When irrational investors meet unpredictable markets, there’s only one recourse: Grab the popcorn and enjoy the show.
SOCIAL SECURITY remains a great mystery to many Americans and is widely misunderstood. For instance, when Social Security’s trustees release their annual report, we get vastly different interpretations. One group will read the report and conclude there’s a “surplus” and plenty of money to improve benefits. Meanwhile, another concludes that the program is in fiscal trouble and fixing it is vital.
Headlines frequently state the program is going bankrupt. It isn’t. Today’s level of benefits may not be sustainable,
THE CLASH, the U.K. punk-rock group, famously asked, “Should I stay or should I go?” Retirees and job changers need to tackle the same question when they leave their employer.
At that juncture, you have four options for your 401(k) or 403(b) account: You can leave the balance in your old employer’s plan, roll over the balance to a new employer’s plan, roll over the balance to an IRA or close out the account.
FRAUD WEARS many faces. But depending on who you believe, potentially the most unusual is that of Jeanne Louise Calment. For years, the French-born Calment, who claimed to have been born in 1875, was celebrated as the world’s oldest person. By the time she died in 1997, she would have been 122— if she’d been telling the truth. New research, however, casts doubt on Calment’s claim.
The real story, it turns out, may be that Calment actually died many decades earlier—in the 1930s.
STOCKS MARCH ever higher, portfolios get ever fatter and yet the conundrum facing investors remains the same. We have no idea what will happen next to share prices—and no reliable way of figuring it out. Consider:
Valuations are rich, but they have been for much of the past three decades. Indeed, if above-average valuations were your signal to sell, you likely would have dumped stocks long ago and missed out on substantial gains. The reality: Valuations don’t predict short-term returns,
OUR WEALTH is usually measured by net worth, which is total assets minus all debt. But there’s an alternative measure—which is to assign our wealth to the purposes it serves. What purposes? Two come to mind: physical and social.
Let’s start with physical wealth. We’re talking here about a family’s ability to maintain basic physical comforts, such as enjoying decent food, a comfortable home, a reliable car and access to good health care.
You don’t have to be rich to afford these.
IN THE PAST, we’ve always bought certified preowned cars. We know new cars lose a big chunk of their value when you drive them off the lot, so we had our eye on a used car when we started our search earlier this year.
Our goal was a Mercedes Benz GLC 300 AWD 4MATIC. My husband enjoys the negotiating and drama that comes with buying a car, so he investigated choices, checked out prices at dealerships and was ready to start his usual two-to-three-month car hunt.
AMONG WORKERS, 67% are somewhat or very confident they’ll have enough to live comfortably in retirement, but only 42% have bothered calculating how much they need saved, according to the Employee Benefit Research Institute.
NO. 3: WE SHOULD focus relentlessly on what we want from our financial life. That’ll motivate us to save, drive our investment strategy—and help ensure we pursue the goals we care about most.
NO. 15: WE FAVOR the familiar. We suffer from home bias, meaning we’re drawn to our employer’s shares, local corporations and stocks of companies whose products we use. We also favor U.S. stocks and shy away from foreign shares. These familiar investments create a portfolio we’re comfortable with—but maybe not one that’s well diversified.
FIRE YOUR BROKER. Is your advisor a true fiduciary, or is he or she held to the suitability standard part or all of the time? If it’s the latter, what you have is a broker—someone with an incentive to sell products that charge high commissions. Do yourself a favor: Hire an advisor who’s a fulltime fiduciary and hence always required to act in your best interest.
RETURN COMPONENTS. If the stock market’s dividend yield is 2% and earnings per share grow 4%, the investment return would be 6% a year. This is a decent guide to long-run returns. But short-run results could stray far from 6%, depending on the speculative return—changes in how investors value corporate profits, as reflected in price-earnings ratios.
SOCIAL SECURITY remains a great mystery to many Americans and is widely misunderstood. For instance, when Social Security’s trustees release their annual report, we get vastly different interpretations. One group will read the report and conclude there’s a “surplus” and plenty of money to improve benefits. Meanwhile, another concludes that the program is in fiscal trouble and fixing it is vital.
Headlines frequently state the program is going bankrupt. It isn’t. Today’s level of benefits may not be sustainable,
THE CLASH, the U.K. punk-rock group, famously asked, “Should I stay or should I go?” Retirees and job changers need to tackle the same question when they leave their employer.
At that juncture, you have four options for your 401(k) or 403(b) account: You can leave the balance in your old employer’s plan, roll over the balance to a new employer’s plan, roll over the balance to an IRA or close out the account.
FRAUD WEARS many faces. But depending on who you believe, potentially the most unusual is that of Jeanne Louise Calment. For years, the French-born Calment, who claimed to have been born in 1875, was celebrated as the world’s oldest person. By the time she died in 1997, she would have been 122— if she’d been telling the truth. New research, however, casts doubt on Calment’s claim.
The real story, it turns out, may be that Calment actually died many decades earlier—in the 1930s.
STOCKS MARCH ever higher, portfolios get ever fatter and yet the conundrum facing investors remains the same. We have no idea what will happen next to share prices—and no reliable way of figuring it out. Consider:
Valuations are rich, but they have been for much of the past three decades. Indeed, if above-average valuations were your signal to sell, you likely would have dumped stocks long ago and missed out on substantial gains. The reality: Valuations don’t predict short-term returns,
OUR WEALTH is usually measured by net worth, which is total assets minus all debt. But there’s an alternative measure—which is to assign our wealth to the purposes it serves. What purposes? Two come to mind: physical and social.
Let’s start with physical wealth. We’re talking here about a family’s ability to maintain basic physical comforts, such as enjoying decent food, a comfortable home, a reliable car and access to good health care.
You don’t have to be rich to afford these.
IN THE PAST, we’ve always bought certified preowned cars. We know new cars lose a big chunk of their value when you drive them off the lot, so we had our eye on a used car when we started our search earlier this year.
Our goal was a Mercedes Benz GLC 300 AWD 4MATIC. My husband enjoys the negotiating and drama that comes with buying a car, so he investigated choices, checked out prices at dealerships and was ready to start his usual two-to-three-month car hunt.
AMONG WORKERS, 67% are somewhat or very confident they’ll have enough to live comfortably in retirement, but only 42% have bothered calculating how much they need saved, according to the Employee Benefit Research Institute.
NO. 3: WE SHOULD focus relentlessly on what we want from our financial life. That’ll motivate us to save, drive our investment strategy—and help ensure we pursue the goals we care about most.
FIRE YOUR BROKER. Is your advisor a true fiduciary, or is he or she held to the suitability standard part or all of the time? If it’s the latter, what you have is a broker—someone with an incentive to sell products that charge high commissions. Do yourself a favor: Hire an advisor who’s a fulltime fiduciary and hence always required to act in your best interest.
NO. 15: WE FAVOR the familiar. We suffer from home bias, meaning we’re drawn to our employer’s shares, local corporations and stocks of companies whose products we use. We also favor U.S. stocks and shy away from foreign shares. These familiar investments create a portfolio we’re comfortable with—but maybe not one that’s well diversified.
RETURN COMPONENTS. If the stock market’s dividend yield is 2% and earnings per share grow 4%, the investment return would be 6% a year. This is a decent guide to long-run returns. But short-run results could stray far from 6%, depending on the speculative return—changes in how investors value corporate profits, as reflected in price-earnings ratios.