Combine above-average intelligence, hard work and self-confidence, and you’ll have a stellar career—and truly terrible investment results.
BELIEVE IT OR NOT, when we were heading into Port Everglades, Florida, hoping to disembark in a few hours, there were mixed emotions. Sure, we wanted off the boat and to be home. But we had been at sea for nearly a month and we humans easily fall into routines. Once home, no one would be setting a tray of food at our condo door three times a day. Our last meal on the ship was filet mignon and lobster tails.
AS BABY BOOMERS and Generation X march toward retirement, they face a daunting issue: What steps should they take, given the risk they’ll require long-term care?
Long-term care—defined as needing help with activities of daily living such as bathing, dressing and eating—is something that almost 70% of retirees will require at some point, according to LongTermCare.gov. Problem is, Medicare only provides limited coverage.
Yes, Medicaid does cover long-term care. But it was designed as a last resort for low-income folks.
I RECENTLY discussed retirement plans with my old college roommate, Joe, who now runs his own business. As we wrapped up the conversation, Joe asked if I had any book recommendations.
I told him I was about to start Good to Great, the management book by Jim Collins. It’s been a huge bestseller, with four million copies sold. Joe immediately shot back, “John, that book demonstrates precisely why low-cost index funds have to be the answer for most retirement plans.
I MET WITH MY financial advisor last week to discuss my portfolio’s performance in the first quarter. This was the first time I’d looked at my investments since the start of the public health crisis and economic shutdown.
My portfolio, with a target mix of 35% stocks and 65% in bonds and cash investments, was down 6.8% for the quarter, while the S&P 500 was off 19.6% and the Dow industrials fell 22.7%, including reinvested dividends.
THE MOST POPULAR retirement income strategy is built around the so-called 4% rule. Three-quarters of financial advisors say they use some variation on this approach. But is it safe?
The 4% rule specifies that you withdraw 4% of your nest egg’s value in the first year of retirement. Thereafter, you increase the dollar amount withdrawn each year at the inflation rate. Based on historical U.S. stock and bond returns, that strategy should carry you safely through a 30-year retirement.
WHEN STOCKS slump, experts are often quick to advise investors to sit tight or, better still, buy more. But that won’t be the right advice for everybody.
Christine Benz, Morningstar’s director of personal finance and one of my favorite financial writers, recently penned an article listing five questions to ask yourself if you’re pondering whether to reduce your stock exposure during a bear market. I figured I’d work through the five questions—and see what I could learn about my own finances.
NO. 29: WHAT MATTERS to long-term stock investors are the market’s dividend yield and growth in earnings per share. Everything else is noise that can bully and seduce us into foolishness.
NO. 27: COST-CONSCIOUS investors can save thousands over their lifetime. Take two investors who salt away $5,000 a year for 40 years. One pays 1% of assets in annual investment costs, while the other incurs 0.1%. If both earn 5% a year before expenses, the cost-conscious investor will amass $618,000, while the high-cost investor garners $494,000.
PREPARE FOR a long life. For a quick gauge of your life expectancy, try Social Security’s calculator. For an in-depth look, try the Lifespan or Living to 100 calculator. What will you learn? First, the longer you live, the longer you can expect to live. Second, lifespans vary widely. Educated, health-conscious Americans live three or four years longer than average.
MONEY ILLUSION. We have the illusion we’re doing better if we earn 5% on our savings rather than 1%, even if these yields simply match the inflation rate—and hence in both cases we aren’t making financial progress. In fact, earning 5% when inflation is 5% leaves us worse off, because we’ll lose more to taxes than in the lower-yielding scenario.
I WAS LISTENING recently to a Bob Dylan song, From a Buick 6. One of the song’s lines is, “I need a dump truck, baby, to unload my head.” That’s how I sometimes feel about the churning in my own mind concerning retirement.
I turned 67 this year. This is probably one of the most critical periods for me as a retiree. There are things in my life I need to sort out,
I HAD TO PAY my credit card bill, so I went online and set up a payment from my credit union a week before the bill was due. Why not, it’s an online transfer, right?
Not always.
The payment was due on the 16th. I went online the day before to check my bank account. It said the credit card payment was “sorted” and hadn’t transferred. Same thing the next day and the next.
BACK IN 2013, I was recently divorced, living on my own for the first time and utterly naïve about investing. I was in my late 40s, I’d lost half of my small state pension in the divorce and I was afraid I’d be working well into my 70s if I didn’t get my financial life on track.
I set the ambitious goal of having a net worth of $500,000 by 2022, when I’ll turn 55.
ARE YOU GETTING rich off your neighbors—or are they mooching off you? You might imagine your financial success, or lack thereof, rests squarely on your own shoulders. But much also hinges on the behavior of your fellow citizens.
In numerous financial situations, one group in society effectively subsidizes another. Much of the time, you want to be the recipient of the subsidy—but not always. Consider seven examples:
Spenders subsidize those who save prodigious amounts.
WHO SHOULD DIET? This isn’t exactly a tough one: It’s people who need to lose weight.
Who should budget? If you listen to conventional wisdom, this is another easy one: It seems we all should. Creating a written budget, and then tracking our spending against it, is considered a sign of high financial rectitude.
I think this is nonsense. I have never created a written budget and I don’t track my spending—because I don’t need to.
BELIEVE IT OR NOT, when we were heading into Port Everglades, Florida, hoping to disembark in a few hours, there were mixed emotions. Sure, we wanted off the boat and to be home. But we had been at sea for nearly a month and we humans easily fall into routines. Once home, no one would be setting a tray of food at our condo door three times a day. Our last meal on the ship was filet mignon and lobster tails.
AS BABY BOOMERS and Generation X march toward retirement, they face a daunting issue: What steps should they take, given the risk they’ll require long-term care?
Long-term care—defined as needing help with activities of daily living such as bathing, dressing and eating—is something that almost 70% of retirees will require at some point, according to LongTermCare.gov. Problem is, Medicare only provides limited coverage.
Yes, Medicaid does cover long-term care. But it was designed as a last resort for low-income folks.
I RECENTLY discussed retirement plans with my old college roommate, Joe, who now runs his own business. As we wrapped up the conversation, Joe asked if I had any book recommendations.
I told him I was about to start Good to Great, the management book by Jim Collins. It’s been a huge bestseller, with four million copies sold. Joe immediately shot back, “John, that book demonstrates precisely why low-cost index funds have to be the answer for most retirement plans.
I MET WITH MY financial advisor last week to discuss my portfolio’s performance in the first quarter. This was the first time I’d looked at my investments since the start of the public health crisis and economic shutdown.
My portfolio, with a target mix of 35% stocks and 65% in bonds and cash investments, was down 6.8% for the quarter, while the S&P 500 was off 19.6% and the Dow industrials fell 22.7%, including reinvested dividends.
THE MOST POPULAR retirement income strategy is built around the so-called 4% rule. Three-quarters of financial advisors say they use some variation on this approach. But is it safe?
The 4% rule specifies that you withdraw 4% of your nest egg’s value in the first year of retirement. Thereafter, you increase the dollar amount withdrawn each year at the inflation rate. Based on historical U.S. stock and bond returns, that strategy should carry you safely through a 30-year retirement.
WHEN STOCKS slump, experts are often quick to advise investors to sit tight or, better still, buy more. But that won’t be the right advice for everybody.
Christine Benz, Morningstar’s director of personal finance and one of my favorite financial writers, recently penned an article listing five questions to ask yourself if you’re pondering whether to reduce your stock exposure during a bear market. I figured I’d work through the five questions—and see what I could learn about my own finances.
NO. 29: WHAT MATTERS to long-term stock investors are the market’s dividend yield and growth in earnings per share. Everything else is noise that can bully and seduce us into foolishness.
PREPARE FOR a long life. For a quick gauge of your life expectancy, try Social Security’s calculator. For an in-depth look, try the Lifespan or Living to 100 calculator. What will you learn? First, the longer you live, the longer you can expect to live. Second, lifespans vary widely. Educated, health-conscious Americans live three or four years longer than average.
NO. 27: COST-CONSCIOUS investors can save thousands over their lifetime. Take two investors who salt away $5,000 a year for 40 years. One pays 1% of assets in annual investment costs, while the other incurs 0.1%. If both earn 5% a year before expenses, the cost-conscious investor will amass $618,000, while the high-cost investor garners $494,000.
MONEY ILLUSION. We have the illusion we’re doing better if we earn 5% on our savings rather than 1%, even if these yields simply match the inflation rate—and hence in both cases we aren’t making financial progress. In fact, earning 5% when inflation is 5% leaves us worse off, because we’ll lose more to taxes than in the lower-yielding scenario.
I WAS LISTENING recently to a Bob Dylan song, From a Buick 6. One of the song’s lines is, “I need a dump truck, baby, to unload my head.” That’s how I sometimes feel about the churning in my own mind concerning retirement.
I turned 67 this year. This is probably one of the most critical periods for me as a retiree. There are things in my life I need to sort out,
I HAD TO PAY my credit card bill, so I went online and set up a payment from my credit union a week before the bill was due. Why not, it’s an online transfer, right?
Not always.
The payment was due on the 16th. I went online the day before to check my bank account. It said the credit card payment was “sorted” and hadn’t transferred. Same thing the next day and the next.
BACK IN 2013, I was recently divorced, living on my own for the first time and utterly naïve about investing. I was in my late 40s, I’d lost half of my small state pension in the divorce and I was afraid I’d be working well into my 70s if I didn’t get my financial life on track.
I set the ambitious goal of having a net worth of $500,000 by 2022, when I’ll turn 55.
ARE YOU GETTING rich off your neighbors—or are they mooching off you? You might imagine your financial success, or lack thereof, rests squarely on your own shoulders. But much also hinges on the behavior of your fellow citizens.
In numerous financial situations, one group in society effectively subsidizes another. Much of the time, you want to be the recipient of the subsidy—but not always. Consider seven examples:
Spenders subsidize those who save prodigious amounts.
WHO SHOULD DIET? This isn’t exactly a tough one: It’s people who need to lose weight.
Who should budget? If you listen to conventional wisdom, this is another easy one: It seems we all should. Creating a written budget, and then tracking our spending against it, is considered a sign of high financial rectitude.
I think this is nonsense. I have never created a written budget and I don’t track my spending—because I don’t need to.