Whether markets are efficient or inefficient, the result is always the same: After costs, most investors trail the market averages.
BEGINNING IN 1961—and for the 48 years that followed—I administered, designed, managed and negotiated health plans covering some 40,000 employees. In the late 1970s, cost became a growing issue. Over the years, we tried every trendy thing to control costs, from HMOs to wellness programs to shifting costs to employees. Nothing worked then and nothing seems to work today.
Before you jump to the most common conclusion, there was no insurance involved in any of the plans I managed.
ALBERT EINSTEIN reportedly once said, “Everything should be made as simple as possible, but not simpler,” or words to that effect.
When it comes to investing, I have always believed that the simplest approach is the best approach. But in recent years, a new type of investment has, I believe, crossed over into the “too simple” category.
This new type of investment: target-date mutual funds. If you aren’t familiar with them, target-date funds are mutual funds that typically buy other funds.
THE SAVINGS RATE has been revised by the federal government—and the new numbers offer a rosier take on America’s financial rectitude. But is the story believable?
Make no mistake: The old figures told a sorry tale. They suggested our savings habits fell apart after 1984 and with a vengeance after 1997. But suddenly, post-1984 doesn’t look so grim. Under the new methodology, the annual savings rate averaged 11.3% over the 35 years through 1984,
BEGINNING IN 1961—and for the 48 years that followed—I administered, designed, managed and negotiated health plans covering some 40,000 employees. In the late 1970s, cost became a growing issue. Over the years, we tried every trendy thing to control costs, from HMOs to wellness programs to shifting costs to employees. Nothing worked then and nothing seems to work today.
Before you jump to the most common conclusion, there was no insurance involved in any of the plans I managed.
ALBERT EINSTEIN reportedly once said, “Everything should be made as simple as possible, but not simpler,” or words to that effect.
When it comes to investing, I have always believed that the simplest approach is the best approach. But in recent years, a new type of investment has, I believe, crossed over into the “too simple” category.
This new type of investment: target-date mutual funds. If you aren’t familiar with them, target-date funds are mutual funds that typically buy other funds.
THE SAVINGS RATE has been revised by the federal government—and the new numbers offer a rosier take on America’s financial rectitude. But is the story believable?
Make no mistake: The old figures told a sorry tale. They suggested our savings habits fell apart after 1984 and with a vengeance after 1997. But suddenly, post-1984 doesn’t look so grim. Under the new methodology, the annual savings rate averaged 11.3% over the 35 years through 1984,
WHILE 14% OF PARENTS said they would shoulder $75,000 or more in college debt for their kids, most were more cautious: 25% would take on $25,000 to $74,999, while the vast majority—61%—put the max at less than $25,000, found a T. Rowe Price survey.
NO. 90: HOME IMPROVEMENTS are money losers. Yes, homes typically climb in price over time. But the only sure source of appreciation is the land. The house itself deteriorates and requires hefty expenditures just to maintain its value. Indeed, if you fix up your home, you might recoup just 50% to 90% of the money spent—assuming you sell within a year.
NO. 90: HOME IMPROVEMENTS are money losers. Yes, homes typically climb in price over time. But the only sure source of appreciation is the land. The house itself deteriorates and requires hefty expenditures just to maintain its value. Indeed, if you fix up your home, you might recoup just 50% to 90% of the money spent—assuming you sell within a year.
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.
DIVERSIFICATION. While diversifying is important with bonds, it’s crucial with stocks—and involves investing in hundreds and perhaps thousands of companies from a host of market sectors and countries. If we don’t diversify, and instead focus our money on a handful of stocks or a single sector, there’s a danger we’ll take the risk of stock market investing—without getting the reward.
YOU’RE UNLIKELY to get the right answers—unless you ask the right questions.
That’s especially true when it comes to managing money. We have answers thrust in our faces all the time, as marketers and salespeople exhort us to buy this mutual fund, that car, this stock, that home and this insurance policy.
But are these really what we want or need? It’s hard to know unless we ask the right questions. There’s ample evidence that many folks end up with financial products they don’t need and spend money in ways that bring little or no happiness.
Jonathan Clements is the founder and editor of HumbleDollar. He spent almost two decades at The Wall Street Journal, where he was the personal finance columnist. His new book is now available: From Here to Financial Happiness.
Jonathan Clements is the founder and editor of HumbleDollar. He spent almost two decades at The Wall Street Journal, where he was the personal finance columnist. His new book is now available: From Here to Financial Happiness.
YOU’RE UNLIKELY to get the right answers—unless you ask the right questions.
That’s especially true when it comes to managing money. We have answers thrust in our faces all the time, as marketers and salespeople exhort us to buy this mutual fund, that car, this stock, that home and this insurance policy.
But are these really what we want or need? It’s hard to know unless we ask the right questions. There’s ample evidence that many folks end up with financial products they don’t need and spend money in ways that bring little or no happiness.