Nada. 2. Virtually every expert you encounter online or on television is being paid for those opinions. If they’re discussing gold, real estate or master limited partnerships, you can be certain that their wallet or purse stands to gain from your interest in any of them. If they are recommending stocks, bonds or unit trusts, it is a sure thing that those products generate profits for them or their company. If they are discussing annuities, well, just run away as fast as you can. 3. Don’t be impressed by their purported qualifications. Not one of those so-called experts is any more expert than my colleagues and me. They’ve been in The Wall Street Journal? I’ve been in The Wall Street Journal. They’ve written articles for financial and trade industry magazines? I’ve written hundreds. They're on television? I’ve been on television. I may not be right all the time. But I’m just as much an expert as these talking heads—and probably more so. Dan Danford is a Certified Financial Planner and founder of the Family Investment Center in St. Joseph, Mo. His most recent book is Stuck in the Middle.
Read more »