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If you think money managers are overpaid, imagine how much they’d charge if they actually beat the market.

Improving With Age

WHEN IT COMES to retirement planning, many Americans focus primarily on their portfolio’s size. That’s understandable. But there are other issues you should also think about, so you get your retirement on the right track and keep it there. Here are 11 steps to a better retirement:

Housing. As you get older, you become less mobile. Climbing stairs and getting up from a chair become more difficult. Keep this in mind when thinking about what house you’ll live in during retirement.

Read more »

Writing Wrongs

“JOURNALISM is printing what someone else does not want printed. Everything else is public relations.” It’s a quote that should be framed on the wall of every newsroom.
Of course, every journalist knows this. We call PR—public relations—the dark side. But most of us journalists stray into it far more often than we like to admit.
As a reporter, I cut my teeth at a group of regional newspapers in a prosperous part of England in 1989.

Read more »

Monthly Affliction

MY ELDERLY mother’s credit card was recently compromised. This required her to move all her automatic payments to a new credit card.
That, in turn, prompted her to reevaluate these various charges. Her cable bill, for instance, had gone up more than 15% over the past two years. My mother complained that, while she gets many channels, she only watches broadcast TV. She dropped the cable package.
As she added the autopay information to her new credit card,

Read more »

Room to Disagree

IN DECEMBER 1954, 23-year-old John Neff hitchhiked from Ohio to New York in search of work. A Navy veteran, Neff had recently graduated college near the top of his class, with a degree in finance. His hope: to land a job as a stockbroker. But despite these qualifications, Neff was turned down. Why? According to a biographer, the brokerage firm felt “his voice didn’t carry enough authority.”
It didn’t take long for Neff to recover from this setback.

Read more »

Pay It Down

DECIDING WHETHER to buy bonds or pay down the mortgage used to be a tricky decision. Not anymore: Paying extra on your home loan will almost always be the right choice.
This takes some explaining—because it involves wrapping your head around the standard vs. itemized deduction, investment taxes, and a mortgage’s shifting mix of principal and interest.
First, let’s dispense with the obvious objection: Yes, if you’re inclined to buy stocks rather than pay down the mortgage,

Read more »

Those Millennials

MUCH CRITICISM is leveled against millennials, often defined as those born between 1981 and 1996. The criticism is frequently directed at their money and career decisions, including their purportedly foolish spending, excessive borrowing, job-hopping, self-absorption and sense of entitlement.
The perception is so pervasive that even millennials buy into this view of themselves.
But I wouldn’t be too quick to criticize millennials or compare them unfavorably to older generations. Each generation confronts its own unique challenges and difficulties,

Read more »

Money Guide

Education Loans

IF YOU’RE struggling to pay your federal student loans or you’re simply overwhelmed by the number of loans you have to pay each month, consider consolidating your federal loans through StudentLoans.gov. The interest rate on the consolidated loan will be based on the weighted average interest rate of your existing loans.

Read more »

Archive

Home Economics

YOU COULD SAY I have graduated summa cum laude from the school of hard knocks—for first-time homebuyers. From a financial standpoint, I did everything by the book. Over two years, my husband and I saved enough to put down 20% and cover closing costs. To ensure we didn’t buy more house than we could comfortably afford, we kept our purchase price to less than half of what some lenders pre-qualified us for. I aggressively analyzed and pursued the best financing options. We established a healthy emergency fund. It turns out, however, that my analytical nature—I’m a Certified Financial Planner—and expensive business school training only solved half the equation. By solely focusing on the financial side, I neglected to respect, and understand, the art of the purchase: What story was the house telling me with its physical clues? Clues, I now know, can include such things as a sump pump: If there’s one, it means the previous owners experienced water in their crawl space. If a new furnace was recently installed, it’s best to ensure it has the correct capacity. Beyond the physical clues, there were behavioral clues from the seller and his realtor. Given the hot Portland market, they knew they were in the driver’s seat. What began as an amicable but firm negotiation devolved into something quite different by the time the ink was dry. The seller and his realtor imposed a closing fine—giving us 30 days to close the deal (something that is entirely out of our control, I might add) or face a $100 per day fine. When politely questioned on items that came back from the inspection report, there were days that would pass without a response. Under normal market conditions, this type of behavior would have sent any buyer running. We, however, were reluctant to start over, especially after six months of devoting nights and weekends to finding a house in one of the most competitive markets in the U.S., including viewing more than 65 homes. The ironic thing is, these were all sunk costs. When evaluating the decision to continue, or start fresh, they should have never entered the equation. No surprise: Our first home came with a side of humble pie. We thought we were prepared, but experience proved once again to be a formidable teacher. My lesson: Financial planning is more than numbers. But let my loss be your gain: Learning from somebody else’s experience is a lot cheaper than learning it firsthand. Anika Hedstrom is a financial planner with Vista Capital Partners in Portland, OR. She loves to nerd-out and, when given a dollar, loves to save 96 cents.
Read more »

Numbers

FOR PURCHASES under $10, 49% of U.S. adults typically use cash, 35% use a debit card and just 16% use a credit card, according to a CreditCards.com survey.

Home Call to Action

Manifesto

NO. 1: THE GOAL isn’t to beat the market, prove we’re clever or grow absurdly rich. Rather, the goal is to have enough to lead the life we want. We should favor the path most likely to get us there.

Truths

NO. 108: OUR HUNTER-gatherer instincts tell us to consume right away—and not save for the future. What to do? We might automate our regular savings. We should visualize our goals, so they seem more alluring than today’s spending. We might share our financial ambitions with others, so fear of their disapproval prods us to act.

Act

REFINANCE to take advantage of today’s low mortgage rates. That can be a smart move if, within a few years, you can recoup the refinancing’s cost through lower monthly payments. Want to get a handle on how much you’re truly saving? If you have, say, 19 years left on your loan, find out the monthly payment on a 19-year mortgage at today’s lower rates.

Think

BETA AND ALPHA. Beta measures an investment’s volatility relative to a benchmark index. If the investment has a positive alpha, it means it outperformed the index on a risk-adjusted basis, with that risk measured by beta. For instance, a mutual fund could trail the market averages, but still have a positive alpha if its performance wasn’t especially volatile.

Improving With Age

WHEN IT COMES to retirement planning, many Americans focus primarily on their portfolio’s size. That’s understandable. But there are other issues you should also think about, so you get your retirement on the right track and keep it there. Here are 11 steps to a better retirement:

Housing. As you get older, you become less mobile. Climbing stairs and getting up from a chair become more difficult. Keep this in mind when thinking about what house you’ll live in during retirement.

Read more »

Writing Wrongs

“JOURNALISM is printing what someone else does not want printed. Everything else is public relations.” It’s a quote that should be framed on the wall of every newsroom.
Of course, every journalist knows this. We call PR—public relations—the dark side. But most of us journalists stray into it far more often than we like to admit.
As a reporter, I cut my teeth at a group of regional newspapers in a prosperous part of England in 1989.

Read more »

Monthly Affliction

MY ELDERLY mother’s credit card was recently compromised. This required her to move all her automatic payments to a new credit card.
That, in turn, prompted her to reevaluate these various charges. Her cable bill, for instance, had gone up more than 15% over the past two years. My mother complained that, while she gets many channels, she only watches broadcast TV. She dropped the cable package.
As she added the autopay information to her new credit card,

Read more »

Room to Disagree

IN DECEMBER 1954, 23-year-old John Neff hitchhiked from Ohio to New York in search of work. A Navy veteran, Neff had recently graduated college near the top of his class, with a degree in finance. His hope: to land a job as a stockbroker. But despite these qualifications, Neff was turned down. Why? According to a biographer, the brokerage firm felt “his voice didn’t carry enough authority.”
It didn’t take long for Neff to recover from this setback.

Read more »

Pay It Down

DECIDING WHETHER to buy bonds or pay down the mortgage used to be a tricky decision. Not anymore: Paying extra on your home loan will almost always be the right choice.
This takes some explaining—because it involves wrapping your head around the standard vs. itemized deduction, investment taxes, and a mortgage’s shifting mix of principal and interest.
First, let’s dispense with the obvious objection: Yes, if you’re inclined to buy stocks rather than pay down the mortgage,

Read more »

Those Millennials

MUCH CRITICISM is leveled against millennials, often defined as those born between 1981 and 1996. The criticism is frequently directed at their money and career decisions, including their purportedly foolish spending, excessive borrowing, job-hopping, self-absorption and sense of entitlement.
The perception is so pervasive that even millennials buy into this view of themselves.
But I wouldn’t be too quick to criticize millennials or compare them unfavorably to older generations. Each generation confronts its own unique challenges and difficulties,

Read more »

Free Newsletter

Numbers

FOR PURCHASES under $10, 49% of U.S. adults typically use cash, 35% use a debit card and just 16% use a credit card, according to a CreditCards.com survey.

Manifesto

NO. 1: THE GOAL isn’t to beat the market, prove we’re clever or grow absurdly rich. Rather, the goal is to have enough to lead the life we want. We should favor the path most likely to get us there.

Home Call to Action

Act

REFINANCE to take advantage of today’s low mortgage rates. That can be a smart move if, within a few years, you can recoup the refinancing’s cost through lower monthly payments. Want to get a handle on how much you’re truly saving? If you have, say, 19 years left on your loan, find out the monthly payment on a 19-year mortgage at today’s lower rates.

Truths

NO. 108: OUR HUNTER-gatherer instincts tell us to consume right away—and not save for the future. What to do? We might automate our regular savings. We should visualize our goals, so they seem more alluring than today’s spending. We might share our financial ambitions with others, so fear of their disapproval prods us to act.

Think

BETA AND ALPHA. Beta measures an investment’s volatility relative to a benchmark index. If the investment has a positive alpha, it means it outperformed the index on a risk-adjusted basis, with that risk measured by beta. For instance, a mutual fund could trail the market averages, but still have a positive alpha if its performance wasn’t especially volatile.

Money Guide

Start Here

Education Loans

IF YOU’RE struggling to pay your federal student loans or you’re simply overwhelmed by the number of loans you have to pay each month, consider consolidating your federal loans through StudentLoans.gov. The interest rate on the consolidated loan will be based on the weighted average interest rate of your existing loans.

Read more »

Archive

Home Economics

YOU COULD SAY I have graduated summa cum laude from the school of hard knocks—for first-time homebuyers. From a financial standpoint, I did everything by the book. Over two years, my husband and I saved enough to put down 20% and cover closing costs. To ensure we didn’t buy more house than we could comfortably afford, we kept our purchase price to less than half of what some lenders pre-qualified us for. I aggressively analyzed and pursued the best financing options. We established a healthy emergency fund. It turns out, however, that my analytical nature—I’m a Certified Financial Planner—and expensive business school training only solved half the equation. By solely focusing on the financial side, I neglected to respect, and understand, the art of the purchase: What story was the house telling me with its physical clues? Clues, I now know, can include such things as a sump pump: If there’s one, it means the previous owners experienced water in their crawl space. If a new furnace was recently installed, it’s best to ensure it has the correct capacity. Beyond the physical clues, there were behavioral clues from the seller and his realtor. Given the hot Portland market, they knew they were in the driver’s seat. What began as an amicable but firm negotiation devolved into something quite different by the time the ink was dry. The seller and his realtor imposed a closing fine—giving us 30 days to close the deal (something that is entirely out of our control, I might add) or face a $100 per day fine. When politely questioned on items that came back from the inspection report, there were days that would pass without a response. Under normal market conditions, this type of behavior would have sent any buyer running. We, however, were reluctant to start over, especially after six months of devoting nights and weekends to finding a house in one of the most competitive markets in the U.S., including viewing more than 65 homes. The ironic thing is, these were all sunk costs. When evaluating the decision to continue, or start fresh, they should have never entered the equation. No surprise: Our first home came with a side of humble pie. We thought we were prepared, but experience proved once again to be a formidable teacher. My lesson: Financial planning is more than numbers. But let my loss be your gain: Learning from somebody else’s experience is a lot cheaper than learning it firsthand. Anika Hedstrom is a financial planner with Vista Capital Partners in Portland, OR. She loves to nerd-out and, when given a dollar, loves to save 96 cents.
Read more »