If you don’t know the difference between helping yourself and helping yourself to what others have, how about a job on Wall Street?
“THERE IS A VERY fine line between ‘hobby’ and ‘mental illness’,” according to humorist Dave Barry.
Some years ago, we had a weekend place—a cabin on acreage—which we greatly enjoyed, even if it did come with challenges. One thing I especially enjoyed: taking the kids on nighttime walks to see how many critters we could spot. That led to an interest in flashlights, and I collected a bunch of them. That, in turn, led to a keen interest in pocketknives.
WE’VE ALL BEEN looking for signs that the financial world is returning to some semblance of normalcy. I recently read a CNBC article that gave me hope. The article said that worldwide dividend payouts were expected to reach $1.39 trillion in 2021, almost back to pre-pandemic levels.
The data came from a report by Janus Henderson, a U.K. money manager. Dividends in this year’s second quarter increased 26% from 2020’s second quarter and were only 6.8% below 2019’s second quarter.
“THE REALITY IS THAT most working Americans will continue to struggle to achieve retirement security because the ownership of financial assets is highly concentrated among the wealthiest,” wrote Dan Doonan, executive director of the National Institute on Retirement Security, for Forbes.com.
I read and re-read that statement, especially the word “because.” It seems Doonan has concluded that the great wealth held by the top 1% somehow inhibits the rest of us from saving and investing.
I HATE DEBT. A very happy day was when we paid off the mortgage. I’d rather walk on broken glass than pay a penny of interest on my credit cards. But there have been a few exceptions to my usual rule, all involving car purchases.
The first was many years ago when I reached what I thought was an all-cash deal on a new car. The salesman surprised me when he offered the same price with 0% financing.
WHEN I WALK AROUND my neighborhood, I see beautiful and expensive automobiles parked on the street. When I look at the garages where these cars should be parked, they’re full of stuff. I just can’t understand why someone would spend thousands of dollars on a vehicle and let it be exposed to theft, vandalism and severe weather, while their garage is used as a storage unit.
Even though I can still fit both our cars in our garage,
AS I TYPE THIS, I’m less than a week from walking out the door of my workplace for the last time, bringing my second career to a close. I’m looking forward to the rest of my life.
We’ve been anticipating this day and we’re more than ready. My wife is already retired. My work for a large corporation is fine, but I’m not passionate about it. While there are some positive aspects to where we currently live,
HOW LUCKY I WAS to be the recipient of a dinner invitation to Ruth’s Chris. I love a sizzling ribeye, so I booked my seat at the event. Those nearing and in retirement have a good idea of what I’m referring to—the good old annuity sales presentation.
These dinners are put on by financial advisors looking to expand their business. The routine goes like this: Invite prospects, present for an hour on the benefits of owning insurance or an annuity,
I’M WRITING THIS a few days after Hurricane Ida ravaged parts of our country. We were lucky. Our home here on the South Jersey coast was spared from all but minor rainfall. Much of Pennsylvania and North Jersey saw enormous amounts of rain, flooding and tornadoes. In my 64 years living in this region, I don’t recall there ever being this much severe weather, especially the number of tornadoes.
Prior to the hurricane landing in Louisiana,
I’VE HAD SOME dreadful jobs in my life. I spent one summer putting metal plates under a huge press for eight hours a day. Once the plates were in the right position, I’d push some buttons that would cause the press to crash down and shape the metal into something useful.
The goal was to work fast because that meant more pay. Some of the workers disabled the safety features so they could produce more widgets and earn extra money.
“SHOULD YOU BUY an annuity from Social Security?” That’s the title of a paper released by Boston College’s Center for Retirement Research (CRR) in May 2012. It’s one of the best articles I’ve ever read about the Social Security claiming decision—and it’s had a big impact on my thinking.
Most of us know what an income annuity is: You hand over a sum of money and, in return, receive a check every month for the rest of your life or for a specified period of time.
WE ALL LIVE IN the same economy, but we experience it differently. How we react to today’s economic developments is heavily influenced by our upbringing and world events at that time. This is a key insight from the first chapter of Morgan Housel’s wonderful book The Psychology of Money.
I can think of three things that have shaped my outlook—and lead me to a very different outlook from my children. First,
STEPPING INTO the HumbleDollar confessional, I admit to dabbling in a few high-fee, low-liquidity investments. It goes against much of what I stand for. But on occasion, I, too, reach for yield and the promise of returns uncorrelated with stocks. Before the chastising begins, please know that these speculative stakes total less than 3% of my portfolio. The rest is invested mainly in funds with expense ratios under 0.15%—and some have zero costs.
I HAVE A RELATIVE—let’s call her Jane. Last year, in the early days of the pandemic, Jane had the foresight to buy shares in vaccine maker Moderna. With the benefit of hindsight, it was a smart decision.
But it wasn’t a difficult one, in Jane’s view. It was no secret that the company was working on a COVID-19 vaccine. It was also clear that vaccines would be in high demand. That made the investment case clear.
ON SEPT. 11, 2001, I spent an hour and a half standing on a crowded subway train two blocks from the World Trade Center. During that time, both towers collapsed. No smoke came shooting down the subway tunnel. The earth didn’t noticeably shake. There were no deafening noises. Instead, we were just another subway car packed with disgruntled passengers, muttering about the perils of public transport.
It was only when the train backed up to Penn Station in midtown Manhattan that we learned what had happened that day.
NO. 27: RISK and potential return are inextricably linked. If an investment holds out the prospect of high returns, we should presume it’s highly risky—even if we can’t figure out what the risk is.
NO. 118: OWNING both U.S. and foreign stocks will smooth out a portfolio’s long-run performance, as those two sectors take turns posting strong results. But when shares turn lower, global stock markets become highly correlated—and salvaging your portfolio’s short-run results will hinge on owning other asset classes, notably high-quality bonds.
TAP HOME EQUITY to trim other debts. If you have high-interest auto loans or credit card debt, you might set up a home equity line of credit and then use it to pay off these higher-cost debts. That’ll reduce the interest you pay. You won’t, however, save on taxes. Thanks to 2017’s tax law, such home-equity borrowing is no longer tax-deductible.
OPPORTUNITY COST. Whenever we make a financial choice, we give up something else, which may be a better use for the money. If we buy one item, we can’t spend the dollars on other items, either now or in the future. When we devote money to one goal, we have less for other goals. When we buy one investment, we’re effectively choosing not to buy other investments.
“WHEN YOU’VE WON the game, stop playing with the money you really need.” That’s something my longtime friend and fellow author William Bernstein is fond of saying—and lately it’s been on my mind.
There’s been much handwringing over 2017’s stock market rally. Looked at objectively, it hasn’t been that startling. As of Sept. 29, the S&P 500 was up 14.2% for the year-to-date, with dividends reinvested—a good year, but nothing compared to the 25%-plus years we saw in 1991,
U.S. CREDIT CARD fraud topped $8 billion in 2015 and should surpass $12 billion next year. You can reduce your exposure to such incidents with a few simple steps. Why bother? Won’t the bank pick up the tab when unauthorized purchases show up on your account? Generally, yes, thanks to the Fair Credit Billing Act and the Electronic Fund Transfer Act. But there may be limitations on that protection, based on how quickly you notify your bank when you discover unauthorized charges.
IT MIGHT SEEM LIKE an obscure academic question: Do stocks truly follow a random walk or can we count on them reverting to the mean? Depending on which side we favor in this debate, it can make a huge difference to how we invest—and to our confidence as investors.
Like me, many HumbleDollar readers have most or all their investment dollars in index funds. A key reason we invest this way: It’s impossible to predict which stocks will shine because they follow a random walk.
IF I’M EVER FEELING lonely, all I need to do is write about certain financial topics—and soon enough my inbox is brimming with emails, some vehemently disagreeing, others offering vigorous nods of assent.
A dozen of those topics are covered in HumbleDollar’s new chapter devoted to great debates—issues like whether money buys happiness, when to claim Social Security and whether individual bonds are superior to bond mutual funds. But those subjects aren’t the only ones that stir up readers.
AS SHARK TANK STAR Lori Greiner once said, “Entrepreneurs are the only people who will work 80 hours a week to avoid working 40 hours a week.”
Got the entrepreneurial itch? When I hear people say they have a great business idea, but don’t have the money to launch their business or quit their day job, my heart sinks. They’re missing the point: In today’s world, there are countless opportunities to start a business without any initial investment.
I’VE HAD SOME dreadful jobs in my life. I spent one summer putting metal plates under a huge press for eight hours a day. Once the plates were in the right position, I’d push some buttons that would cause the press to crash down and shape the metal into something useful.
The goal was to work fast because that meant more pay. Some of the workers disabled the safety features so they could produce more widgets and earn extra money.
“SHOULD YOU BUY an annuity from Social Security?” That’s the title of a paper released by Boston College’s Center for Retirement Research (CRR) in May 2012. It’s one of the best articles I’ve ever read about the Social Security claiming decision—and it’s had a big impact on my thinking.
Most of us know what an income annuity is: You hand over a sum of money and, in return, receive a check every month for the rest of your life or for a specified period of time.
WE ALL LIVE IN the same economy, but we experience it differently. How we react to today’s economic developments is heavily influenced by our upbringing and world events at that time. This is a key insight from the first chapter of Morgan Housel’s wonderful book The Psychology of Money.
I can think of three things that have shaped my outlook—and lead me to a very different outlook from my children. First,
STEPPING INTO the HumbleDollar confessional, I admit to dabbling in a few high-fee, low-liquidity investments. It goes against much of what I stand for. But on occasion, I, too, reach for yield and the promise of returns uncorrelated with stocks. Before the chastising begins, please know that these speculative stakes total less than 3% of my portfolio. The rest is invested mainly in funds with expense ratios under 0.15%—and some have zero costs.
I HAVE A RELATIVE—let’s call her Jane. Last year, in the early days of the pandemic, Jane had the foresight to buy shares in vaccine maker Moderna. With the benefit of hindsight, it was a smart decision.
But it wasn’t a difficult one, in Jane’s view. It was no secret that the company was working on a COVID-19 vaccine. It was also clear that vaccines would be in high demand. That made the investment case clear.
ON SEPT. 11, 2001, I spent an hour and a half standing on a crowded subway train two blocks from the World Trade Center. During that time, both towers collapsed. No smoke came shooting down the subway tunnel. The earth didn’t noticeably shake. There were no deafening noises. Instead, we were just another subway car packed with disgruntled passengers, muttering about the perils of public transport.
It was only when the train backed up to Penn Station in midtown Manhattan that we learned what had happened that day.
NO. 27: RISK and potential return are inextricably linked. If an investment holds out the prospect of high returns, we should presume it’s highly risky—even if we can’t figure out what the risk is.
TAP HOME EQUITY to trim other debts. If you have high-interest auto loans or credit card debt, you might set up a home equity line of credit and then use it to pay off these higher-cost debts. That’ll reduce the interest you pay. You won’t, however, save on taxes. Thanks to 2017’s tax law, such home-equity borrowing is no longer tax-deductible.
NO. 118: OWNING both U.S. and foreign stocks will smooth out a portfolio’s long-run performance, as those two sectors take turns posting strong results. But when shares turn lower, global stock markets become highly correlated—and salvaging your portfolio’s short-run results will hinge on owning other asset classes, notably high-quality bonds.
OPPORTUNITY COST. Whenever we make a financial choice, we give up something else, which may be a better use for the money. If we buy one item, we can’t spend the dollars on other items, either now or in the future. When we devote money to one goal, we have less for other goals. When we buy one investment, we’re effectively choosing not to buy other investments.
“WHEN YOU’VE WON the game, stop playing with the money you really need.” That’s something my longtime friend and fellow author William Bernstein is fond of saying—and lately it’s been on my mind.
There’s been much handwringing over 2017’s stock market rally. Looked at objectively, it hasn’t been that startling. As of Sept. 29, the S&P 500 was up 14.2% for the year-to-date, with dividends reinvested—a good year, but nothing compared to the 25%-plus years we saw in 1991,
U.S. CREDIT CARD fraud topped $8 billion in 2015 and should surpass $12 billion next year. You can reduce your exposure to such incidents with a few simple steps. Why bother? Won’t the bank pick up the tab when unauthorized purchases show up on your account? Generally, yes, thanks to the Fair Credit Billing Act and the Electronic Fund Transfer Act. But there may be limitations on that protection, based on how quickly you notify your bank when you discover unauthorized charges.
IT MIGHT SEEM LIKE an obscure academic question: Do stocks truly follow a random walk or can we count on them reverting to the mean? Depending on which side we favor in this debate, it can make a huge difference to how we invest—and to our confidence as investors.
Like me, many HumbleDollar readers have most or all their investment dollars in index funds. A key reason we invest this way: It’s impossible to predict which stocks will shine because they follow a random walk.
IF I’M EVER FEELING lonely, all I need to do is write about certain financial topics—and soon enough my inbox is brimming with emails, some vehemently disagreeing, others offering vigorous nods of assent.
A dozen of those topics are covered in HumbleDollar’s new chapter devoted to great debates—issues like whether money buys happiness, when to claim Social Security and whether individual bonds are superior to bond mutual funds. But those subjects aren’t the only ones that stir up readers.
AS SHARK TANK STAR Lori Greiner once said, “Entrepreneurs are the only people who will work 80 hours a week to avoid working 40 hours a week.”
Got the entrepreneurial itch? When I hear people say they have a great business idea, but don’t have the money to launch their business or quit their day job, my heart sinks. They’re missing the point: In today’s world, there are countless opportunities to start a business without any initial investment.
When is it okay to go into debt?
What’s the best way to teach children about money?
What spending brings you greatest happiness?