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Applying Murphy's Law To Retirement
If you can envision all that might go wrong with retirement planning, you can take steps to reduce your risk.
As a CEO I constantly consider risk in every area of the business--especially in areas where I am not an expert, such as technology. When we develop a new product or service, or make substantial improvements to an existing one, we put it through a thorough testing process where the main goal is to try to "break it." In business, this way of thinking is essential to success, and it occurred to me that it also may be essential in retirement planning.
Forbes.com, February 25, 2010
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Children: Expense Or Investment? Tips on how to make your children your best investment.
If you're a parent, you can probably recall the moment your child was born. You probably remember the anticipation you felt while you waited for them to arrive and the emotions you were overcome with; emotions you probably never felt before in such capacity. In that moment you're ready to care for your new baby and devote your life to them, no matter what the sacrifice or cost.
Forbes.com, February 4, 2010
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Anatomy Of A Financial Crisis: Some steps to prepare for the next bubble or personal financial crisis.
We recently took a call from someone whose world was turned upside down by a letter he'd received in the mail. It was from his mortgage lender, so he figured it was just another monthly loan statement. But when he opened it, his stomach dropped. It told him that they'd reviewed his account and that his line of credit had been dropped to $20,000, his current balance due. The news was a devastating blow. His daughter was about to start her first semester of college, and he'd been counting on using the remaining $30,000 that was available on the line of credit to pay for her tuition. Now it was gone, and he'd have to have a disappointing talk with his daughter about applying for student loans.
Forbes.com, January 28, 2010
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How Expensive Is Your Job?: Taxes, travel and social expenses could eat your earnings away.
In the movie Million Dollar Baby Maggie Fitzgerald buys her mother a house after winning several fights. Her mother never signs the papers because it will "mess up" her welfare. The director, Clint Eastwood, portrays the mother as ungrateful and conniving because she is working the system. As anticipated, the audience reacts with disdain. That is not the American way--we believe you need to work hard and succeed like Fitzgerald. She works harder than anyone else and has something inside her that drives her to succeed, a quality that is admired in our society. For many of us, this particular scenario is far removed from our normal lives--it doesn't hit close to home.
Forbes.com, January 14, 2010
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How Expensive Is Your Marriage?: Before you get married, sit down and evaluate how things will change financially.
Fifteen years ago, my employee Greg and his soon-to-be wife, Susan, opted to take a pre-marital course that would help them prepare for life as a couple. They had talked about their plan for their marriage before stepping into a counseling room, but they both knew there were aspects they hadn't considered. There were several other couples in that course and Greg was shocked when he realized that most of them had never discussed their life goals--let alone their financial ones--until that day, which in some cases was just weeks before their wedding date.
Forbes.com, January 6, 2010
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The Story Of The Investing Autopsy: How dissecting your past investments can transform your future ones.
It was a rainy weekend in Austin, Tex., circa 1998, and I was at an uninspired investing conference wondering if I could get an earlier flight home.
But something happened that rainy weekend that would become a turning point in how I looked at investing and, more importantly, at life.
At lunch, I met a couple, married for 21 years, who attend investing conferences for fun--something even I couldn't contemplate despite building my career around investing. As strange as their concept of "fun" might sound, the beginning of their story had a familiar ring.
Forbes.com, December 15, 2009
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Exercise The Options, Sell The Stock: Lock in retirement account profits
A friend of mine finally was able to retire last year, albeit quite a few years later than he had planned on. He was a tech engineer in Silicon Valley who, like many employees, was rich on paper with company stock options he was relying on for his retirement.
At that time with the technology boom, investors were more concerned about missing out on future gains than they were with possible market losses. I remember him telling stories of people selling stock to buy a car or a boat which later became the butt of office jokes: "There's his million-dollar car!" They smiled smugly thinking of their stock option values continuing to grow.
Forbes.com, November 12, 2009
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When Employers Cut 401(K) Matching
Your 401(k) match has been axed and your savings are dwindling. Here's how to take back control.
There's been a cruel reality check going around the office. Your company has just cut their match on the 401(k) plan with no promise that it will return, and you're left wondering what to do about the loss. We saw something like this happen when defined benefit plans started to disappear and unfortunately, the future isn't looking bright for defined contribution plans either.
Forbes.com, November 5, 2009
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Solving The Wrong Financial Problem: Is your investment plan right for you?
"He was solving the wrong problem."
There it was, a single sentence that articulated one of the biggest challenges in financial planning, five words that encapsulated what I've spent a career trying to define and resolve.
Forbes.com, October 22, 2009
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Seven Things To Know About Money
A handy guide toward financial planning from Financial Finesse.
In last week's column, we discussed the importance of not surrendering your money to someone else--always maintaining control, power and knowledge over your financial decisions and your financial situation.
But for many of us that's easier said than done, as evidenced by the phone calls, e-mails and in-person comments we get from the employees we work with who often want us to make financial decisions for them.
Forbes.com, September 17, 2009
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Just Tell Me What To Do!
Don't surrender your financial decisions to someone else.
As financial educators, we hear this every week, sometimes on a daily or even hourly basis, depending on what is going on with the market and the economy. Our callers and workshop participants reach a point of total surrender, where they want us to make a decision for them. Don't educate me, they are saying. Don't teach me how to avoid problems like this in the future or how to make decisions on my own. I have a life to run, a job to perform, children to care for. I don't have time to make my own financial decisions on top of everything else. You're the expert. Make this easy, make this painless. Make the decision for me!
Forbes.com, September 10, 2009
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Making The Deficit Personal
How to apply the country's lessons to your personal balance sheet.
Remember when the only time "trillions" were ever referenced was in science class, and it quantified either stars in the universe or miles in a light year? Now an overhaul of the health care system alone could account for a trillion dollars over a decade. We even see a $2 trillion ("give or take") discrepancy between the White House budget office estimate ($9 trillion) for the deficit over the next 10 years, and the Congressional Budget Office estimate of about $7 trillion.
Forbes.com, September 3, 2009
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Debt Management
How even responsible and rational planners can incur enormous debts.
Craig and Jennifer each take their turns pleading their case, and each look directly at Linda while speaking to one another. There's $80,000 at stake, and each of them are holding their ground. In less than 30 minutes, a decision will be made that will affect both of them, and that will feel more compromising for one than for the other.
Forbes.com, August 26, 2009
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His Day-Trading Heart
Lots of trading on speculative stocks can produce surprising losses.
Rita feels like a fish out of water. Her 12-page investment statement is more than she can decipher, but she wants to know where she stands. She is meeting with one of our financial planners for the first time, and is looking for some guidance. The planner takes her to page three of the statement, which has the account summary information, and Rita adjusts her eyeglasses to bring the pie charts and numbers into a little bit better focus. But the real moment of clarity is right around the corner.
Forbes.com, August 20, 2009
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Raising Financially Savvy Kids
Parents should try to educate their children about investing, money managing and donating to charities.
It's Friday afternoon, and Garrett Jay is surrounded by 30 kids at the mall. He's not giving away tickets to the IMAX, but the adventure is about to begin. Garrett runs Money Lessons For Life, a business dedicated to teaching children the day-to-day issues of money, and these field trips help them experience that first hand.
Forbes.com, August 13, 2009
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Should I Save, Invest or Pay Off Debt?
In the midst of the recession, Americans are trying to determine how to know when to save, invest and pay off their debt.
Todd is kicking himself. He had forgotten how gut-wrenching it was when he got into some stocks shortly before the tech bubble burst in 2000, and rode what he didn't realize was a downward slide until he couldn't take anymore and cashed out. A lengthy bull run in the stock market and his soaring home value made him forget those past frustrations, and his 401(k) rollover built up some momentum in his IRA for a handful of years. That same IRA has dropped by 30%. At 41, he knows he needs to be putting at least something away for retirement, but he's become so accustomed to stock market disappointments, he can't even imagine reaching his retirement goal, and only reluctantly has he enrolled for a 3% deferral into his employer's 401(k) plan.
Forbes.com, August 6, 2009
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Can My Lender Do That?
What new credit card legislation means to you.
With an incredulous tone, and seemingly out of the blue, the workshop participant does not even bother to raise her hand. "Can they really do that?" These are not ordinary times, and Trisha, our workshop participant, is merely vocalizing what everyone else was thinking--that it should be illegal for credit card companies to abruptly change credit limits, especially in the midst of an economic crisis. And especially for those of us who have been loyal, dependable cardholders for years. Shouldn't they at least be required to give us notice so we have time to adjust?
Forbes.com (online version), July 30, 2009
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Real World Economics
Divine economic insights through the anecdotes of cab drivers, corporate sponsors and restaurant employees.
For the last 25 years, The Skins Game has been a popular TV attraction for golf fans and anyone else who wanted a sport other than football to enjoy for a few hours on Thanksgiving weekend. While there are plans to resume the event in 2010, this year its sponsors decided to step aside and wait, letting the 2009 economy play through.
Forbes.com (online version), July 23, 2009
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Too Much Advice!
Retail investors are experiencing information overload with lots of stock advice instead of focusing on their core investing strategies.
What our client Jim wants to know is "What's your take on the market?" Jim's been watching from the sidelines for over a year now, with the majority of his long-term savings in a money market fund. He called a financial planner, concerned that he'd missed the rebound.
Forbes.com (online version), July 15, 2009
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Living With A 4% Return
Investors who expect less than half the S&P's historic return had better save more.
Since when does 4% seem like an outrageous rate of return?
At a recent financial workshop we held about retirement readiness, everyone wanted to know, "Am I on track to retire, how far off am I and can I get back on track?" So we run through some common scenarios to find out. We throw out to the group, "Who has an idea of what we should use for an average yearly rate of return?"
Forbes.com, July 8, 2009
