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Sunshine is the best disinfectant: Schedule time to show your account statements to a friend—and you’ll rush to clean up your finances.

We All Want an A

IN THE WEEKS BEFORE my annual physical, I made a concerted effort to lose a few pounds, drink more water, skip my evening glass of wine, eat more fiber, and avoid red meat, French fries and cheese. The happy result: My blood pressure was low. My weight was down slightly from my previous checkup. My cholesterol count was good. My A1C level suggests my prediabetic condition hasn’t got any worse. All in all, last month’s physical found that I had little reason to worry.

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Don’t Be Like Joe

I HAD SOME GOOD bosses and some bad ones over my 35-year career. The worst was Joe. He tried to intimidate you. I once overheard him tell another manager that he likes to ride his employees and dig his spurs into them.
What was so terrible about Joe? It wasn’t that he was tough on employees. It was that he was unfair. You incurred his wrath whether you deserved it or not.
I remember the first time I attended a meeting held by Joe.

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Short Stuff

Moaning About Money

I’M SPENDING MONEY like water, even though I’m a tightwad, or so says my wife.

We’re on vacation—well, sort of. Since we’re retirees, “vacation” has less meaning. Still, we are away from our principal residence in New Jersey, instead spending the summer at our house on Cape Cod.

At various points, some of our four children and 13 grandchildren arrive—but, fortunately, not all at once. The house goes from quiet to pandemonium. Even so,

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Going Strong

RECESSION FEARS are fading. Second-quarter corporate profits have been better than expected. Some recent economic data show key barometers in growth mode, even as the latest GDP report confirmed a second consecutive quarter of economic contraction. Indeed, this past Friday’s hot employment report cooled the debate over whether we’re in a recession.
The pandemic upended so many facets of life and business, and we’re still feeling the effects today, as evidenced by odd swings in what are often stable economic numbers.

Read more »

Check on Yourself

MEET THE LATEST feature added to HumbleDollar—as well as the website’s first calculator: the Two-Minute Checkup.
How does it work? All you need to do is input up to nine pieces of information, the sort of stuff most of us know off the top of our head. There’s no need to create an account or link to your brokerage firm or bank, and none of your information is saved on HumbleDollar or anywhere else. 

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Earning a Roth

HAVE YOU GOT children or grandchildren with summer jobs? That means you could put them on the path to financial success—by helping them open a Roth IRA.
My brothers and I always had jobs, including delivering newspapers, bussing tables, mowing lawns and valet parking. My sons also had jobs at an early age, including shucking thousands of ears of corn at our local swim club. Later on, they were lifeguards, along with many of their friends from the swim team.

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Retirement Is Coming

AM I ALLOWED another rant?

I have a tip for anyone under age 50. Someday—if you’re lucky—you’ll stop working and still need income to live. Most of us call that retirement.

How in the world do people reach their 50s and suddenly have a revelation that retirement is somewhere in their future?

I get it. If you’re in your 20s or even early 30s, it’s time to have fun. But there’s the trap. Fun for too long,

Read more »

Ask Around

AH, SUMMER. Over the July 4 weekend, we spent time relaxing at our neighbor’s house. A three-year-old jumped into the pool from the diving board for the first time. He had a big smile and many supporters.
It’s always fun to chat with neighbors we haven’t seen for a while, and also meet new visitors. One man swimming with his kids turned out to be an investigative reporter for a local news station. We didn’t talk for long,

Read more »

Longer Reads

Brain Teasers

I CAN’T CALL THE BOOKS I buy “beach reads” because, honestly, they can get dense. Still, if—like me—you enjoy learning about investing, economics or even the religious overtones of capitalism, here are five books that might make for insightful summer reading or, perhaps, induce napping in the hammock.
The Physics of Wall Street by James Owen Weatherall. This book begins with the assertion that “Warren Buffett isn’t the best money manager in the world” and then spends the next 224 pages introducing us to genius PhDs who’ve whipped the S&P 500 by anticipating the prices of securities.

Read more »

What to Worry About

BOSTON COLLEGE’S Center for Retirement Research just published a study that explores what Americans think are the biggest risks to their retirement—as opposed to what they objectively are. The center found “a big disconnect between how actual and perceived risks are ranked.” That disconnect could be hurting people’s retirement planning.
The study says the biggest risk to retirement is longevity—living so long that we run out of money. But the survey found that the biggest perceived threat is a market drop that cuts into savings,

Read more »

About Those Bonds

AT THE MUTUAL FUND company where I once worked, the stock and bond teams liked to poke fun at one another. Bond managers viewed the stock-pickers as overpaid storytellers. Meanwhile, the stock-pickers saw the world of bonds as stultifying. “Playing for nickels and dimes” is how one of them put it.
For better or worse, bonds do indeed represent the slow lane. But this year, with bond prices depressed by rising interest rates, investors are wanting to learn more.

Read more »

Rates Up Fed Down

THE FEDERAL RESERVE has been the biggest buyer of Treasury and mortgage-backed bonds for the past decade. In that time, it expanded its balance sheet from about $800 million to more than $8 trillion.
As long as inflation remained low, its bond purchases helped produce a slowly growing economy by keeping interest rates and unemployment low. Now that inflation is at its highest level in 40 years, the Federal Reserve is starting to raise interest rates in response.

Read more »

Twelve Travel Tips

I RECENTLY VISITED Eastern Europe, where I volunteered to teach English in Poland through an organization called Angloville. I received free room and board at a resort in exchange for conversing from breakfast through dinner with Polish adults who wanted to improve their English.
In addition to meeting Poles and being immersed in Polish culture, I used my free time to explore nearby countries. Planning a vacation abroad? Based on my recent trips to Poland,

Read more »

Bad Guy on Line One

GOOD PARENTS WARN their children about predators who look to take advantage of them. By the same token, good adults should warn and safeguard their elderly parents, as well as the other seniors they care for.
We all use our electronics for accessing information. We sometimes forget the information highway is two-way, and nefarious people use those lines of communication to get to the vulnerable. And it isn’t just about hacking online accounts. Often,

Read more »

Voices

Which financial markets are in a bubble, if any?

"Ask me this question in 10 years. We see bubbles in the rearview mirror."
- Kurt S
Read more »

What everyday purchase do you consider a bargain?

"Gift cards that sell less than face value. Retailers are betting the entire balance will not be used and forgotten or expired. I like Lowes and Home Depot and look for bargains from people who are selling them less than face value…some received as gifts and others need the cash more than the merchandise. The higher denomination, the more savings. Always buy from reputable sites though….ones that offer a full guarantee. I like eBay and Card Bear. Some of my favorite restaurants offer a free $10 gift card if you buy a gift card from them for $50 or more. These are popular around the holidays, and I use some for myself or gift them to others."
- Debbie Clay
Read more »

Should affluent parents insist their children pay college costs?

"If kids take college seriously, no. It is a silly generalization that wealthy kids don't do well because everything is handed to them. I say this as the second generation in my family to have college fully paid for. My parents worked hard and I've worked hard. We paid for our kids to go to college. I think that the cost now is way over-inflated, but both kids learned a lot, made many friends and contacts, and have brand name degrees. The brand name issue, however, is a serious one. My wife worked full-time through a state school and probably got a better education than I did at a brand name school. Also, with the current differential between typically hourly pay and college tuition, what she did then is probably not possible now. I look at the question a different way; what schools are worth paying for and what diploma credentials are you buying? I say that A grades at a lower cost school are worth more than Bs or Cs anyplace else except maybe Stanford or Yale. Junior Phi Bet may open doors. Not everybody can achieve this, but working for this without distraction of an hourly job is more important than making a point of work."
- Cammer Michael
Read more »

Money Guide

Hedge Funds

FOR MANY YEARS, hedge funds were the status symbol of the investment world, promising superior returns to the lucky few who could afford the price of admission. But more often than not, the superior returns haven’t materialized—and lately hedge funds have lost some of their luster. These lightly regulated investment funds use a broader array of strategies than the typical mutual fund. For instance, a hedge fund might try to boost returns by borrowing money and then using that money to purchase additional investments. It might also buy some investments, hoping they will rise in value, while also selling short other investments, in a bet that they’ll fall. The hope: If a hedge fund manager is truly skillful—a big "if"—these various strategies will take that skill and convert it into even fatter returns. While hedge funds have a reputation for delivering outsized returns, that isn’t always the objective. Yes, some funds gun for big gains, making large, leveraged bets. But others are focused on “absolute returns,” meaning they aim to generate healthy returns year after year, no matter what’s happening in the financial markets. To invest in a hedge fund, you need at least a $1 million net worth, excluding your primary residence, or to have earned $200,000 in each of the past two years (or $300,000 together with your spouse). Many hedge funds, however, set the bar even higher, demanding huge initial investments that are only affordable by institutional investors and the extremely wealthy. Hedge-fund ownership may be an exclusive club—but the membership fees are, alas, equally rich. Historically, hedge funds have typically charged 1% or 2% of assets each year, while also taking 20% of any gains. But this fee structure has come under pressure amid mediocre returns and managers have been experimenting with different fee arrangements. What if you buy a fund of funds, which is a hedge fund that invests in other hedge funds?  You will have to deal with a second layer of fees, which might take an additional 1.5% of assets and 10% of gains. Weighed down by fees with like that, it’s hardly surprising that most hedge funds turn out to be poor investments. Next: Liquid Alts Previous: Real Estate Stocks Articles: Not for You and Looking Sharpe
Read more »

Manifesto

NO. 71: WE SHOULD take a broad view of our bond holdings—and include our paycheck, Social Security and other bond-like income streams. Result? We may find we have too much in bonds.

Truths

NO. 15: WE FAVOR the familiar. We suffer from home bias, meaning we’re drawn to our employer’s shares, local corporations and stocks of companies whose products we use. We also favor U.S. stocks and shy away from foreign shares. These familiar investments create a portfolio we’re comfortable with—but maybe not one that’s well diversified.

Act

KEEP ENOUGH in cash investments to give yourself a sense of security. It’s tempting to invest as much as possible for long-term growth. But research suggests putting perhaps $5,000 in a savings account or a money market fund can greatly improve our sense of financial wellbeing. If your emergency fund isn’t that large, consider stockpiling some cash.

Think

ENDOWMENT EFFECT. We prize the items we own. We might believe our homes are worth more than they really are and our investments have performed better than they have, making us reluctant to sell. We might also hang on to investments we inherited from our parents, because we endow them with meaning beyond their actual value.

Second Look

Retirement

Too Thrifty?

I NEVER REALLY liked the vehicles that I owned. They were an unimpressive lot, including a Volkswagen Beetle, Mercury Capri, Toyota SR5 pickup, Toyota Camry and Ford Fusion. I would like to say they got me where I needed to go, but that wasn’t always the case. All the cars, except for the Camry, were unreliable, which would sometimes make my life stressful and difficult. Of course, keeping those cars for many years didn’t help.

Read more »

Family Finance

The Student Trap

NOT ALL DEBT IS created equal—and that’s especially true when it comes to student loans.
For the vast majority of debt, we can calculate the ongoing monthly payment if we know the interest rate, number of payment periods, current balance and if the payment is due at the beginning or end of the period. But for federal student loans, we may need to know one more variable: the borrower’s discretionary income.
With federal student loans,

Read more »

Investing

He Says She Says

MY HUSBAND AND I have been selecting investments together for years—and we’re still married. How have we gotten along for decades without killing each other?
Our investment discussions revolve mostly around individual stocks and bonds. They constitute the bulk of our investments and take up the bulk of our time. We own everything from small amounts of risky stocks like Immutep (symbol: IMMP) to blue chips like Johnson & Johnson (JNJ) and 3M (MMM).

Read more »

Lists

Troubling Signs

WE TRY NOT TO BE too judgmental here at HumbleDollar. But if any of the items below apply to you, you might want to get yourself to the financial emergency room. Here are 33 signs you could be in trouble:

You save on eating out by attending free financial seminars.
You earn extra income by purchasing mutual funds just before they make their distributions.
All your stocks are penny stocks, but they weren’t when you bought them.

Read more »
Home Call to Action

Mindset

Plus Ca Change

WHAT COUNTS as good financial advice doesn’t change much from one year to the next. In 2014, you should have owned a globally diversified portfolio, kept investment costs low, avoided credit-card debt, maxed your 401(k) and avoided annuity salesmen. Ditto for 2015.
So why do folks read the business section every day, buy personal-finance books and subscribe to business magazines? There’s an entertainment aspect: We like feeling engaged with the wider world.
But there’s also a practical reason: Even if good financial advice doesn’t change much from one year to the next,

Read more »

Longer Reads

Brain Teasers

I CAN’T CALL THE BOOKS I buy “beach reads” because, honestly, they can get dense. Still, if—like me—you enjoy learning about investing, economics or even the religious overtones of capitalism, here are five books that might make for insightful summer reading or, perhaps, induce napping in the hammock.
The Physics of Wall Street by James Owen Weatherall. This book begins with the assertion that “Warren Buffett isn’t the best money manager in the world” and then spends the next 224 pages introducing us to genius PhDs who’ve whipped the S&P 500 by anticipating the prices of securities.

Read more »

What to Worry About

BOSTON COLLEGE’S Center for Retirement Research just published a study that explores what Americans think are the biggest risks to their retirement—as opposed to what they objectively are. The center found “a big disconnect between how actual and perceived risks are ranked.” That disconnect could be hurting people’s retirement planning.
The study says the biggest risk to retirement is longevity—living so long that we run out of money. But the survey found that the biggest perceived threat is a market drop that cuts into savings,

Read more »

About Those Bonds

AT THE MUTUAL FUND company where I once worked, the stock and bond teams liked to poke fun at one another. Bond managers viewed the stock-pickers as overpaid storytellers. Meanwhile, the stock-pickers saw the world of bonds as stultifying. “Playing for nickels and dimes” is how one of them put it.
For better or worse, bonds do indeed represent the slow lane. But this year, with bond prices depressed by rising interest rates, investors are wanting to learn more.

Read more »

Rates Up Fed Down

THE FEDERAL RESERVE has been the biggest buyer of Treasury and mortgage-backed bonds for the past decade. In that time, it expanded its balance sheet from about $800 million to more than $8 trillion.
As long as inflation remained low, its bond purchases helped produce a slowly growing economy by keeping interest rates and unemployment low. Now that inflation is at its highest level in 40 years, the Federal Reserve is starting to raise interest rates in response.

Read more »

Twelve Travel Tips

I RECENTLY VISITED Eastern Europe, where I volunteered to teach English in Poland through an organization called Angloville. I received free room and board at a resort in exchange for conversing from breakfast through dinner with Polish adults who wanted to improve their English.
In addition to meeting Poles and being immersed in Polish culture, I used my free time to explore nearby countries. Planning a vacation abroad? Based on my recent trips to Poland,

Read more »

Bad Guy on Line One

GOOD PARENTS WARN their children about predators who look to take advantage of them. By the same token, good adults should warn and safeguard their elderly parents, as well as the other seniors they care for.
We all use our electronics for accessing information. We sometimes forget the information highway is two-way, and nefarious people use those lines of communication to get to the vulnerable. And it isn’t just about hacking online accounts. Often,

Read more »

Free Newsletter

Voices

When have you regretted paying the lowest cost possible?

"When deigning the house addition 10 years ago I decided to put a crawl space under the addition instead of a room to keep from stretching beyond our comfort zone of expenses. Instead, now in retirement I have to convince spouse to to clear out a room piled high with stuff accumulated over 35 years to allow space for for my hobby."
- An
Read more »

Which financial tasks do you keep putting off?

"Estate Planning. We had a will pre-kids, but we didn't fully follow through. We needed big changes with our oldest being born, he has special needs. There were many tough decisions about trustees, guardians, and more. We eventually finalized it, but it was torture. That was over 15 years ago. We started revising it again about 4 years ago, but these same issues came up, and we never finished. We are finally tackling it again, and find that now those answers are coming a lot more easily, so we're hopeful to finish it off this year."
- Roboticus Aquarius
Read more »

Which life decisions shouldn’t involve financial considerations?

"It depends upon your location, culture, and environment. If you live in a capitalist society, all decisions should consider financial implications and ramifications."
- Moesha
Read more »
Home Call to Action

Manifesto

NO. 71: WE SHOULD take a broad view of our bond holdings—and include our paycheck, Social Security and other bond-like income streams. Result? We may find we have too much in bonds.

Act

KEEP ENOUGH in cash investments to give yourself a sense of security. It’s tempting to invest as much as possible for long-term growth. But research suggests putting perhaps $5,000 in a savings account or a money market fund can greatly improve our sense of financial wellbeing. If your emergency fund isn’t that large, consider stockpiling some cash.

Truths

NO. 15: WE FAVOR the familiar. We suffer from home bias, meaning we’re drawn to our employer’s shares, local corporations and stocks of companies whose products we use. We also favor U.S. stocks and shy away from foreign shares. These familiar investments create a portfolio we’re comfortable with—but maybe not one that’s well diversified.

Think

ENDOWMENT EFFECT. We prize the items we own. We might believe our homes are worth more than they really are and our investments have performed better than they have, making us reluctant to sell. We might also hang on to investments we inherited from our parents, because we endow them with meaning beyond their actual value.

Money Guide

Start Here

Hedge Funds

FOR MANY YEARS, hedge funds were the status symbol of the investment world, promising superior returns to the lucky few who could afford the price of admission. But more often than not, the superior returns haven’t materialized—and lately hedge funds have lost some of their luster. These lightly regulated investment funds use a broader array of strategies than the typical mutual fund. For instance, a hedge fund might try to boost returns by borrowing money and then using that money to purchase additional investments. It might also buy some investments, hoping they will rise in value, while also selling short other investments, in a bet that they’ll fall. The hope: If a hedge fund manager is truly skillful—a big "if"—these various strategies will take that skill and convert it into even fatter returns. While hedge funds have a reputation for delivering outsized returns, that isn’t always the objective. Yes, some funds gun for big gains, making large, leveraged bets. But others are focused on “absolute returns,” meaning they aim to generate healthy returns year after year, no matter what’s happening in the financial markets. To invest in a hedge fund, you need at least a $1 million net worth, excluding your primary residence, or to have earned $200,000 in each of the past two years (or $300,000 together with your spouse). Many hedge funds, however, set the bar even higher, demanding huge initial investments that are only affordable by institutional investors and the extremely wealthy. Hedge-fund ownership may be an exclusive club—but the membership fees are, alas, equally rich. Historically, hedge funds have typically charged 1% or 2% of assets each year, while also taking 20% of any gains. But this fee structure has come under pressure amid mediocre returns and managers have been experimenting with different fee arrangements. What if you buy a fund of funds, which is a hedge fund that invests in other hedge funds?  You will have to deal with a second layer of fees, which might take an additional 1.5% of assets and 10% of gains. Weighed down by fees with like that, it’s hardly surprising that most hedge funds turn out to be poor investments. Next: Liquid Alts Previous: Real Estate Stocks Articles: Not for You and Looking Sharpe
Read more »

Second Look

Retirement

Too Thrifty?

I NEVER REALLY liked the vehicles that I owned. They were an unimpressive lot, including a Volkswagen Beetle, Mercury Capri, Toyota SR5 pickup, Toyota Camry and Ford Fusion. I would like to say they got me where I needed to go, but that wasn’t always the case. All the cars, except for the Camry, were unreliable, which would sometimes make my life stressful and difficult. Of course, keeping those cars for many years didn’t help.

Read more »

Family Finance

The Student Trap

NOT ALL DEBT IS created equal—and that’s especially true when it comes to student loans.
For the vast majority of debt, we can calculate the ongoing monthly payment if we know the interest rate, number of payment periods, current balance and if the payment is due at the beginning or end of the period. But for federal student loans, we may need to know one more variable: the borrower’s discretionary income.
With federal student loans,

Read more »

Investing

He Says She Says

MY HUSBAND AND I have been selecting investments together for years—and we’re still married. How have we gotten along for decades without killing each other?
Our investment discussions revolve mostly around individual stocks and bonds. They constitute the bulk of our investments and take up the bulk of our time. We own everything from small amounts of risky stocks like Immutep (symbol: IMMP) to blue chips like Johnson & Johnson (JNJ) and 3M (MMM).

Read more »

Lists

Troubling Signs

WE TRY NOT TO BE too judgmental here at HumbleDollar. But if any of the items below apply to you, you might want to get yourself to the financial emergency room. Here are 33 signs you could be in trouble:

You save on eating out by attending free financial seminars.
You earn extra income by purchasing mutual funds just before they make their distributions.
All your stocks are penny stocks, but they weren’t when you bought them.

Read more »

Mindset

Plus Ca Change

WHAT COUNTS as good financial advice doesn’t change much from one year to the next. In 2014, you should have owned a globally diversified portfolio, kept investment costs low, avoided credit-card debt, maxed your 401(k) and avoided annuity salesmen. Ditto for 2015.
So why do folks read the business section every day, buy personal-finance books and subscribe to business magazines? There’s an entertainment aspect: We like feeling engaged with the wider world.
But there’s also a practical reason: Even if good financial advice doesn’t change much from one year to the next,

Read more »