TODAY’S STOCK MARKET reminds me of Charles Dickens’s famous line: “It was the best of times, it was the worst of times….”
It’s the best of times, of course, because the market continues to hit new highs. From a low of 2,237 in March 2020, the S&P 500 has doubled. Over the 10 years through July, the S&P has delivered an average annual return of 15.4%, including dividends, far above the historical average of 10%.
IN SEPTEMBER 2017, my wife and I sold our home, car and almost all our earthly possessions. We spent the next four years driving across four continents. Along the way, I learned a great deal about renting a car that, in this rental-car-challenged world, could make your travels less costly and more reliable.
1. I use Expedia, Kayak and Hotwire to compare rental car rates. When you book, pay attention to whether your reservation is free cancellation or pay now (noncancellable).
CAN YOU EVER HAVE enough? Yes, I’m talking about money.
But I’m not some gazillionaire burning up billions on a rocket to space. I’m talking about emergency savings for ordinary people. A cash stash. Rainy-day funds. Mattress money.
I thought I had enough a few months ago, but then life happened. Dental work. A blown clutch. More support for my son, who has a great job offer but won’t start work until later this year.
ACROSS THE COUNTRY, teachers are losing out on hundreds of thousands of dollars in retirement money because of the fees in their 403(b) plans. When I tell this to most teachers, they look at me with a level of skepticism that should be reserved for the salesperson who signed them up for a 12-year variable annuity contract.
“That can’t be true,” they say. “The district wouldn’t allow this. The union wouldn’t allow this. Everyone I know uses that company.
MY TWINS ARE OFF to college. They’re on different paths. One is attending an institution less than 100 miles from home, while the other will be on the far side of the continent. One has a full-ride package of financial aid from her chosen college. The other isn’t getting as much.
Every morning this past week, I’ve intended to pay the first semester for the twin who didn’t get a full ride. I have the cash.
MY 28-YEAR-OLD wanted to know how much to contribute to her retirement plan at work. As a father, this was a text that I loved to get.
In May 2020, we toasted Genevieve over Zoom when she graduated with a master’s degree in social work. Within a week, she’d landed a job helping children in foster care and their families. Now, nearly a year later, she was invited to join the retirement savings plan at work,
FINANCIAL EXPERTS often advise retirees to delay claiming Social Security. Their actuarial tables and statistics make a compelling case. Still, as soon as I’m eligible, I’ll strongly consider claiming Social Security.
Why? I never knew either of my grandfathers. My mom’s dad died of a stroke when she was age 19. One of my favorite photos of my parents’ wedding is that of my uncle—my mom’s oldest brother—walking her down the aisle. My grandfather never got to see my parents wed.
FORGET BUYING a home or paying for college. In terms of complexity and cost, nothing comes close to retirement—a topic that encompasses saving, investing, taxes, Social Security, health care expenses and countless other financial issues.
Fortunately, there’s a growing body of research to guide us, and some of the best studies come from Boston College’s Center for Retirement Research (CRR). Here are just some of the insights I’ve lately garnered from CRR studies:
ONE FUN FACT I TELL my students about Daniel Kahneman: He won the Nobel Prize for economics without ever taking an economics course in college. Kahneman is a psychologist whose discoveries laid the foundation for the new science of behavioral economics.
One of his most important findings is that loss feels twice as painful to us as gain feels good, so the emotional scales aren’t balanced when we make economic decisions. For instance, workers will wait years to join a 401(k) because contributions can feel like a loss in spending power.
CONGRATULATIONS, your family has grown with the arrival of a first child or grandchild. As the celebration subsides, reality sets in: You want to do everything you can to pave the way for a secure future.
For new parents, the first step is to obtain two basic documents that’ll last a lifetime: a birth certificate and Social Security card. The hospital will start the process, but you need to be diligent. Is the name spelled correctly?
IF YOU’RE MARRIED, it’s almost certain that one of you will outlive the other—perhaps by many years. What are the financial implications? Here are 10 issues to keep in mind:
1. Social Security. For a married couple, their Social Security benefits can consist of two workers’ benefits or a worker’s benefit and a spousal benefit. On the death of either spouse, the remaining benefit is the higher of the two benefits. For instance,
AS AN INVESTOR, I’d describe myself as a small-cap-value-aholic with a worldly outlook. Right now, I’m betting that one of world’s least loved overseas markets will finally return to favor after decades of disappointment. You can laugh out loud now.
Last year, my investment in U.S. small-cap value stocks was a great play from the March 2020 market bottom through about mid-May of this year. I didn’t catch the market bottom perfectly, but—luckily—I was close.
THIS PAST FATHER’S Day, I was listening to a financial talk show. The host asked listeners to phone in and describe how their father influenced their thinking about money.
Callers related that their fathers told them to save early, to not waste money, to avoid debt and a few other basic ideas like “don’t worry about keeping up with the Joneses.”
I told my wife I couldn’t recall my father ever talking to me about money.
THE 19TH CENTURY feud between the Hatfields and the McCoys doesn’t hold a candle to the debate between supporters of index funds and supporters of active management.
Those in the index fund camp cite decades of data—going back to the 1930s—to support their view that active management is a fool’s errand. In fact, Standard & Poor’s regularly publishes a study it calls SPIVA, short for S&P Index Versus Active. Each time, analysts there reach the same conclusion—that it’s exceedingly difficult for an actively managed fund to beat its benchmark.
I’M NOT SURE HOW anyone can achieve financial peace and prosperity without addressing the “b” word—budgeting.
I got my first credit card in my late teens. I bragged that—in my wallet—I had whatever my credit limit was and could do anything I wanted with it. By my early 20s, I was in credit-card debt. But as long as I could pay the monthly minimum, I didn’t think I had a problem. Of course, the interest rate was astronomically high—sadly,