Student Loan Forgiveness is Not the Issue
Today, student loan forgiveness is a political hot-button topic. Wade into the morass of comments on articles like this one if you don't believe me.
But that’s not the actual issue. Student loans aren’t the root cause of the economic malaise in which many young people are ensnared.
Rather, student loans are a symptom.
So what is the core issue, then?
Links for July 2023
Happy Financial Independence! Here are some great links I've collected recently:
This is a fantastic breakdown! I'm not usually a fan of infographics, but this one is supremely well-done! https://www.visualcapitalist.com/chart-assets-make-wealth/
https://spintwig.com/fire-taxes/
A great reminder to consider before you invest: https://noahpinion.substack.com/p/on-bullshit-in-investing
This will make you think: https://thereformedbroker.com/2022/10/02/you-werent-supposed-to-see-that/
https://retireearlyhomepage.com/careeradv.html
http://www.realworlddivorce.com/Ohio
https://retireearlyhomepage.com/medicare2022.html
Vanguard is usually trotted out as the best possible brokerage firm. But are top management's interests really aligned with their fundholders? Note: this article is from 2002
https://www.forbes.com/forbes/2002/1028/058.html?sh=5d0cc9bf135b
I'm sure that John Bogle would have something to say about that if he were still alive...
Bubbles, Beanies, and Bullion: A Lesson from My Youth
I’m just old enough to remember Beanie Babies, the State Quarter program, Pokemon cards, and the inflation of the dot-com bubble. All at once.
And at the time, I was just old enough to have begun learning about coin collecting, a hobby I still pursue today. As part of my education on coin collecting, I learned the basics of supply and demand, which seemed not to apply during the run-up of the Big Bubble in the late 1990s.
Links for April 2023: History of FIRE edition!
Happy Financial Literacy Month! Here are some links on the history of financial independence on the Internet:
Who originally coined the term FIRE? Apparently, it came from the Motley Fool discussion boards, circa 2000/2001: https://retireearlyhomepage.com/fire.html
The above information comes from the website of a forgotten pioneer of the movement: https://forum.earlyretirementextreme.com/viewtopic.php?t=10436
Greaney's page still has the Web 1.0 look; a simple style that reminds you of a Geocities page (remember them?). However, it's still maintained and updated! Here's a list of articles, in chronological order (some really great stuff, too! I'm fond of the "Retire Early in the News" posted July 1, 1997): https://retireearlyhomepage.com/chronidx.html
Heck, early retirement has apparently been mainstream since 2004! https://www.newsweek.com/retiring-early-quit-time-your-side-124127
Should you have precious metals in your IRA?
You may have seen those commercials (like this one) advocating the use of a gold IRA or precious metals IRA. So...is it a good idea? Should you put your money in one?
The short answer? No. At least not more than a small portion of your money.
But why not?
Ah, now that is an interesting question!
1) Fees.
An important part of the Froogal Stoodent-approved investing method is to use low-fee options.
Storing your gold, silver, and platinum in an IRA is not a low-fee option. Some are better than others, but in every case, the company administering your IRA has to make money. That's not easy to do when they have to buy precious metals, pay for storage lockers and security, plus rent on the building, plus keep records of who owns what, and file reports with the government.
2) Performance.
Precious metals have a dismal performance record, even next to Treasury bonds. Stocks and REITs absolutely blow gold out of the water, in terms of performance over the past (pick a term - 20 years, 50 years, 100 years, or more).
3) Shenanigans.
You'll have to do some digging to make sure your claims are actually backed by physical gold. Otherwise, you're left holding worthless paper claims to a precious metal that doesn't actually exist.
At the risk of sounding like a conspiracy theorist, the paper claims on precious metals greatly exceed the actual amount of precious metal in the world: https://silverseek.com/article/paper-vs-physical-amazing-amount-leverage-silver-market
I'd guess that a significant amount of these paper claims come from commodities traders (not so much from unscrupulous providers of precious metal IRAs), but that's only a guess.
Just in case you think that link above seems a little sketchy (it strikes me that way, too, though I find the analysis believable), here are various other sources saying something similar: Link 1, Link 2, Link 3, Link 4
4) Inconvenience.
Imagine a situation comes where you'll have to use your gold, because some sort of disaster (or series of disasters) makes ordinary banking impractical.
In this disaster scenario - the only time you'll actually NEED that gold - how quickly do you think they'll send your gold after you call for a redemption? When, of course, everybody else is ALSO calling them for a redemption?
The custodian will be overwhelmed, at the very moment when you need a quick response.
5) Distributions.
Once you reach a certain age - as of 2023, it's age 73 - you will have to sell some of your holdings, whether you want to or not. Whether the price is up or down. [In fairness, this applies to any holding in a traditional IRA or 401(k), including stocks and mutual funds.]
It's called an RMD, or required minimum distribution, and it's a government mandate, so that they can finally start collecting those taxes you've been putting off during the past 40+ years.
6) Requirements.
You can't just hold any type of gold or other precious metal. No, the federal government specifies certain purity requirements. They also penalize you if you hold collectibles, such as coins, in your precious metals IRA, even if the coin meets the purity requirements!
No, IF you want gold or other precious metal, you're probably better off having some physical coins or bars in your house, or in a safe-deposit box nearby. But, of course, each of those options comes with its own issues and challenges (and expenses).
What do I do? Me, personally?
Well, I've collected coins since I was in elementary school. Recently, I've been taking a small amount of money and buying older coins that interest me, as well as the occasional silver round or tenth-ounce gold coin. I keep the more valuable ones in a safe-deposit box.
But these purchases only amount to a very small portion of my net worth. Like, 0.4% of my net worth.
I think it's an interesting hobby, and also a way to preserve some purchasing power, in the event of some sort of economic collapse or hyperinflation. But the odds of those disasters are pretty small, so I only commit a relatively small amount of resources to the pursuit. Because, in the end, it's mainly a hobby.
In my own IRAs, I use index funds - low-cost stock, bond, and REIT funds. I, personally, do not have precious metals in my IRA. I prefer to have my precious metals within easy reach.
Don't believe some random blogger? That's okay, I don't blame you. Here's Investopedia's take on the matter: https://www.investopedia.com/articles/personal-finance/091814/analysis-should-you-get-gold-ira.asp
Investopedia has a list of some of the best custodians to consider, if you're still interested: https://www.investopedia.com/best-gold-ira-companies-5087720
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Want to learn more? Check out my book reviews, including Ray Dalio's Changing World Order: https://froogalstoodent.blogspot.com/2022/04/the-changing-world-order-froogal.html
Links for February 2023
This is alarming, but alas, not surprising: https://www.icij.org/investigations/fincen-files/global-banks-defy-u-s-crackdowns-by-serving-oligarchs-criminals-and-terrorists/
In the same vein, but more direct: https://wallstreetonparade.com/2019/04/research-study-on-ongoing-crime-spree-by-wall-street-mega-banks-gets-news-blackout-heres-why/
Just a reminder: https://wallstreetonparade.com/2023/01/after-16-months-there-are-still-no-arrests-in-the-feds-trading-scandal/
One of the worst cases of inflation on record (the second-highest rate of inflation, behind Hungary post-World War II): https://www.economicshelp.org/blog/390/inflation/hyper-inflation-in-zimbabwe/
More interesting musings from SteveArk: https://steveark.com/2022/11/18/how-much-money/
Insightful analytics on millionaires in America: https://dqydj.com/millionaires-in-america/
Speaking of reports on millionaires, how about Credit Suisse's Global Wealth Report? https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html
A compelling deep-dive into the reasons why medications cost so much in the United States: https://www.yahoo.com/news/130-000-medicine-outrageous-blame-120004797.html
Great analysis on stocks as an inflation hedge: https://www.kennongreen.com/investing-in-stocks-as-a-long-term-inflation-hedge/
Happy Financial Wellness Month!
As Financial Wellness Month winds to a close, this is a good time to reflect on your goals - for the new year, and for the rest of your life.
Purdue University provides some helpful money management resources here: https://www.purdue.edu/dfa/students/moneymanagement/.
The Consumer Financial Protection Bureau provides a brief survey to help you assess where you stand: https://www.consumerfinance.gov/consumer-tools/financial-well-being/
Here's to a healthy and successful 2023!
Links for Jan 2023
Enjoy this food for thought during the depths of winter! (At least, winter in the Northern Hemisphere. To readers in the Southern Hemisphere, such as Australia, New Zealand, and South Africa - we're all jealous of you, enjoying the nice summer weather!)
Without further ado:
These should induce rage among young people, and should probably induce rage among older people on behalf of younger people. But unless that rage gets converted into productive action, I'm not sure how much good it'll do.
Great reminders from Darius Foroux:
A couple worthwhile lessons from the book The Millionaire Mind, written by Thomas J. Stanley, author of the bestselling The Millionaire Next Door: https://limpression.org/the-millionaire-mind/
Since crypto and FTX is in the news, I'll include these from CNBC:
Stumbled across this interesting piece on Wikipedia. Speaks to how interconnected the world is, as well as providing yet another lesson in the dynamics of stock market bubbles: https://en.wikipedia.org/wiki/2015%E2%80%932016_Chinese_stock_market_turbulence
An essay by Michael Crichton, published in 1993! https://www.wired.com/1993/04/mediasaurus/
'Our kids say our small house is embarrassing.' Spoken like people that didn't have to pay for anything: https://www.marketwatch.com/story/our-kids-say-our-small-house-is-embarrassing-my-husband-and-i-earn-160k-have-1-million-in-retirement-savings-cook-at-home-and-drive-an-old-honda-are-we-missing-out-11673356853
Links for December 2022
Yet another reminder about the impossibility of predicting the future. Pilots love to say that the enemy you don't see is the one that shoots you down: https://www.mindfullyinvesting.com/if-youve-already-won-the-investing-game-should-you-stop-playing/
More sense and sensibility from Mindfully Investing: https://www.mindfullyinvesting.com/fitting-square-inflation-data-into-a-round-stock-market-narrative/
Just stumbled across Joshua Kennon's blog, and it's filled with wisdom! Ignore his lessons at your own peril! P.S. the comments are usually excellent, too.
The Intelligent Investor: A Froogal Stoodent review
The Intelligent Investor by Benjamin Graham – Notes and Quotes
Ninth in a series of book reviews by The Froogal Stoodent
No doubt thanks in part to Warren Buffett’s recommendation, Benjamin Graham’s classic The Intelligent Investor remains highly regarded by investors everywhere.
Now, I can say that I have read it for myself. Twice, in fact.
So, do I recommend that you read it too? Surely, if it’s good enough for the greatest investor alive, it’s good enough for you, right?
Let’s read on and see.
