The results speak for themselves—and that’s a problem for active money managers.
ALMOST 20 YEARS AGO, we renovated our entire Washington, DC, home. The memory is still quite fresh. If you’ve ever renovated a house, you’ll understand.
A home renovation has similarities to personal finance: You can do it yourself (DIY), you can pay someone to do it for you, or you can do something in between. This last approach has worked well for me—both with renovations and financial matters.
Our home consisted of a three-level townhouse.
SHAQ AND A-ROD have gotten involved in special purpose acquisition companies, or SPACs, one of the hottest products on Wall Street over the past year. I got there a few years earlier.
In 2018, I invested $5,000 in a SPAC that has since underperformed the market. Still, I got some hands-on experience ahead of the 2020-21 boom. Thinking of buying a SPAC? Based on my investment, here’s what you can expect.
Tom Farley isn’t a household name like Shaq or A-Rod,
MY SPRING CLEANING this year was less eventful than last year’s, except I found my fanny pack. I bought it in the early 1990s but misplaced it some years ago. It was so handy for air travel, especially international trips, that I ignored all fashion worries.
I forgot what I paid for the fanny pack, but it was certainly one of my best buys. Frankly, only a few such purchases stand out. Here’s my list of half-a-dozen similar items.
I’M CONSERVATIVE, but sometimes even I see the need to change. For instance, I belonged to a high-profile service organization for many years. They’re very proud of their tradition of raising money to give a Webster’s dictionary to each fifth grader in our city.
Let’s face it: These days, no self-respecting fifth grader is going to be caught dead with a hardcopy dictionary. Doesn’t everyone know that kids look up everything online? Traditions die hard—even when they no longer make sense.
THE FEDERAL RESERVE caught the market by surprise this past week. In fact, it seemed like Fed policymakers caught even themselves by surprise.
Previously, they had been forecasting that interest rates would stay near zero through 2023, on the assumption that inflation would remain manageable. But as the country has emerged from hibernation, inflation has run much hotter than expected. As a result, an increasing number of Fed officials now expect they’ll have to raise rates much sooner.
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.
NO. 63: WE CAN’T time the stock market—but we can rebalance our portfolios. There’s no way to guess the market’s direction. But by regularly rebalancing, we can profit from those price swings.
NO. 38: IN EFFICIENT markets, stock and bond prices reflect all known information. That makes it tough for smart investors to find bargains and earn market-beating returns. But that market efficiency also protects ignorant investors, who are less likely to overpay for stocks and bonds, and hence they should do okay—provided they diversify.
TAKE STOCK of your bonds. Our financial lives are chock-full of bond lookalikes, including our paycheck, Social Security and any defined benefit pension—all paying us regular income now or in the future. Set against this income is a big income drain: our debts. Result: Our finances may be more or less risky than our bond position alone suggests.
MONTE CARLO analysis. Suppose you wrote down all annual historical stock market returns on index cards and randomly selected 30 cards—to get a hypothetical 30-year return—and did so 10,000 times. You’d have a sense of the range of possible 30-year returns and their likelihood. To see Monte Carlo analysis in action, try Vanguard Group’s calculator.
IF YOU DESIGNATE beneficiaries for your retirement accounts, that’s usually a surefire way to pass those assets directly to your desired heirs without going through probate—but not always.
Because those beneficiary designations are so important, you should verify your choices every year in case there’s a change due to, say, marriage, birth, divorce or death. Especially marriage and divorce. Which brings me to a crucial issue: When dealing with IRA and 401(k) beneficiary designations,
AFTER YOU’VE BECOME successful and accumulated wealth, what comes next? Americans are facing this question more often than ever before. CNBC notes that the number of millionaire U.S. households grew by more than 700,000 in 2017. This affluence can create a disconnect between parent and child: One generation created the wealth, while the other grows up surrounded by it.
As a financial planner, I’ve learned the younger generation has two options: They can either destroy the wealth or they can add to the family’s legacy.
I BEGAN MY CAREER in investments as a junior analyst at a public endowment fund. It was 1980 and I’d just finished my last investment class at college, where I learned about Modern Portfolio Theory. Why, decades later, is it still called “Modern”?
The Dow Jones Industrial Average was below 1000, versus today’s 27000. Men wore suits in 100-degree Texas heat. We had individual offices. We researched companies by reading brokerage reports, talking to brokers and requesting annual reports from companies.
THE MOST WIDELY read book of all time, the Bible, has a lot to say about money. According to biblical scholars, money and wealth are mentioned more than 2,000 times. Out of the roughly 40 parables Jesus told, nearly half speak of money.
Why does the Bible make such a big deal about money? The answer belongs in a Sunday sermon, not here. Still, I believe there’s a great deal to be learned from what the Bible says about money.
WHEN I WAS a teenager, I couldn’t wait to get a summer job. Just the thought of it would give me goose bumps. Why? I could earn my own money and buy the car I desperately wanted: a two-tone 1956 Chevrolet Bel Air with a big steering wheel that looked like it belonged on a bus.
My dream was to gain some independence and drive myself wherever I needed to go. After working a number of summer jobs,
ALMOST 20 YEARS AGO, we renovated our entire Washington, DC, home. The memory is still quite fresh. If you’ve ever renovated a house, you’ll understand.
A home renovation has similarities to personal finance: You can do it yourself (DIY), you can pay someone to do it for you, or you can do something in between. This last approach has worked well for me—both with renovations and financial matters.
Our home consisted of a three-level townhouse.
SHAQ AND A-ROD have gotten involved in special purpose acquisition companies, or SPACs, one of the hottest products on Wall Street over the past year. I got there a few years earlier.
In 2018, I invested $5,000 in a SPAC that has since underperformed the market. Still, I got some hands-on experience ahead of the 2020-21 boom. Thinking of buying a SPAC? Based on my investment, here’s what you can expect.
Tom Farley isn’t a household name like Shaq or A-Rod,
MY SPRING CLEANING this year was less eventful than last year’s, except I found my fanny pack. I bought it in the early 1990s but misplaced it some years ago. It was so handy for air travel, especially international trips, that I ignored all fashion worries.
I forgot what I paid for the fanny pack, but it was certainly one of my best buys. Frankly, only a few such purchases stand out. Here’s my list of half-a-dozen similar items.
I’M CONSERVATIVE, but sometimes even I see the need to change. For instance, I belonged to a high-profile service organization for many years. They’re very proud of their tradition of raising money to give a Webster’s dictionary to each fifth grader in our city.
Let’s face it: These days, no self-respecting fifth grader is going to be caught dead with a hardcopy dictionary. Doesn’t everyone know that kids look up everything online? Traditions die hard—even when they no longer make sense.
THE FEDERAL RESERVE caught the market by surprise this past week. In fact, it seemed like Fed policymakers caught even themselves by surprise.
Previously, they had been forecasting that interest rates would stay near zero through 2023, on the assumption that inflation would remain manageable. But as the country has emerged from hibernation, inflation has run much hotter than expected. As a result, an increasing number of Fed officials now expect they’ll have to raise rates much sooner.
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.
NO. 63: WE CAN’T time the stock market—but we can rebalance our portfolios. There’s no way to guess the market’s direction. But by regularly rebalancing, we can profit from those price swings.
TAKE STOCK of your bonds. Our financial lives are chock-full of bond lookalikes, including our paycheck, Social Security and any defined benefit pension—all paying us regular income now or in the future. Set against this income is a big income drain: our debts. Result: Our finances may be more or less risky than our bond position alone suggests.
NO. 38: IN EFFICIENT markets, stock and bond prices reflect all known information. That makes it tough for smart investors to find bargains and earn market-beating returns. But that market efficiency also protects ignorant investors, who are less likely to overpay for stocks and bonds, and hence they should do okay—provided they diversify.
MONTE CARLO analysis. Suppose you wrote down all annual historical stock market returns on index cards and randomly selected 30 cards—to get a hypothetical 30-year return—and did so 10,000 times. You’d have a sense of the range of possible 30-year returns and their likelihood. To see Monte Carlo analysis in action, try Vanguard Group’s calculator.
IF YOU DESIGNATE beneficiaries for your retirement accounts, that’s usually a surefire way to pass those assets directly to your desired heirs without going through probate—but not always.
Because those beneficiary designations are so important, you should verify your choices every year in case there’s a change due to, say, marriage, birth, divorce or death. Especially marriage and divorce. Which brings me to a crucial issue: When dealing with IRA and 401(k) beneficiary designations,
AFTER YOU’VE BECOME successful and accumulated wealth, what comes next? Americans are facing this question more often than ever before. CNBC notes that the number of millionaire U.S. households grew by more than 700,000 in 2017. This affluence can create a disconnect between parent and child: One generation created the wealth, while the other grows up surrounded by it.
As a financial planner, I’ve learned the younger generation has two options: They can either destroy the wealth or they can add to the family’s legacy.
I BEGAN MY CAREER in investments as a junior analyst at a public endowment fund. It was 1980 and I’d just finished my last investment class at college, where I learned about Modern Portfolio Theory. Why, decades later, is it still called “Modern”?
The Dow Jones Industrial Average was below 1000, versus today’s 27000. Men wore suits in 100-degree Texas heat. We had individual offices. We researched companies by reading brokerage reports, talking to brokers and requesting annual reports from companies.
THE MOST WIDELY read book of all time, the Bible, has a lot to say about money. According to biblical scholars, money and wealth are mentioned more than 2,000 times. Out of the roughly 40 parables Jesus told, nearly half speak of money.
Why does the Bible make such a big deal about money? The answer belongs in a Sunday sermon, not here. Still, I believe there’s a great deal to be learned from what the Bible says about money.
WHEN I WAS a teenager, I couldn’t wait to get a summer job. Just the thought of it would give me goose bumps. Why? I could earn my own money and buy the car I desperately wanted: a two-tone 1956 Chevrolet Bel Air with a big steering wheel that looked like it belonged on a bus.
My dream was to gain some independence and drive myself wherever I needed to go. After working a number of summer jobs,
What do other people spend too much money on?
Is it okay to retire with debt?
Are annuities ever worth buying—and, if so, which type?