Drinks on Me

Tracy Bee  |  September 30, 2019

MONEY WAS ALWAYS tight when I was growing up. When my brother was age 10 and I was 12, my parents boosted our modest allowance. The difference almost doubled what we were getting—but there was a catch.
Our parents felt we drank too many sodas. It was the late ’80s, so I doubt the extra sugar was their concern. Rather, it was the extra items on the grocery receipts. We were inflating the family grocery bill with our beverage consumption.

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But Will It Work?

Adam M. Grossman  |  September 29, 2019

IN RECENT WEEKS, the world met WeWork founder Adam Neumann. The meeting did not go well. WeWork had been preparing an initial public offering for its stock and things seemed on track. But the IPO was shelved and Neumann was out of a job. 
The proximate cause: A Wall Street Journal profile of Neumann detailed the entrepreneur’s odd habits and fanciful notions. Among Neumann’s stated goals: to become president of the world,

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Show Me the Money

Jonathan Clements  |  September 28, 2019

HERE’S A SOBERING thought: Much—and perhaps most—of the money you’ll accumulate for retirement will reflect the raw dollars you sock away and not the investment returns you earn.
Consider a simple example. Let’s say retirement is 40 years away and your goal is to quit with $1 million. Let’s also assume you can earn an after-inflation “real” annual return of 4%, which is my best guess for the long-run return on a globally diversified,

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How Low? Too Low

John Lim  |  September 27, 2019

IT’S WIDELY assumed that the Federal Reserve, our nation’s central bank, has two mandates: maximum employment and stable prices. But a closer look at the Federal Reserve Act of 1977 on the Federal Reserve’s very own website reveals a third mandate, namely “moderate long-term interest rates.”
Does a 1.7% yield on 10-year Treasurys and 2.15% on 30-year Treasurys count as “moderate long-term interest rates”? Since I have nothing better to do on the weekend,

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Straight Talk

Richard Quinn  |  September 26, 2019

TAKE ANY MONEY issue and you’re sure to find detailed guidance—some so complicated that it’s largely ignored, regardless of its potential benefit.
The following is not intended to make light of the difficulty some people have with money. Still, a little straightforward information helps. Let’s strip personal finance down to its basics:
1. “I can’t afford to save.” It’s easy: Put savings first, and then figure out what you can and can’t afford.

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End Game

Dennis Ho  |  September 25, 2019

WHENEVER I TELL people I’m an actuary, I often get the same response: “So you’re the guy who can tell me when I’ll die.” It was funny the first couple of times I heard it, but less so a few dozen occasions later.
Still, the comment is a good reminder of a key statistics principle: Probabilities work well for large groups, but are less useful for smaller sample sizes. Statistics help actuaries predict the number of deaths for a large population.

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Marrying Money

Kendra Madsen  |  September 24, 2019

IN THE RUNUP to our marriage, everyone had advice for us—on everything from communication to sex to our finances. But some of the best advice we received came from a church leader my husband had known for years. He gave us a list of topics to discuss. These discussions resulted in some financials wins, while the conversations we avoided led to struggles.
Needs vs. wants. My husband and I each made a list of what we considered to be our needs and wants.

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Weight Problem

William Ehart  |  September 23, 2019

MICHAEL BURRY waited years to be rewarded for his bet against subprime mortgages. Actor Christian Bale, in the movie version of Michael Lewis’s book, The Big Short, portrays Burry curled up in the fetal position on the floor of his office. When the financial crisis finally hit in 2008, he made $100 million.
I’m no Michael Burry and the chance I’ll ever see $100 million is about 100 million to one.

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Staying Positive

Adam M. Grossman  |  September 22, 2019

PRESIDENT TRUMP recently criticized the Federal Reserve—yet again. Calling Fed Chair Jerome Powell and his colleagues “boneheads,” the president expressed frustration that they haven’t done more to lower interest rates. Specifically, the president said we should, “get our interest rates down to ZERO, or less.” That last part—“or less”—was key. Not only should rates be lower, he argued, but they should be below zero, as they have been in Europe.
Last week, the Fed did indeed cut short-term interest rates—by 0.25 percentage point.

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Timely Reminder

Jonathan Clements  |  September 21, 2019

PAST PERFORMANCE is no guarantee of future results. But we keep hoping.
Over the 10 years through August 2009, the large-cap stocks in the S&P 500 shed an average 0.8% a year, even with dividends included. Meanwhile, U.S. value stocks beat U.S growth stocks, smaller-cap U.S. shares notched 5.5% a year, developed foreign stock markets 2.7% and emerging markets 10.4%.
Fast forward one decade, and the leaders have become laggards and vice versa. Over the 10 years through August 2019,

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Shame on Us

Jim Wasserman  |  September 20, 2019

OVER 600 YEARS ago, Geoffrey Chaucer gave the world The Canterbury Tales, a caustic look at a cross-section of English society. While all the stories are still worth reading, one tale is especially relevant to today’s consumer.
For those who don’t remember The Canterbury Tales, it’s a story about a group of pilgrims traveling from London to Canterbury. They pass the time on the road by having a contest to see who can tell the best tale.

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What Number?

Richard Connor  |  September 19, 2019

A DECADE AGO, a large financial firm ran a clever advertising campaign that showed people going about their everyday lives carrying a bright orange six- or seven-figure sum that represented their number—how much money they needed to retire. It was clever because we humans like to simplify—and sometimes oversimplify—complicated issues. It’s one of our cognitive biases.
I spent almost 40 years in aerospace engineering. I did a lot of detailed engineering analyses, calculating expected performance numbers,

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Educated Consumers

Kristine Hayes   |  September 18, 2019

COLLEGE STUDENTS who borrow graduate with an average $37,000 in loans. While many people believe loans are the only way to finance a college education, that’s simply not the case. Here are five ways to get an advanced education while minimizing debt:
1. Stay close to home. Sure, it’s fun to think about moving across the country to go to school. But staying close to home after high school comes with several benefits.

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Where to Begin

James McGlynn  |  September 17, 2019

WHEN I STARTED working fulltime in 1980, there were very few retirement savings vehicles available to the average worker. I remember setting up my IRA and contributing the $2,000 annual maximum—at the time the only retirement account I could fund.
Today, by contrast, there’s a slew of retirement choices on offer. Where should those new to the workforce focus their dollars? If you have access to a 401(k) or similar retirement plan with an employer matching contribution,

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Creeping Costs

John Yeigh  |  September 16, 2019

WE ARE ALL victims of continually rising costs. Here’s the oft-repeated drill: The service provider sends the yearly renewal bill by mail or email, or the new annual cost is simply posted to our credit card account or deducted from our bank account.
Assuming we even notice the charge, the head-scratching starts. What the heck was the cost last year anyway? The new fee may have increased just 3% or 5%, which doesn’t seem like a lot.

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