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If you think money managers are overpaid, imagine how much they’d charge if they actually beat the market.

Writing Wrongs

“JOURNALISM is printing what someone else does not want printed. Everything else is public relations.” It’s a quote that should be framed on the wall of every newsroom.
Of course, every journalist knows this. We call PR—public relations—the dark side. But most of us journalists stray into it far more often than we like to admit.
As a reporter, I cut my teeth at a group of regional newspapers in a prosperous part of England in 1989.

Read more »

Monthly Affliction

MY ELDERLY mother’s credit card was recently compromised. This required her to move all her automatic payments to a new credit card.
That, in turn, prompted her to reevaluate these various charges. Her cable bill, for instance, had gone up more than 15% over the past two years. My mother complained that, while she gets many channels, she only watches broadcast TV. She dropped the cable package.
As she added the autopay information to her new credit card,

Read more »

Room to Disagree

IN DECEMBER 1954, 23-year-old John Neff hitchhiked from Ohio to New York in search of work. A Navy veteran, Neff had recently graduated college near the top of his class, with a degree in finance. His hope: to land a job as a stockbroker. But despite these qualifications, Neff was turned down. Why? According to a biographer, the brokerage firm felt “his voice didn’t carry enough authority.”
It didn’t take long for Neff to recover from this setback.

Read more »

Pay It Down

DECIDING WHETHER to buy bonds or pay down the mortgage used to be a tricky decision. Not anymore: Paying extra on your home loan will almost always be the right choice.
This takes some explaining—because it involves wrapping your head around the standard vs. itemized deduction, investment taxes, and a mortgage’s shifting mix of principal and interest.
First, let’s dispense with the obvious objection: Yes, if you’re inclined to buy stocks rather than pay down the mortgage,

Read more »

Those Millennials

MUCH CRITICISM is leveled against millennials, often defined as those born between 1981 and 1996. The criticism is frequently directed at their money and career decisions, including their purportedly foolish spending, excessive borrowing, job-hopping, self-absorption and sense of entitlement.
The perception is so pervasive that even millennials buy into this view of themselves.
But I wouldn’t be too quick to criticize millennials or compare them unfavorably to older generations. Each generation confronts its own unique challenges and difficulties,

Read more »

The Right Stuff

IT CAN BE HARD to find time to make healthy meals, plus—with the convenience of fast food restaurants—why bother? It’s way easier to enter the drive-through at the local burger joint than it is to scramble together ingredients at home and make a healthier version.
But these decisions come at a cost, financial and otherwise. Most fast foods are loaded with sodium and calories, while lacking the nutrients you need for optimum health. This can lead to weight gain,

Read more »

Money Guide

Buy Happiness?

ASK FOLKS WHETHER money buys happiness and they almost always respond with a resounding “yes.” And the research suggests that they’re right—but maybe not to the degree they imagine.

Read more »

Archive

Home Economics

YOU COULD SAY I have graduated summa cum laude from the school of hard knocks—for first-time homebuyers. From a financial standpoint, I did everything by the book. Over two years, my husband and I saved enough to put down 20% and cover closing costs. To ensure we didn’t buy more house than we could comfortably afford, we kept our purchase price to less than half of what some lenders pre-qualified us for. I aggressively analyzed and pursued the best financing options. We established a healthy emergency fund. It turns out, however, that my analytical nature—I’m a Certified Financial Planner—and expensive business school training only solved half the equation. By solely focusing on the financial side, I neglected to respect, and understand, the art of the purchase: What story was the house telling me with its physical clues? Clues, I now know, can include such things as a sump pump: If there’s one, it means the previous owners experienced water in their crawl space. If a new furnace was recently installed, it’s best to ensure it has the correct capacity. Beyond the physical clues, there were behavioral clues from the seller and his realtor. Given the hot Portland market, they knew they were in the driver’s seat. What began as an amicable but firm negotiation devolved into something quite different by the time the ink was dry. The seller and his realtor imposed a closing fine—giving us 30 days to close the deal (something that is entirely out of our control, I might add) or face a $100 per day fine. When politely questioned on items that came back from the inspection report, there were days that would pass without a response. Under normal market conditions, this type of behavior would have sent any buyer running. We, however, were reluctant to start over, especially after six months of devoting nights and weekends to finding a house in one of the most competitive markets in the U.S., including viewing more than 65 homes. The ironic thing is, these were all sunk costs. When evaluating the decision to continue, or start fresh, they should have never entered the equation. No surprise: Our first home came with a side of humble pie. We thought we were prepared, but experience proved once again to be a formidable teacher. My lesson: Financial planning is more than numbers. But let my loss be your gain: Learning from somebody else’s experience is a lot cheaper than learning it firsthand. Anika Hedstrom is a financial planner with Vista Capital Partners in Portland, OR. She loves to nerd-out and, when given a dollar, loves to save 96 cents.
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Numbers

FOR PURCHASES under $10, 49% of U.S. adults typically use cash, 35% use a debit card and just 16% use a credit card, according to a CreditCards.com survey.

Home Call to Action

Manifesto

NO. 64: AS WE GROW wealthier, we should seize the chance to save on insurance—by raising deductibles, lengthening elimination periods and perhaps dropping some policies entirely.

Truths

NO. 108: OUR HUNTER-gatherer instincts tell us to consume right away—and not save for the future. What to do? We might automate our regular savings. We should visualize our goals, so they seem more alluring than today’s spending. We might share our financial ambitions with others, so fear of their disapproval prods us to act.

Act

GET SPENDING money out of stocks. Calculate how much cash you’ll need from your portfolio over the next five years. That money should be out of stocks and invested in nothing more volatile than high-quality short-term bonds. You don’t want to be forced to sell shares at depressed prices—and that could happen if your time horizon is less than five years.

Think

BETA AND ALPHA. Beta measures an investment’s volatility relative to a benchmark index. If the investment has a positive alpha, it means it outperformed the index on a risk-adjusted basis, with that risk measured by beta. For instance, a mutual fund could trail the market averages, but still have a positive alpha if its performance wasn’t especially volatile.

Writing Wrongs

“JOURNALISM is printing what someone else does not want printed. Everything else is public relations.” It’s a quote that should be framed on the wall of every newsroom.
Of course, every journalist knows this. We call PR—public relations—the dark side. But most of us journalists stray into it far more often than we like to admit.
As a reporter, I cut my teeth at a group of regional newspapers in a prosperous part of England in 1989.

Read more »

Monthly Affliction

MY ELDERLY mother’s credit card was recently compromised. This required her to move all her automatic payments to a new credit card.
That, in turn, prompted her to reevaluate these various charges. Her cable bill, for instance, had gone up more than 15% over the past two years. My mother complained that, while she gets many channels, she only watches broadcast TV. She dropped the cable package.
As she added the autopay information to her new credit card,

Read more »

Room to Disagree

IN DECEMBER 1954, 23-year-old John Neff hitchhiked from Ohio to New York in search of work. A Navy veteran, Neff had recently graduated college near the top of his class, with a degree in finance. His hope: to land a job as a stockbroker. But despite these qualifications, Neff was turned down. Why? According to a biographer, the brokerage firm felt “his voice didn’t carry enough authority.”
It didn’t take long for Neff to recover from this setback.

Read more »

Pay It Down

DECIDING WHETHER to buy bonds or pay down the mortgage used to be a tricky decision. Not anymore: Paying extra on your home loan will almost always be the right choice.
This takes some explaining—because it involves wrapping your head around the standard vs. itemized deduction, investment taxes, and a mortgage’s shifting mix of principal and interest.
First, let’s dispense with the obvious objection: Yes, if you’re inclined to buy stocks rather than pay down the mortgage,

Read more »

Those Millennials

MUCH CRITICISM is leveled against millennials, often defined as those born between 1981 and 1996. The criticism is frequently directed at their money and career decisions, including their purportedly foolish spending, excessive borrowing, job-hopping, self-absorption and sense of entitlement.
The perception is so pervasive that even millennials buy into this view of themselves.
But I wouldn’t be too quick to criticize millennials or compare them unfavorably to older generations. Each generation confronts its own unique challenges and difficulties,

Read more »

The Right Stuff

IT CAN BE HARD to find time to make healthy meals, plus—with the convenience of fast food restaurants—why bother? It’s way easier to enter the drive-through at the local burger joint than it is to scramble together ingredients at home and make a healthier version.
But these decisions come at a cost, financial and otherwise. Most fast foods are loaded with sodium and calories, while lacking the nutrients you need for optimum health. This can lead to weight gain,

Read more »

Free Newsletter

Numbers

FOR PURCHASES under $10, 49% of U.S. adults typically use cash, 35% use a debit card and just 16% use a credit card, according to a CreditCards.com survey.

Manifesto

NO. 64: AS WE GROW wealthier, we should seize the chance to save on insurance—by raising deductibles, lengthening elimination periods and perhaps dropping some policies entirely.

Home Call to Action

Act

GET SPENDING money out of stocks. Calculate how much cash you’ll need from your portfolio over the next five years. That money should be out of stocks and invested in nothing more volatile than high-quality short-term bonds. You don’t want to be forced to sell shares at depressed prices—and that could happen if your time horizon is less than five years.

Truths

NO. 108: OUR HUNTER-gatherer instincts tell us to consume right away—and not save for the future. What to do? We might automate our regular savings. We should visualize our goals, so they seem more alluring than today’s spending. We might share our financial ambitions with others, so fear of their disapproval prods us to act.

Think

BETA AND ALPHA. Beta measures an investment’s volatility relative to a benchmark index. If the investment has a positive alpha, it means it outperformed the index on a risk-adjusted basis, with that risk measured by beta. For instance, a mutual fund could trail the market averages, but still have a positive alpha if its performance wasn’t especially volatile.

Money Guide

Start Here

Buy Happiness?

ASK FOLKS WHETHER money buys happiness and they almost always respond with a resounding “yes.” And the research suggests that they’re right—but maybe not to the degree they imagine.

Read more »

Archive

Home Economics

YOU COULD SAY I have graduated summa cum laude from the school of hard knocks—for first-time homebuyers. From a financial standpoint, I did everything by the book. Over two years, my husband and I saved enough to put down 20% and cover closing costs. To ensure we didn’t buy more house than we could comfortably afford, we kept our purchase price to less than half of what some lenders pre-qualified us for. I aggressively analyzed and pursued the best financing options. We established a healthy emergency fund. It turns out, however, that my analytical nature—I’m a Certified Financial Planner—and expensive business school training only solved half the equation. By solely focusing on the financial side, I neglected to respect, and understand, the art of the purchase: What story was the house telling me with its physical clues? Clues, I now know, can include such things as a sump pump: If there’s one, it means the previous owners experienced water in their crawl space. If a new furnace was recently installed, it’s best to ensure it has the correct capacity. Beyond the physical clues, there were behavioral clues from the seller and his realtor. Given the hot Portland market, they knew they were in the driver’s seat. What began as an amicable but firm negotiation devolved into something quite different by the time the ink was dry. The seller and his realtor imposed a closing fine—giving us 30 days to close the deal (something that is entirely out of our control, I might add) or face a $100 per day fine. When politely questioned on items that came back from the inspection report, there were days that would pass without a response. Under normal market conditions, this type of behavior would have sent any buyer running. We, however, were reluctant to start over, especially after six months of devoting nights and weekends to finding a house in one of the most competitive markets in the U.S., including viewing more than 65 homes. The ironic thing is, these were all sunk costs. When evaluating the decision to continue, or start fresh, they should have never entered the equation. No surprise: Our first home came with a side of humble pie. We thought we were prepared, but experience proved once again to be a formidable teacher. My lesson: Financial planning is more than numbers. But let my loss be your gain: Learning from somebody else’s experience is a lot cheaper than learning it firsthand. Anika Hedstrom is a financial planner with Vista Capital Partners in Portland, OR. She loves to nerd-out and, when given a dollar, loves to save 96 cents.
Read more »