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Short-term trading is an act of great arrogance: You assume you know better than the market—and that you’ll quickly be proven right.

Unloaded

“YOU’RE FIRED” was made famous by Donald Trump as host of The Apprentice. Imagine my surprise when my broker delivered the same message to me two years ago.
In 2015, my job was transferred to Texas. I opted to become a long-distance commuter, while my family stayed in Maryland. Around that time, we moved homes, so our son could attend a better high school. In addition, I was helping to launch two huge long-term work projects.

Read more »

Castles in the Air

AMONG THE 16 million who served during the Second World War, many returned home, started families and pursued what would become an integral part of the American dream: homeownership. It’s during this time that the term “starter home” was coined.
My grandfather was one of those proud vets. He and my grandmother bought a place in South Dakota, where they started our family.
In 1950, the average new single-family home was 983 square feet.

Read more »

Takes Skill

IN 2015, I was selected for the “leadership pipeline program” at the major bank where I worked. It was a 10-month-long program for minority employees just below executive level. We were selected to learn all about corporate culture and what it took to advance to the next level. I felt honored to be among such talented and promising employees.
Participants were from various departments from across the U.S.—technology, risk management, operations, compliance, human resources,

Read more »

Pass It On

BABY BOOMERS are retiring every day and Generation X is right on their heels. With this, an increasingly large amount of wealth is making its way into IRAs and Roth IRAs, thanks to rollovers from employer retirement plans.
I’ve found that many folks don’t quite grasp the complexities of such accounts. On the surface, they seem pretty simple: You contribute to an IRA or Roth IRA, receive tax-deferred growth and then gradually withdraw the funds during retirement.

Read more »

Many Happy Returns

AS THE OLD saying goes, there are lies, damned lies and statistics. And then there’s investment performance, which may deserve a category all its own.
This topic came to mind recently when I saw a press release heralding the accomplishments of a retired nonprofit executive. Among the claims: that he had doubled the organization’s endowment. This struck me as impressive—until I considered it more critically. What did it mean that he had doubled the endowment?

Read more »

On the Other Hand

YOU COULD ARGUE that U.S. stocks are reasonably priced, with the S&P 500 companies trading at 22 times their reported earnings for the past 12 months. That’s not much above the 50-year average of 19.3—and hardly outrageous, given today’s modest bond yields.
But you could also argue that U.S. shares are horribly overpriced. The S&P 500 stocks today offer a dividend yield of just 1.9%, versus a 50-year average of 2.9%. Shares also seem pricey compared to both the value of corporate assets and average company profits for the past 10 years.

Read more »

Money Guide

Conforming vs. Not

A CONFORMING LOAN is one that meets the standards used by Freddie Mac and Fannie Mae, making them eligible for purchase by either institution. Result: A conforming loan often charges a somewhat lower interest rate, perhaps 0.25 percentage point less than a comparable nonconforming loan. To qualify as a conforming loan, a mortgage has to meet a number of conditions, the most notable of which is size. According to the Federal Housing Finance Agency, for 2019, a conforming loan for a single-family home typically has to be $484,350 or less. In more expensive parts of the country, however, a single-family home loan can be as large as $726,525 and still qualify as conforming. What if a loan is larger? It’s considered a jumbo loan. Such loans are more difficult for lenders to securitize, by packaging them into mortgage bonds and then selling these bonds to investors. Instead, lenders will often keep a jumbo mortgage on their own books, hence the higher cost and stricter scrutiny of borrowers. Next: Closing Costs Previous: Fixed vs. Adjustable
Read more »

Archive

NewRetirement

WANT TO CHECK your retirement readiness? There's a slew of online calculators available, but one of the best is NewRetirement.com. The site strives to deliver great content and foster an active community, and it does a decent job on those two fronts. But the site's heart and soul is its super-sophisticated, comprehensive retirement calculator. Truth be told, my preference usually runs to calculators that don't require registration and don't involve many inputs, so I was initially reluctant to create an account at NewRetirement.com. But I know Steve Chen, NewRetirement.com's founder, and he cajoled me into giving the calculator a test drive. I'm glad I did. Signing up and adding my data proved less onerous than I feared, there was no cost involved and my registration didn't trigger an endless steam of pestering emails. Indeed, I didn't have to add much information to get an assessment of my retirement plan. Or maybe I should say two assessments: The site gauged my chances of a financially comfortable retirement using both optimistic and pessimistic assumptions. Things look good, though the site suggested they would look even better if I converted my traditional IRA to a Roth, downsized my home and reduced my expenses by 10%. I figured maybe I was an easy case, so I decided to slash the value of my retirement account and my home, and see what that did to the analysis. The site suggested my top opportunity was purchasing a deferred income annuity, which would provide income starting later in retirement—and which would likely be a good move for someone short on retirement savings. The site also suggested increasing the amount I save, which makes sense, and suggested I delay claiming Social Security. But it didn't advise postponing retirement, which would probably be a good idea, given that I was angling to quit at 62. Along with some of its financial suggestions, NewRetirement.com offers links to the site's product partners. But there's no hard sell—a big plus in my book. Follow Jonathan on Twitter @ClementsMoney and on Facebook.
Read more »

Numbers

GOING ON a first date? Among millennials, 37% expect to split the tab, versus 26% for those who are older, according to a Bankrate survey.

Manifesto

NO. 41: VERY FEW of us need life insurance for our entire life. That’s why term insurance makes sense and cash-value policies are usually a mistake—despite what insurance agents say.

Truths

NO. 60: SHORT-TERM results matter to long-term investors. Even if you’re investing for the long haul and have a strong stomach for short-term price swings, this volatility can still have a huge impact on your long-run returns. Want to retire rich? Pray for lousy markets now—and buoyant markets as you approach retirement.

Act

FREEZE YOUR CREDIT—something you can now do at no cost. This will prevent data thieves from taking out loans and credit cards using your identity. But it also means you’ll need to contact the three credit bureaus and unfreeze your credit temporarily whenever applying for credit. Sound like a hassle? As an alternative, consider setting up a fraud alert.

Think

INFLATION RISK. Suppose inflation runs at 2.5% a year. If you were living off a traditional employer pension or interest from long-term bonds, your income would lose more than half its spending power over a 30-year retirement. What to do? You might keep more in stocks, while also delaying Social Security so you have more inflation-indexed income.

About Jonathan

Jonathan Clements

HumbleDollar is edited by Jonathan Clements, former personal finance columnist for The Wall Street Journal.

Home Call to Action

Unloaded

“YOU’RE FIRED” was made famous by Donald Trump as host of The Apprentice. Imagine my surprise when my broker delivered the same message to me two years ago.
In 2015, my job was transferred to Texas. I opted to become a long-distance commuter, while my family stayed in Maryland. Around that time, we moved homes, so our son could attend a better high school. In addition, I was helping to launch two huge long-term work projects.

Read more »

Castles in the Air

AMONG THE 16 million who served during the Second World War, many returned home, started families and pursued what would become an integral part of the American dream: homeownership. It’s during this time that the term “starter home” was coined.
My grandfather was one of those proud vets. He and my grandmother bought a place in South Dakota, where they started our family.
In 1950, the average new single-family home was 983 square feet.

Read more »

Takes Skill

IN 2015, I was selected for the “leadership pipeline program” at the major bank where I worked. It was a 10-month-long program for minority employees just below executive level. We were selected to learn all about corporate culture and what it took to advance to the next level. I felt honored to be among such talented and promising employees.
Participants were from various departments from across the U.S.—technology, risk management, operations, compliance, human resources,

Read more »

Pass It On

BABY BOOMERS are retiring every day and Generation X is right on their heels. With this, an increasingly large amount of wealth is making its way into IRAs and Roth IRAs, thanks to rollovers from employer retirement plans.
I’ve found that many folks don’t quite grasp the complexities of such accounts. On the surface, they seem pretty simple: You contribute to an IRA or Roth IRA, receive tax-deferred growth and then gradually withdraw the funds during retirement.

Read more »

Many Happy Returns

AS THE OLD saying goes, there are lies, damned lies and statistics. And then there’s investment performance, which may deserve a category all its own.
This topic came to mind recently when I saw a press release heralding the accomplishments of a retired nonprofit executive. Among the claims: that he had doubled the organization’s endowment. This struck me as impressive—until I considered it more critically. What did it mean that he had doubled the endowment?

Read more »

On the Other Hand

YOU COULD ARGUE that U.S. stocks are reasonably priced, with the S&P 500 companies trading at 22 times their reported earnings for the past 12 months. That’s not much above the 50-year average of 19.3—and hardly outrageous, given today’s modest bond yields.
But you could also argue that U.S. shares are horribly overpriced. The S&P 500 stocks today offer a dividend yield of just 1.9%, versus a 50-year average of 2.9%. Shares also seem pricey compared to both the value of corporate assets and average company profits for the past 10 years.

Read more »

Numbers

GOING ON a first date? Among millennials, 37% expect to split the tab, versus 26% for those who are older, according to a Bankrate survey.

Manifesto

NO. 41: VERY FEW of us need life insurance for our entire life. That’s why term insurance makes sense and cash-value policies are usually a mistake—despite what insurance agents say.

Act

FREEZE YOUR CREDIT—something you can now do at no cost. This will prevent data thieves from taking out loans and credit cards using your identity. But it also means you’ll need to contact the three credit bureaus and unfreeze your credit temporarily whenever applying for credit. Sound like a hassle? As an alternative, consider setting up a fraud alert.

Truths

NO. 60: SHORT-TERM results matter to long-term investors. Even if you’re investing for the long haul and have a strong stomach for short-term price swings, this volatility can still have a huge impact on your long-run returns. Want to retire rich? Pray for lousy markets now—and buoyant markets as you approach retirement.

Think

INFLATION RISK. Suppose inflation runs at 2.5% a year. If you were living off a traditional employer pension or interest from long-term bonds, your income would lose more than half its spending power over a 30-year retirement. What to do? You might keep more in stocks, while also delaying Social Security so you have more inflation-indexed income.

Home Call to Action

Money Guide

Start Here

Conforming vs. Not

A CONFORMING LOAN is one that meets the standards used by Freddie Mac and Fannie Mae, making them eligible for purchase by either institution. Result: A conforming loan often charges a somewhat lower interest rate, perhaps 0.25 percentage point less than a comparable nonconforming loan. To qualify as a conforming loan, a mortgage has to meet a number of conditions, the most notable of which is size. According to the Federal Housing Finance Agency, for 2019, a conforming loan for a single-family home typically has to be $484,350 or less. In more expensive parts of the country, however, a single-family home loan can be as large as $726,525 and still qualify as conforming. What if a loan is larger? It’s considered a jumbo loan. Such loans are more difficult for lenders to securitize, by packaging them into mortgage bonds and then selling these bonds to investors. Instead, lenders will often keep a jumbo mortgage on their own books, hence the higher cost and stricter scrutiny of borrowers. Next: Closing Costs Previous: Fixed vs. Adjustable
Read more »

Archive

NewRetirement

WANT TO CHECK your retirement readiness? There's a slew of online calculators available, but one of the best is NewRetirement.com. The site strives to deliver great content and foster an active community, and it does a decent job on those two fronts. But the site's heart and soul is its super-sophisticated, comprehensive retirement calculator. Truth be told, my preference usually runs to calculators that don't require registration and don't involve many inputs, so I was initially reluctant to create an account at NewRetirement.com. But I know Steve Chen, NewRetirement.com's founder, and he cajoled me into giving the calculator a test drive. I'm glad I did. Signing up and adding my data proved less onerous than I feared, there was no cost involved and my registration didn't trigger an endless steam of pestering emails. Indeed, I didn't have to add much information to get an assessment of my retirement plan. Or maybe I should say two assessments: The site gauged my chances of a financially comfortable retirement using both optimistic and pessimistic assumptions. Things look good, though the site suggested they would look even better if I converted my traditional IRA to a Roth, downsized my home and reduced my expenses by 10%. I figured maybe I was an easy case, so I decided to slash the value of my retirement account and my home, and see what that did to the analysis. The site suggested my top opportunity was purchasing a deferred income annuity, which would provide income starting later in retirement—and which would likely be a good move for someone short on retirement savings. The site also suggested increasing the amount I save, which makes sense, and suggested I delay claiming Social Security. But it didn't advise postponing retirement, which would probably be a good idea, given that I was angling to quit at 62. Along with some of its financial suggestions, NewRetirement.com offers links to the site's product partners. But there's no hard sell—a big plus in my book. Follow Jonathan on Twitter @ClementsMoney and on Facebook.
Read more »

Free Newsletter

Jonathan Clements

About Jonathan

HumbleDollar is edited by Jonathan Clements, former personal finance columnist for The Wall Street Journal.