What Would Goldilocks Do?

March 16, 2012

Over the last few months, the stock market has reached levels that we have not seen since before the financial crisis/Great Recession. Companies are reporting good earnings. Interest rates are low. Economists say that we are in a recovery. Yet, so many people I talk to are still very afraid to re-enter the stock market. I see a lot of 401(k) accounts that are still more conservatively allocated than the employee’s goals and age would indicate they could be. My question, which I ask either to myself or to no one in particular, is “Why?” I have my own theories and I talked with a psychologist about what her field might say about this issue. Continue reading “What Would Goldilocks Do?”

When Enough is Enough

March 07, 2012

After my stepfather passed away, my mom started working with a local bank to manage her investments. At the time, I was living in California and it was difficult for me to help her with investment decisions. Plus, I had always warned my clients that allowing family members to get involved in your investments was a bad idea because you could always fire a stranger but you can never fire a member of the family. It was with this in mind that I allowed her to continue this relationship despite my occupation as a financial planner. Continue reading “When Enough is Enough”

Investing for People Who Hate Investing

March 01, 2012

If you’re like most people, you may not know much about investing or quite frankly, even care to know. Perhaps you’re only vaguely aware of what’s going on in the stock market and rarely look at your 401(k) performance. The last thing you want to worry about is researching and monitoring mutual funds. Yet, you’re responsible for choosing and managing the investments that will help determine whether you can retire early or end up having to eat cat food in your retirement. Continue reading “Investing for People Who Hate Investing”

There’s More Than One Way to Become a Millionaire

February 24, 2012

I listened to a radio interview recently with a talented and enigmatic artist, David Choe, who has an amazing life story. It’s filled with a lot of twists and turns, making a fortune gambling in Las Vegas, losing that same fortune in Vegas, some wild and erratic behavior, and most recently becoming a $100-millionaire overnight. Here’s the cool one-in-a-billion kind of story that makes us all think “wow, that could be me one day.” Continue reading “There’s More Than One Way to Become a Millionaire”

Is Inertia Costing You Money?

February 23, 2012

Let’s face it. We human beings are generally creatures of habit. We tend to do the same things over and over even if we aren’t always thrilled with the result, something Albert Einstein called the definition of insanity. Continue reading “Is Inertia Costing You Money?”

What Going to the Shooting Range Can Teach Us About Financial Planning

February 15, 2012

Recently, some colleagues and I visited the local shooting range to practice firing pistols at paper targets. I hadn’t fired a pistol in years, but I remembered that the last time I did I had fun. I was excited to go, but at the same time I was a little nervous. What if I miss the target and my friends laugh at me? What if I do something wrong and somebody gets hurt? What if I hurt myself? What if, what if, what if? Continue reading “What Going to the Shooting Range Can Teach Us About Financial Planning”

If It Looks Too Good To Be True…

February 10, 2012

Have you ever seen one of the infomercials about a workout routine, a diet program, or a piece of exercise equipment and said to yourself “that just looks too good to be true”? Well…so did this guy! In a video that has become an internet sensation, Furious Pete shows how he made a remarkable physical transformation (you have to check out the video to see just how amazing the transformation is) and took both before and after photos in only 5 hours as proof. Proof? Yep! Proof that his transformation was not completely legitimate. Nor was it the product of hard work, diet, or exercise. Continue reading “If It Looks Too Good To Be True…”

How to Plan for an Extreme Early Retirement

February 02, 2012

My most popular blog post (and the most popular one on our whole blog) called “How to Be Financially Independent in 5 Years (No Matter What Age You Are)” was about a concept called “Early Retirement Extreme” in which people save very large percentages of their income to be financially independent before they even turn 40. For example, if you save 75% of your take-home pay and earn a 5% real rate of return, you would have enough savings in just 5 years to maintain that standard of living for the rest of your life (assuming a standard 4% safe withdrawal rate of your initial savings amount and adjusted each year for inflation). While this would probably not be realistic for most people, the more you can save, the sooner you can be financially independent to use your time as you see fit. (The author of the blog that inspired my post actually ended up going back to work but out of enjoyment rather than financial necessity.) But in addition to the challenge of living on much less income than we’re used to, there are some other considerations facing anyone looking to retire extremely early: Continue reading “How to Plan for an Extreme Early Retirement”

Investing Lessons From Mitt Romney and the Italian Cruise Ship Tragedy

January 20, 2012

Within the last 24 hours, I watched a presidential debate and saw endless news footage of an Italian cruise ship sinking. As a guy who lived on a boat for a few years, I couldn’t help but read everything I could find about the cruise ship, the captain, and the circumstances surrounding this tragedy. As a political geek, I couldn’t help but watch yet another debate with an ever narrowing field of candidates. My only regret this political season is that there are only debates for the Republicans. During the last election cycle we had them for both parties, and for me that was a wonderful thing. But, that’s not what I ‘m writing about today. Continue reading “Investing Lessons From Mitt Romney and the Italian Cruise Ship Tragedy”

Back to Basics: What Exactly is a Bond?

January 12, 2012

Last week, we discussed how to invest by buying a stock and becoming an owner of a company. This week, we’ll take a look at becoming a loaner instead. The first experience most people have as a loaner is with a bank. You loan the bank money by making a deposit, your money earns some interest, and you can withdraw it. You can also go to the bank to borrow money for something like a car or a home. Continue reading “Back to Basics: What Exactly is a Bond?”

Back to Basics: What Exactly is a Stock?

January 05, 2012

With the start of a new year, it might be a good time to take a step back. As financial planners and educators, we can get so caught up in the complexities of things like employee benefits, various investment strategies, and tax laws that sometimes we forget that sometimes people just really need to understand the basics. I recently asked a group of workshop participants what exactly a stock was and one person said it was just a piece of paper. I thought about it later and realized that his answer reflected many of the misconceptions people have about investing (aside from the fact that we don’t even really use paper stock certificates anymore). In fact, there’s a surprising amount of insight you can gain just from examining some of the basic investment vehicles. Continue reading “Back to Basics: What Exactly is a Stock?”

What Fantasy Football Can Teach Us About Investing

December 14, 2011

I fielded my first fantasy football team back in the late 90’s, and what I enjoyed most about it was that it gave me an excuse to watch games I would otherwise care less about. (I mean after all, unless you live in St. Louis or Cleveland, why would anyone have a reason to watch a Rams versus Browns football game?) This year I decided to introduce fantasy football to the staff at Financial Finesse. Those of us that had played before had to convince some of the “rookies” that experience wasn’t necessary (hey, every league needs a patsy) and that they would have fun regardless of the outcome. The truth is, it has been fun, but more important than the bragging rights are the lessons it can teach us about investing. Continue reading “What Fantasy Football Can Teach Us About Investing”

How Being a Pro at Fantasy Football Can Translate to Investing

October 24, 2011

This is my third year playing fantasy football so I am no longer a novice. When I finished second to last my first year, no one took notice because they figured I was a rookie and of course, a girl who doesn’t know anything. They were right. Last year in a complete surprise to everyone, especially me and especially to my husband, I took first place. A big shout out in thanks to Sebastian Jankowski the kicker for the Oakland Raiders, who if you looked at the points he brought in, you’d have thought he was a running back, and to my quarterback Jay Cutler Chicago Bears who had a great season last year. This is a new season with new challenges, and once again I am holding my own and enjoying playing in my family league. Truthfully, I like to play to stay connected with family and friends, and I have to admit that I love to “trash talk.” Continue reading “How Being a Pro at Fantasy Football Can Translate to Investing”

How Do I Start to Educate Myself About Investing?

June 09, 2011

Now that my wife and I have, for the most part, settled in our new hometown of Chicago, I have decided that my vacation from working out is officially over. So last week I actually completed my first full week of the P-90X workout (haven’t joined a gym yet). I must tell you that in some of the workouts, yoga and kenpo for example, I felt like an absolute klutz! That got me to thinking about how many people might feel when they want to learn about investing on their own for the first time. The good news is that like learning yoga (and kenpo), with time, continued education and practice, you will become more confident in your investing. With that, take a look at these tips to get you started in the wonderful world of investing. Continue reading “How Do I Start to Educate Myself About Investing?”

What Happens When the Desire for Wealth Overtakes the Sense of Reason?

May 13, 2011

I recently saw a news article that caught my attention. The headline was a grabber: A woman had been arrested for stealing half a million dollars from her in-laws to help pay off her gambling debt. She had acquired about 14 million dollars in debt over 2 years. But the real news for me lay in the sentence that followed. She had also won 13 million dollars over the same period of time. This fact seemed noteworthy. Yes, the woman had a gambling addiction. She was arrested for stealing from her in-laws. But, she also had an obvious winning streak. To amass 13 million dollars in winnings takes some luck, or possibly even skill. However, by the end of her run (which coincided with criminal charges!), with all of her time and money she was no better off, indeed much worse off, than when she started. Continue reading “What Happens When the Desire for Wealth Overtakes the Sense of Reason?”

Dividends Aren’t Enough

April 18, 2011

Dividends are a beautiful thing. Last week I wrote about my mother-in-law’s bond fund that paid her a steady stream of dividends over the years – twenty five years to be exact. Every month, the dividend came like clockwork and she spent it. Now she is using the funds to pay for her care – she is 97. This strategy worked for her because she has other funds invested in other types of vehicles. Here is the problem with using the dividend strategy as the only strategy—even if the dividend doesn’t increase, the cost of goods and services do. So the dollar buys less and less each year. Continue reading “Dividends Aren’t Enough”

Retirement Preparedness: What Employees Need to Know About Investing

February 07, 2011

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”

Investing: The Benefits of Starting Young

January 14, 2011

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”

Time for a Change

July 21, 2010

Despite it’s never-ending and (often questionable) invention of “innovative” new financial products, services, and securities, the financial services industry is woefully behind in the area that matters most to Americans in this economy: financial counseling.

You see, there is no money in helping someone to get out of debt, or helping someone deal with a job loss, yet every day I come across individuals that are dealing with just those sorts of issues. Personally, I think every financial professional should be required to receive training in the area of financial counseling. For starters, someone dealing with high debt or low income could probably benefit the most from professional help. Secondly, we need improvement in financial literacy among all consumers in our country if it’s truly going to rebound from this difficult economy, and what a better way to do that than by having financial experts available for folks who may otherwise never work with a financial professional.

So how do you get tens of thousands of financial professionals to suddenly take interest in a group that has little to no assets to invest? Continue reading “Time for a Change”

Are Target Date Funds a Good Idea?

July 20, 2010

Mayan Calendar — Image courtesy of theilr/Flickr

There’s an awkward moment in virtually every conversation I have with HR executives about retirement plan education when they ask the question they’ve been waiting all meeting to ask:

“What do you think of target funds?”

(Translation: “We have target date funds in our plan, we used to think they were a great idea, but they’ve performed terribly and employees don’t seem to understand them. Now I’m wondering if we made a big mistake.”)

Continue reading “Are Target Date Funds a Good Idea?”