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Weighty Decisions

Jim Wasserman  |  November 8, 2019

LET’S SAY YOU come into some extra money. Do you take the family on a great vacation or do you remodel that room you try to stop guests from seeing? To come to a decision, you might weigh the fun of the vacation against the pride of the redone room.
It’s at this point that some intrepid economist, risking his or her life-of-the-party reputation, would pop up and say, “You’re not doing it right.”
Economics is the study of choice—and the big engine for choosing is cost-benefit analysis.

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Take a Break

John Yeigh  |  November 7, 2019

SAVE FIRST for the kids’ college or for your own retirement? Pundits generally recommend that parents put themselves first. But I’d argue the question demands a more nuanced answer. The tax code offers numerous tax-savings opportunities for families with dependent children—and those tax breaks shouldn’t be overlooked.
To be sure, for cash-strapped parents, the top two financial priorities should be building up an emergency fund and putting at least enough in their 401(k) or 403(b) to capture the full employer match.

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Why FI?

Kristine Hayes  |  November 6, 2019

“FINANCIAL independence” has become a catchphrase over the past decade—in part because it’s the FI in FIRE, short for financial independence/retire early, a movement that’s captured the imagination of some and earned scorn from others.
The strategies touted by the financial independence movement are simple enough: Earn a large salary. Live frugally. Invest a substantial percentage of your income in low-cost mutual funds. The objective: Accumulate savings equal to at least 25 times your total annual spending.

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Getting Schooled

Dennis Friedman  |  November 5, 2019

MANY BELIEVE we’ve raised a bunch of financial illiterates. If people were better educated about personal finance, the argument goes, they’d make smarter money decisions.
North Carolina this year became the 20th state to require high schoolers to take a financial literacy class. Its Lieutenant Governor, Dan Forest, said the new law would “ensure future students, prior to graduating high school, will be more financially literate and economically sound in their decision making as adults.”
But many aren’t sold on the idea that a personal finance class in high school is going to make much of a difference.

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October’s Hits

Jonathan Clements  |  November 4, 2019

WHAT WERE FOLKS reading last month? Here are the seven most popular articles that we published in October:

Better than Timing. Tempted to guess the stock market’s direction and invest accordingly? Robin Powell suggests five alternatives—none of which requires a crystal ball.
Happiness Formula. There’s a connection between money and happiness—but it’s a complicated one, says Adam Grossman. He offers three insights from the research.
It’ll Cost You.

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Time Out

Adam M. Grossman  |  November 3, 2019

IN WINTER 2012, I experienced what every traveler dreads: a lost bag. Stranded without so much as a toothbrush, I had to replace everything—and fast. At first, this seemed like a pain. But in the end, I came to see it as a blessing. Why? Replacing everything—from head to toe, including the toothbrush—became an unexpected opportunity for a fresh start.
To be sure, all I’m talking about here are clothes and toiletries. Still, the experience made me realize that,

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Cash Back

Jonathan Clements  |  November 2, 2019

AMAZON.COM is the world’s fourth most valuable company, based on its stock market capitalization. At that size, it isn’t about to get bought by another company. It doesn’t pay a dividend. The last time it repurchased its own shares was seven years ago.
Now, imagine this continued—no buyout, no dividend, no stock buybacks—until the sad day arrives when Amazon goes the way of buggy whip manufacturers. Result: There’s a good chance its shareholders would,

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Scenes From a Life

Jim Wasserman  |  November 1, 2019

ONE SUNDAY, my son was lamenting that he had a school project due the next day, but hadn’t yet taken any steps to get it done. When I asked what his plan was, he replied, “I could use a really good montage right about now.”
For those who aren’t procrastinating teens with a father who delves into media literacy, a montage is a series of quick shots in a TV show or movie that accelerates time around a theme—that theme often being the effort and time expended to achieve a goal.

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Decision 2020

Richard Connor  |  October 31, 2019

FALL IS MY favorite time of year, but there used to be one thing I dreaded: picking a health plan for the year ahead.
Many folks don’t know how to evaluate their health insurance options. I used to be in that group—until I adopted a fairly straightforward process. Bear with me while I walk you through the sort of choice you might face as an employee. The same analysis can be used if you’re buying insurance on your own.

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What’s Your Plan?

Richard Quinn  |  October 30, 2019

ARE PENSION PLANS superior to 401(k) plans? I have a soft spot for my pension plan, especially when that payment hits my checking account each month. But pension plans were never as common as people imagine—and, for today’s workers, 401(k) plans may be a better bet.
The traditional defined benefit (DB) pension plan is all but gone from the private sector. Companies have terminated them, frozen them for new hires or converted them to so-called hybrid plans,

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7,000 Days

John Yeigh  |  October 29, 2019

MY LAST CLOSE relative—other than my kids—recently experienced major health issues. That prompted me to reflect on my own potential longevity. I’ve got 7,000 days to go, more or less, or at least that’s what the Social Security Administration’s life expectancy calculator tells me.
It seems like a big number, but it’s less than 20 years and just a quarter of a U.S. male’s average 29,000-day lifespan. Each day in retirement, we get to decide how to utilize one of those precious remaining days—whether to use it wisely or possibly fritter it away.

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Alphabet Soup

Mark Eckman  |  October 28, 2019

WHEN YOU NEED expertise, you hire an expert. Water leak? Call a plumber. Electrical issue? Call an electrician. But when it’s a financial issue, the choice may not be so clear. Do you go to a CKA, a GFS or maybe a C3DWP? Chances are you haven’t heard of these designations.
I have 10 letters in my name. I also have 10 letters after my name: CPA, CISA and MBA. What do they mean?

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Staying Home

Adam M. Grossman  |  October 27, 2019

A UNIQUE EVENT occurred earlier this month: A group who call themselves the Bogleheads held an investment conference in the Philadelphia area, near the headquarters of Vanguard Group. Since its inception in 2000, this annual gathering has brought together fans of Vanguard’s founder Jack Bogle, who died earlier this year. 
Bogle was beloved by his fans for his authenticity and iconoclastic views. He was so self-assured, in fact, that—after he retired from Vanguard—he didn’t hesitate to share his opinions,

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Crazy Like a Fox

Jonathan Clements  |  October 26, 2019

THERE’S A MADNESS to crowds—but also great wisdom.
Each of us knows very little about the world. But between us, we know an extraordinary amount. Every time we buy or sell a stock, we each draw on the knowledge and insights we have, and we effectively vote on whether we think the stock’s price should be higher or lower. Because today’s market prices reflect our collective wisdom, it’s hard to find shares that are badly mispriced.

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Changeup Pitch

Jim Wasserman  |  October 25, 2019

WHEN WE WATCH advertisements, we tend to think of ourselves as stationary, with the marketers coming to us and then, if we don’t respond, heading elsewhere. Like an Einstein relativity paradox, however, we observers are also in motion, being coaxed toward the marketer, often without knowing it.
A good business knows its customer niche—and good marketers know how to speak to that niche. Customer niches are defined by demographic attributes. When I discuss these attributes with students,

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