Thursday, February 23, 2017

Is your retirement in jeopardy?

Due to severe budget problems, Puerto Rico will have to slash its budget, as announced in February 2017 (see http://www.businessinsider.com/the-board-has-spoken-puerto-rico-to-be-hit-with-painful-austerity-measures-2017-2). This includes cutting 10% from the retirement system for government employees, since that system is on the verge of running out of money completely. Sound familiar, U.S. residents?...

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Saturday, February 11, 2017

Should you trust the stock market? Pt I

Should you trust the stock market? Part I

Historically, the returns have been good on the Dow Jones or the S&P 500. But, as every financial advisor cautions, past performance is no guarantee of future results.

Dow Jones (all-time):
A historical graph. From its record low of under 35 in the late 1890s to a high reached above 14,000 in mid-2011, the Dow rises periodically through the decades with corrections along the way eventually settling in the mid-10,000 range within the last 10 years.

Dow Jones (all-time, labeled with some historical highlights):


S&P 500 (since 1950, including adjustment for inflation):

Or, for those who would prefer an annualized chart of S&P 500 returns, here you go (all-time--note that the S&P 500 was called the "Composite Index" before 1957):

Notably, John Bogle is not optimistic: http://www.marketwatch.com/story/john-bogle-says-you-wont-make-much-money-from-stocks-2015-11-05

So, should you be optimistic? Is it wise to invest in the stock market? Is the market really trustworthy?

You don't need my advice. Take a look at the graphs above and decide for yourself.

Friday, February 3, 2017

How advertising ruins your life

According to this article, companies spent nearly $600 billion—that's billion with a b—on advertising around the world in 2015 alone!

All of this money is geared toward one thing: convincing you to spend, spend, spend! Is it really any wonder that consumer debt is sky-high, and 70% of Americans believe that debt is necessary? I'm here to tell you that it's not necessary. Not at all.

The point of advertising is to make you want stuff. And if you spend your money on stuff, it can't be invested and go to work for you. In fact, many businesses use some pretty clever psychological tricks to get people to spend money on an annual, biannual, or monthly basis. So apologies for the clickbait-y title, but in a general sense, it's true: the constant stream of advertising ruins people's lives!

What happens if you don't buy into the advertising hype? Well, take me for example: I live on under $13,000 a year, before taxes. And I make money doing it! Not much money, mind you, but I live well below my meager means!

Saturday, January 28, 2017

A Tale of Two Kingdoms

My friend Bill at Wealth Well Done writes some true-ish stories as a creative way to communicate financial wisdom. So, in honor of Bill and of the parables of Jesus (many of which had to do, at least on the surface, with money), I've created a parable of my own:

A Tale of Two Kingdoms
There once was a kingdom with a very powerful army. One day, the king realized that he could make money while also providing protection for the nations he had conquered: he would allow the conquered nations to maintain their existing social orders, including their own forms of government. In return, each nation could choose one of a few different levels of protection—the amount of the conquered nation’s annual tribute depended on the level of protection they selected.

Wednesday, January 18, 2017

Links for your financial health, January 2017

Links for your financial health

Confused about the difference between Roth IRAs and regular IRAs or 401(k)s? Mr. Tako explains clearly and succinctly at http://www.mrtakoescapes.com/give-yourself-the-gift-of-wealth/:

"IRA / 401(s) — Don’t pay taxes now, pay later!
Roth IRA — Pay taxes now, but don’t pay taxes later!"
The above link at mrtakoescapes.com provides a great resource on wealth-building--a recommended read! Some other interesting and important thoughts for your financial health:

Monday, October 3, 2016

Links October 2016

Donald Trump could have had twice as much money as he has now if he'd retired 30 years ago and invested his money into index funds:
http://www.moneytalksnews.com/why-youre-probably-better-investing-than-donald-trump/?all=1

The Parable of the Little Red Hen:
http://www.intellectualtakeout.org/blog/makers-vs-takers

We need to encourage entrepreneurial spirit like this:
http://www.intellectualtakeout.org/blog/we-need-more-entrepreneurial-children-one

You're not going to get any help in retirement--not from the government, not from your employer. Plan accordingly: http://redpillmoney.blogspot.com/2015/08/saving-means-investing-or-how-to-fund.html

College isn't for everyone. This entertaining video explains more: https://www.youtube.com/watch?v=2CmbJzPmQ-M

Speaking of college, jlcollinsnh includes this gem:
"Moreover, one of the more unfortunate results of spiraling college costs and debt is the way it has warped the very concept of higher education. Rather than the pursuit of learning and culture, it has become the pursuit of job training in an effort to secure employment that will justify the astounding cost and debt incurred.

"Even successfully applied, this shackles young people to jobs long after the appeal has faded. Youth should be spent exploring—building and expanding one’s horizons—not grinding away in chains."
http://jlcollinsnh.com/2015/03/26/stocks-part-xxviii-debt-the-unacceptable-burden/
-Amen, brother!

And also this, from the very popular James Altucher: http://www.jamesaltucher.com/2011/01/8-alternatives-to-college/
When one or two people buck the trend, they may be visionaries--or they may be saying something edgy for the sake of saying something edgy. But when a lot of successful people are saying the same thing, there's probably something to it!

Maybe baby boomers should quit complaining about the 'attitude of entitlement' in the generation they raised:
http://www.intellectualtakeout.org/blog/boomers-you-made-us

Speaking of entitlement: http://www.foxnews.com/us/2015/07/19/college-student-blames-parents-after-blows-0g-college-fund/

How and why the media sometimes creates "news" that may or may not be true:
http://www.intellectualtakeout.org/blog/war-worlds-how-media-%E2%80%9Ccreates%E2%80%9D-news

Need to check your credit score but don't know where to start? Here's one resource:  https://www.cafecredit.com/free-credit-score/

Wednesday, September 7, 2016

Do Doctors Earn Enough?

Do Doctors Earn Enough to Make Ends Meet?
Or, The Very Definition of Lifestyle Inflation

We all know that physicians must go through many years of expensive schooling, as well as grueling residencies and tough exams, before being certified to practice medicine. And, once they finish this long ordeal, doctors finally begin to make generous salaries upwards of $200,000 or more every year.

But, considering the onerous burden of student loans and the relatively short careers (thus impairing their lifetime earning power), are these salaries actually enough for doctors to make ends meet?


Tuesday, August 9, 2016

When Your 'Friends' Spend Your Money...

As excited as I am about the imminent return of NFL football, I'm heartbroken to see family and friends taking advantage of players: http://ftw.usatoday.com/2016/08/trent-richardson-money



This ties into the fact that there's an alarming lack of financial literacy in this country! If you don't watch your business and make a plan for what to do with your cash, you'll look up one day and wonder where it all went! However, as the #3 overall pick in the 2012 NFL draft, he signed a rookie contract for over $20 million guaranteed, plus a $13.3 million signing bonus. So the lost $1.6 million shouldn't destroy his finances, as long as he didn't blow through the other $13 million that should be left after taxes.

A reminder that if you want to avoid being broke, you have to keep up the right mindset--whether you're an NFL player or a grad student!

This article was originally published at