Nerd Gone Wild

Jonathan Clements  |  May 27, 2017

IT’S LONG BEEN an idea that’s captured my imagination: Get a child invested in the stock market at a young age and then leave compounding to work its magic. If stocks notch four percentage points a year more than inflation—which many would consider a conservative estimate—$10,000 invested at birth would be worth $230,500 at age 80. That sort of success would, I suspect, give a significant boost to parental popularity.
When my kids were born,

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Too Trusting

Zach Blattner  |  May 25, 2017

AFTER SHARING my best investment in my previous post, it’s only fair that I follow up with my biggest blunder. I was 22 and working my first real job, as a high school English teacher in south Texas. Thanks to the job, I quickly kick-started my “adult” life: learning about health insurance, taxes and retirement savings.
A colleague introduced me to his brother, who worked as an investment advisor. We scheduled a meeting to talk about my retirement plan.

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Site Seeing (Part I)

Steven Aguiar  |  May 23, 2017

MAKING SMART personal finance decisions involves lots of homework. Fortunately, there are plenty of great resources out there, both aspirational and practical, to help us figure out what to do. Here are my five favorite money blogs:
The Billfold is a personal finance site brought to us by The Awl, the trend-bucking culture blog favored by media industry types. On this idiosyncratic blog, you’ll find refreshingly human takes on everything from the unexpected costs of getting a divorce to receiving an inheritance.

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Not So Dumb

Jonathan Clements  |  May 20, 2017

IT’S ONE OF WALL Street’s more galling rituals: its regular dismissal of everyday investors as stupid. They’re the “dumb money” you should watch so you know what not to buy—the sheep that the “smart money” regularly fleeces.
This narrative was bolstered by early behavioral finance research, which detailed our many mental mistakes: In our overconfidence, we trade too much and make large investment bets. We’re overly influenced by recent returns. We assume our investments perform better than they really do.

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Shaking the Dice

Jonathan Clements  |  May 19, 2017

WHEN THE WORLD SEEMS A LITTLE CRAZY, we strive for greater control over our lives, including our financial lives. But the greater control we feel is often an illusion and the steps we take can badly hurt our finances. Want to learn more? Check out my latest article for Creative Planning.

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Land Grab

Zach Blattner  |  May 18, 2017

WHEN WE MAKE investment mistakes, often bad advice is to blame. Someone recommends a stock or annuity or no-risk rental property, and we’re so tantalized by the upside that we completely miss the pitfalls. Sound familiar? As a counterpoint to this common trope, I wanted to share my best investment—one I never would have made if I hadn’t listened to those around me.
Before I officially closed on my house in Philadelphia, my parents drove by,

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Footing the Bill

Adam M. Grossman  |  May 16, 2017

IN MY HOMETOWN of Boston, there’s an old joke about our dismal winter weather. “February,” they say, “is the longest month of the year.” I don’t disagree and so, each year at Presidents’ Day, my family tries to get away for a warm weather vacation.
On these trips, we often stay at the same hotel and, because of that, we have noticed certain patterns. Among them: Most years, there is the same large corporate gathering.

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Odds Against

Jonathan Clements  |  May 13, 2017

IF YOU WANT TO BEAT the market, you need to pick stocks that perform well enough to overcome the investment costs you incur. That task is made harder not only by the market’s efficiency, but also by another hurdle: skewness.
What’s that? The most a stock can lose is 100% of its value, but the possible gain is far greater than 100% and potentially infinite (though no stock has got there yet). In any given year,

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Value for Money?

Dan Danford  |  May 11, 2017

WHAT’S THE BIGGEST challenge facing investors? Forget politics, low interest rates or high stock market valuations. I would argue there’s an even bigger challenge: How do you find financial advisors who are worth their fee?
On offer are brokerage firms, insurance companies, banks, mutual funds, accountants and independent advisory firms, all of them employing charming people who would love to help you. Problem is, there isn’t a lot of uniformity in the products and services they offer,

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Truly Taxing

Henry Hebeler  |  May 9, 2017

IN 1934, when I was age one, a federal income tax return was one page, and came with two pages of instructions. It was hand carried to the house by a live postman. The IRS regulations were 200 pages—though some say it was 400—all of which were memorized by the tax author J. K. Lasser.
When I was a young man in the workforce, we still got the several-page income tax form by mail,

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Risky Business

Jonathan Clements  |  May 6, 2017

IS “SMART BETA” truly smarter and better?
The world of smart beta, sometimes called factor investing, used to be fairly easy to grasp. In 1981, academic Rolf Banz noted that small-company stocks didn’t just outperform their larger brethren. Rather, they outperformed by more than could be explained by their extra risk, as reflected in greater share price volatility. Similarly, in 1992, finance professors Eugene Fama and Kenneth French documented the strong performance of bargain-priced value stocks—and noted that this couldn’t be explained by volatility,

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Trust Issues

Adam M. Grossman  |  May 4, 2017

LIKE MOST PEOPLE, I’ve made my fair share of financial blunders. I’ve also had some successes. But I definitely spend more time beating myself up over my errors than celebrating my successes.
Undoubtedly, my biggest mistake fits into the relatively obscure category of asset location. If you aren’t familiar with the term, I can explain it by way of an example. Suppose you have two investment accounts: a retirement account and a standard, taxable account.

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My Generation

Nicholas Clements  |  May 2, 2017

YOU CAN TELL the story of my generation in myriad ways—including through our evolution as investors. I entered the world of stock investing with the purchase of shares in Twentieth Century (now American Century) Select Fund. It was the summer of 1987 and I was 26 years old. By autumn, the stock market had crashed and the value of my shares along with it. It was the first of three major market declines that my generation would face.

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Playing Favorites

Jonathan Clements  |  April 29, 2017

OTHERS ARE LUCKY. But we deserve every penny we have, right? The distinction between “just deserts” and “just plain lucky” strikes me as far messier than we might initially assume. Consider just some of the ways that we can be financially lucky or unlucky:
Birthplace. If we were born in the U.S. or another part of the developed world, we’re pretty much starting the 100-meter sprint within a few strides of the finish line,

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Lessons Learned

Dennis Friedman  |  April 27, 2017

I HAVE MADE some glaring investment mistakes over the years. For instance, in my 20s, I was too conservative. I opened an individual retirement account and regularly invested the maximum annual contribution in a mortgage-backed bond fund. I still think about how much further ahead I would have been, if I had invested more of the money in stocks.
In my 30s, I received a $5,000 performance award from my employer. I wanted to invest the money,

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