It was only after my son Ethan got home from school and played an April Fools’ Day joke on me that I even realized it was April. In the spirit of laughing at ourselves, I thought it would be fun to do my best David Letterman impression by offering what I consider to be the top ten most “foolish” financial decisions we make: Continue reading “Top Ten Most “Foolish” Financial Decisions”
The 401(k) is celebrating its 30th birthday this year – I wish I could say the same for my birthday next week! I wasn’t quite old enough to be in the workforce back in 1981 (I was in junior high) when the first 401(k) was conceived by Ted Benna, a fellow Pennsylvanian like myself. As I age I’ve gained wrinkles, a few grey hairs, and a few extra pounds. As the 401(k) has matured, we’ve seen the growth of auto enrollment, auto escalation, target funds, and even the Roth option.
So why are some employees still not taking advantage of the 401(k) opportunity? I hear excuses ranging from “I can’t afford to contribute,” “I don’t have faith in the stock market,” to “I plan to eventually after I’m sure I will be staying at my job.” These are employees that could have been getting matching money over the years but just don’t realize how much that means to their bottom line. I have actually spoken to a few employees who thought they WERE contributing, but they were NOT! Try this trick that a client of ours used a few years ago as an eye-opener: Mail a dummy 401(k) statement with a zero balance to all your employees that are not actively participating in your plan. I guarantee you will get at least a few calls from those workers that thought they were contributing and they are calling wondering why they don’t have any money in their account!
Last week I tackled the question of what to consider before buying investment property and whether or not it could be right for YOU. You may also recall that I stated that the actual property to buy was not necessarily a major driver of the decision – initially.
That said, the property you decide upon becomes a very important piece once you have made the decision to buy. Some things to consider (in order of importance) before signing the purchase contract are: Continue reading “So You’ve Decided to Buy Investment Property, Great! Now How Do You Decide Which Property to Buy?”
There is information that is nice to know and information that you need to know but what you really need to know is — the difference. For example, my husband is a history buff with an avid interest in politics. When we have friends over and we are discussing politics or world affairs, he often pops up with not just the year a politician won a race but who ran against him. I am always amazed at his memory and wonder, “How does he remember that?” It’s crazy! Even though I am always impressed, I do know that is the kind of information that is nice to know but in our work and in our lives, this is not vital information that we need to know. Continue reading “Retirement Preparedness: What Employees Need to Know About Investing”
One of the (many) aspects of my job is being part of our ongoing fact checking process. We are constantly staying on top of the latest in tax law changes that can encompass everything from retirement plan limits to education and estate planning issues. Needless to say we are kept busy! Continue reading “Fact Check Your Investments”
Over the past few weeks I have had the opportunity to meet with a number of people who are recent college graduates just starting their careers. Boy, has the world changed a little bit since I graduated! The first thing I noticed is that starting salaries today are what managers’ salaries were when I was starting my career. And, as my kids would tell you, back when I graduated from college I still had to feed my pet dinosaur on my way to work. Is it wrong to occasionally want to sell your kids on EBay? Back to the point. Continue reading “Investing: The Benefits of Starting Young”
Over the holidays I was enjoying a wonderful dinner at my brother-in-law’s house and as is the tradition, a conversation ensued after the meal. It started off innocently enough, a little banter about politics, careers, vacations and of course the inevitable, investments. Now I’ve been involved in a lot of conversations surrounding investments and what my opinion is on the investment du jour. For those of you who frequent my posts, you know that I am a big proponent of sticking to fundamentals in making investment decisions. So, asking me my thoughts on investments will lead to such topics as: what is the worst thing the investment can do and can you live with the outcome? How does the investment fit in your overall portfolio? Do you understand the basics of how the investment works? I certainly understand that the answers to those questions may not be exciting but a solid investment choice doesn’t necessarily need to be exciting to get the end result we hope for. Continue reading “Investments Du Jour – Are They Right for You?”
I often get asked the best way to learn about investing. It really is quite simple. Just like anything else, if you have even a slight interest in something, you will be more open to learning about that topic. For investing, some people will want to learn everything they can because they aspire to manage their own portfolios at some point. Others will want to know just enough so that they will not be taken advantage of. But, everyone should have at least an understanding of not only what they’re invested in but also why. Continue reading “How Much Investment Education Do I Really Need?”
Have you heard the term “paper loss?” It’s a nice way of saying that you haven’t really lost money on your investment until you place a sell order. Most investors become familiar with this phenomenon occasionally in their investing life. But what about the seldom used term “paper gain?” It’s very likely that you have never heard of that one (since I want to believe I coined it!). It is the opposite of a loss situation. You actually made money! But guess what? It’s only on paper until you sell. Continue reading “A Case for Rebalancing”
Recently while my wife and I were on vacation with my Dad and step-mom, he found some time to talk to me about some new behavioral strategies regarding investment strategies. I thought some of the things were interesting, such as taking a personality test to help define possible strengths/weaknesses and delving a bit further into a myriad of investing traits. Continue reading “Investment Strategies: Keep it Simple!”
I heard a statistic the other day that the average employee spends 30 minutes choosing their benefits at open enrollment. I cringe to think how some people choose the funds in their 401(k) plans and I’ve seen the resulting disaster from people choosing the wrong funds especially funds they thought were safe and turned out to be much more aggressive than they thought. Many of these were Target Funds. Continue reading “Target Fund: Glide To or Glide Through”
So…when I wrote Part I of this blog, I pointed out an issue but gave no solution. I hate it when people do that! So, I’ll try not to do that very often. The situation was that individual investors often make decisions that allow them to “Buy High, Sell Low.” Now maybe I’m not the best with investing, but that sounds like a lousy strategy! What can be done to improve it?
Well, the most obvious and simple answer (which surprisingly is often the best answer) is to have a strategy. Continue reading “Why Do Individual Investors Do Worse than the Funds They Invest In?”
I wrote ‘How does Drew Brees Do That?’ in a prior posting about decision making. I was reminded of that while listening to a financial talk show. The host talked about a study that was performed to track individual investor performance vs. the performance of the funds in which they invest. The study was very revealing and it ties in with the concept of decision making. The study said that over a 20 year period ending in 2005, the average stock mutual fund earned 11% while the average stock mutual fund investor earned only 3.9% during that time frame. My first question was…why? Continue reading “Why Do Individual Investors Do Worse than the Funds They Invest in?”
This past Sunday was quite interesting. I was doing some early morning chores, washing clothes, cleaning counters and washing dishes. You know the kind of stuff you want to knock out early so you can watch football later. Well, as I was washing the dishes I noticed a leak at the base of the faucet. I figured this is easy enough to fix, so I dried everything off beneath the sink and I tightened the piece that was loose. All fixed! However I noticed that the outlet beneath the sink didn’t have a cover on it – little dangerous maybe? Anyway as I was putting on the cover I inadvertently bumped the pipe from the sink and it came loose. Guess what? Another leak!
This type of thing can happen in investing. Continue reading “Are You Really “Fixing” Your Portfolio?”
The other day I was waiting for a flight to Seattle (great city by the way) and the person taking tickets said “Now boarding all those who will not be putting anything in the overhead bin.” I initially thought that this is a great way to seat people, speed up the process and have bin space available for others. As I watched the people progress through, I saw a lot of backpacks, purses etc. and then I saw it, a ROLLERBAG! And then I saw another, and another. Didn’t these people hear? I was appalled at the first person who skirted the system but amazed at all the others who followed suit. At long last the ticket agent finally said “Sir, we are only loading people with nothing to put in the overhead bin.”
Now what does that event have to do with financial education? Everything! Continue reading “Investment Choices: Be Wary of Following the Herd”
I got a call the other day on the financial helpline from an employee who is retiring next year. He had always planned on retiring in the month of June and noticed a trend this year of managers in his company retiring in August. Now this gentleman had over 35 years of service so you wouldn’t think two months would have made much difference.
So we did some digging and here is what we found. Continue reading “Retirement Decisions: What a Difference a Month Makes”
People poke fun at Gen Y’ers because this was the generation where everyone got a trophy just for participating in a sport or activity. At the Little League “end of season” team parties, even the team that was dead last and the player that barely sniffed the field, went home with their trophy. While these parents (I know because I was one of them) were worrying about the delicate sensibilities of our little Millennials, they were fast at work learning technology. Continue reading “What We Can Learn about Investing from Generation Y”
“Don’t be fooled” seems to be the mantra for Generation X. This is the generation sandwiched between the Baby Boomers and the Millennial Gen Y. They are described as being born between 1965 and 1980 and they can work a deal. These folks are good at getting the most of their dollar and unfortunately they will need to because their other mantra is “this is NOT turning out like I planned.” Continue reading “Investment Ideas We Can Learn from Generation X”
Today investing in a mutual fund is a way of life but at the end of the1970’s there were only a little over 500 mutual funds. With the help of the Baby Boomer investors toward the end of the decade of the 1990’s this exploded to over 7000 mutual funds.
Now I have heard that if everyone is doing it, it could be a fad – so watch out. Remember the “pet rock” was also born in the age of Baby Boomers and we have to note that these people actually purchased this product in great quantities – so we have to take any of their choices with a grain of salt. But don’t forget, there could also be great value. Continue reading “Investment Ideas We Can Learn from the Baby Boomers”
When you go to the grocery store today to pick up a gallon of milk you have the opportunity to choose between whole milk, 2%, 1% or fat free and don’t forget that you can choose organic milk or even soy or rice milk. We have multiple choices in just about everything – bread, cereal, jam, coffee, tea, etc. It is an endless journey of choices!
Think back to our grandparents or parents and the choices they had. You went to the store to buy milk and you picked up your gallon and walked home. In terms of investing, there weren’t as many choices either. Investments consisted of Treasury bills, bank accounts, stock and bonds – pretty simple. In some ways, those days were easier without so many choices and some of the choices they did have were pretty good! Continue reading “Investment Ideas We Can Learn From the Silent Generation”
