How to outshine competing investors: Save more, pay lower costs, manage risk better—and think longer term.
I’M AN AVID player of video and computer games—along with 150 million other Americans. They’ve been a nice occasional escape from the pressures and obligations of the real world for more than 40 years and, now well into my 50s, I’m old enough to see them as merely that.
Youth, on the other hand, is more susceptible to having their behavior influenced, if not shaped, by interactive entertainment. There’s much debate as to whether such games promote dissociative behavior and even violence.
FOR THE BETTER part of 40 years, I spent a great deal of time helping thousands of workers prepare for retirement. We ran seminars for workers and spouses on topics like retirement income, insurance, lifestyle, relocation and more. I think it’s fair to say that, if someone took advantage of the programs offered, they would have been well prepared financially and emotionally for retirement.
Sadly, relatively few workers utilized all that was available to them—this despite the support and urging of the unions that represented them.
THE INTERNAL Revenue Code doesn’t authorize much relief for investors when they suffer capital losses that exceed their gains. It allows taxpayers each year to offset the excess against as much as $3,000 of their ordinary income from sources like salaries, pensions and withdrawals from IRAs.
What about the unused losses? The law lets investors carry forward such losses and claim them in an identical way on their tax returns in subsequent years, until they’re used up.
IN THE HISTORY of the investment industry, May 1, 1975, is a date to be celebrated. On that day, the industry took not one, but two, remarkable steps forward.
The first change was an action by the SEC to deregulate stockbrokers. For the first time in more than 100 years, brokers were given the freedom to set their own commission rates on stock trades. The result was a boon for individual investors. Today, instead of paying hundreds of dollars to trade a stock,
JAMES CLEAR, in his bestselling book Atomic Habits, offers this thought-provoking notion: Suppose a plane takes off from Los Angeles on its way to New York. But after taking off, the pilot turns the nose of the plane by an almost imperceptible 89 inches. Where will the plane end up? The answer: nowhere near New York. As it flies across the country, that 89-inch difference will take it hundreds of miles off course.
AN ESTIMATED 86% of U.S. funeral homes are privately owned. The remaining 14% are operated by publicly-traded companies, including 12% by Service Corp. International (SCI), according to the National Funeral Directors Association.
WHEN FOLKS have financial questions, they go hunting for the right answer. But what if there’s no right answer to be found?
To be sure, in retrospect, the correct answer is often crystal clear. Looking back at 2018, we should have owned growth stocks until September and then gone to 100% cash. If our home didn’t burn down and our health was good, we shouldn’t have bothered with homeowner’s and health insurance. If we kept our job and survived the year,
NO. 35: WHENEVER YOU buy or sell a stock or bond, somebody’s on the other side of the trade—and she’s likely far better informed. The financial markets attract some of the brightest minds: They’re the investors you’re trying to outwit when you make a trade. Do you know more than they do—or do they know something you don’t?
CALCULATE YOUR REQUIRED nest egg. Once retired, you’ll likely have Social Security and perhaps a traditional employer pension. How much additional income will you need for a comfortable retirement? This money will need to come from savings. Take your desired portfolio income, multiply by 25—and you’ll have an estimate for how big a nest egg you need.
DOLLAR AVERAGING. If you put, say, $300 into stocks every month, you’re dollar-cost averaging. Because you invest the same sum, you buy more shares when the market falls, thus lowering your average cost per share. Dollar averaging supposedly improves the odds of making money. Its real virtue: It helps investors to get started and then stay the course.
HumbleDollar is edited by Jonathan Clements, author of From Here to Financial Happiness.
I’M AN AVID player of video and computer games—along with 150 million other Americans. They’ve been a nice occasional escape from the pressures and obligations of the real world for more than 40 years and, now well into my 50s, I’m old enough to see them as merely that.
Youth, on the other hand, is more susceptible to having their behavior influenced, if not shaped, by interactive entertainment. There’s much debate as to whether such games promote dissociative behavior and even violence.
FOR THE BETTER part of 40 years, I spent a great deal of time helping thousands of workers prepare for retirement. We ran seminars for workers and spouses on topics like retirement income, insurance, lifestyle, relocation and more. I think it’s fair to say that, if someone took advantage of the programs offered, they would have been well prepared financially and emotionally for retirement.
Sadly, relatively few workers utilized all that was available to them—this despite the support and urging of the unions that represented them.
THE INTERNAL Revenue Code doesn’t authorize much relief for investors when they suffer capital losses that exceed their gains. It allows taxpayers each year to offset the excess against as much as $3,000 of their ordinary income from sources like salaries, pensions and withdrawals from IRAs.
What about the unused losses? The law lets investors carry forward such losses and claim them in an identical way on their tax returns in subsequent years, until they’re used up.
IN THE HISTORY of the investment industry, May 1, 1975, is a date to be celebrated. On that day, the industry took not one, but two, remarkable steps forward.
The first change was an action by the SEC to deregulate stockbrokers. For the first time in more than 100 years, brokers were given the freedom to set their own commission rates on stock trades. The result was a boon for individual investors. Today, instead of paying hundreds of dollars to trade a stock,
JAMES CLEAR, in his bestselling book Atomic Habits, offers this thought-provoking notion: Suppose a plane takes off from Los Angeles on its way to New York. But after taking off, the pilot turns the nose of the plane by an almost imperceptible 89 inches. Where will the plane end up? The answer: nowhere near New York. As it flies across the country, that 89-inch difference will take it hundreds of miles off course.
AN ESTIMATED 86% of U.S. funeral homes are privately owned. The remaining 14% are operated by publicly-traded companies, including 12% by Service Corp. International (SCI), according to the National Funeral Directors Association.
CALCULATE YOUR REQUIRED nest egg. Once retired, you’ll likely have Social Security and perhaps a traditional employer pension. How much additional income will you need for a comfortable retirement? This money will need to come from savings. Take your desired portfolio income, multiply by 25—and you’ll have an estimate for how big a nest egg you need.
NO. 35: WHENEVER YOU buy or sell a stock or bond, somebody’s on the other side of the trade—and she’s likely far better informed. The financial markets attract some of the brightest minds: They’re the investors you’re trying to outwit when you make a trade. Do you know more than they do—or do they know something you don’t?
DOLLAR AVERAGING. If you put, say, $300 into stocks every month, you’re dollar-cost averaging. Because you invest the same sum, you buy more shares when the market falls, thus lowering your average cost per share. Dollar averaging supposedly improves the odds of making money. Its real virtue: It helps investors to get started and then stay the course.
WHEN FOLKS have financial questions, they go hunting for the right answer. But what if there’s no right answer to be found?
To be sure, in retrospect, the correct answer is often crystal clear. Looking back at 2018, we should have owned growth stocks until September and then gone to 100% cash. If our home didn’t burn down and our health was good, we shouldn’t have bothered with homeowner’s and health insurance. If we kept our job and survived the year,
HumbleDollar is edited by Jonathan Clements, author of From Here to Financial Happiness.