All You Need To Know About Investing In 3 Simple Steps

April 16, 2015

Whenever I talk to people about investing, I find that most people fall into one of two groups. One group feels that investing is too complicated for them so they want to hire a professional to manage their money for them. The other group is make up of active investors who try to time the market with statements like “I think the market is too high to get in right now” or “I’m going to wait for prices to come down before I buy” and/or pick stocks or actively managed funds that they think will outperform the market. The problem is that there’s no evidence that market timing or even actively picking stocks really works (unless monkeys or cats are doing the picking). If the vast majority of professional money managers continue to underperform the market with these methods, do you really think you can in your spare time? Continue reading “All You Need To Know About Investing In 3 Simple Steps”

Why Your Advisor May Want You to Take Social Security Early

April 15, 2015

Earlier this year, I took a call from Carl who is getting ready to retire within the next few years. His advisor was suggesting that upon retirement, Carl rollover his 401(k) to an IRA and start collecting his Social Security benefit at age 62. Carl wasn’t so sure so he wanted a second opinion. Carl and I talked for a while and determined that it might make more sense for him to draw down his retirement account and allow his Social Security benefit to collect delayed credits. Continue reading “Why Your Advisor May Want You to Take Social Security Early”

How To Tell If You Are Getting Advice Or A Sales Pitch

March 31, 2015

I recently spoke with a friend who has been talking to advisors about retirement planning. Since I am always curious about the client-advisor experience, I asked her what she was told. After hearing her, I told her that she was not getting advice. She was getting a sales pitch. Continue reading “How To Tell If You Are Getting Advice Or A Sales Pitch”

Is Paying Off Your Mortgage Worth Losing The Tax Deduction?

March 12, 2015
Updated June 14, 2017

I recently received a question after one of my workshops from a woman who was wondering if she made a mistake paying her mortgage off early because she no longer has the mortgage interest deduction. I can’t tell you how many times I’ve gotten different versions of that same question (including after a later workshop session that same day). Here are several reasons why this is a classic case of letting the tax tail wag the dog: Continue reading “Is Paying Off Your Mortgage Worth Losing The Tax Deduction?”

3 Investment Myths Busted

February 26, 2015

Think you know everything you need to know about investing? I recently read three articles that dispel some conventional wisdom when it comes to your investments. Here are the busted myths along with the implications of what they could mean for you: Continue reading “3 Investment Myths Busted”

What A Lost Cell Phone Can Teach Us About Investing

February 25, 2015

Earlier this year, my boss shared with us her story of how she dropped her phone behind her bed. Her first thought since the bed was basically against the wall was to move the bed…in her words “bad idea.” After some time (and a little pain medicine), she took a second approach: use a hanger from the side to pull it out….again, “No dice.” (She thinks she actually made it worse by pushing it further out of reach.) Continue reading “What A Lost Cell Phone Can Teach Us About Investing”

Want to Live a Happier Financial Life?

February 19, 2015

Very rarely do I find a personal finance article that resonates me as much as one I recently read called “How to Live a Happier Financial Life.” First, I love the title. When it comes to finances, sometimes we get so caught up in the numbers that we forgot the whole point is is about maximizing happiness not money. Sometimes that means spending more money on certain things but often it actually means spending less. The article’s following points do a good job of differentiating which is which: Continue reading “Want to Live a Happier Financial Life?”

The Gym Rat’s Guide to Investment Terms

February 12, 2015

Investing and the financial world in general can be pretty confusing. There are a lot of terms you may not know and concepts you may not be familiar with. It can even start sounding like another language! Continue reading “The Gym Rat’s Guide to Investment Terms”

Noise Cancelling Headphones Needed

January 30, 2015

 

I recently had a flight to remember. After a mad scramble to the airport and through the security line, all I wanted to do was relax in my airline seat after a long day. I plopped down into my seat next to a guy with ear buds that I think allowed me to hear his music better than he could.

The volume on his phone was probably not that high but I could clearly hear his music and I was annoyed because I was tired, felt a cold/flu coming on, and just wanted to relax. He promptly fell asleep but I couldn’t because his music was keeping me awake. As I was sitting there trying to focus on something other than his heavy metal playlist, I longed for noise cancelling headphones!

Then I thought it would be nice to have something to drown out the noise in the advertising world the way noise cancelling headphones block out the audio distractions. Thankfully, the holiday season is over along with the 24/7 messages to buy, buy, buy.  Of course, these media messages don’t talk about how to pay for all the things we buy…

Now, a month later, the bills are coming due. I heard a commercial the other day suggesting that I don’t have to worry about those bills because I can make them all go away by filing for bankruptcy. Incredible!

That’s an awesome message. Shop till you drop…then file bankruptcy. That’s not exactly the way I’d recommend people handle the holiday season! Then I remembered how nice it would be to have those noise cancelling “financial headphones” to drown out all the fiscally irresponsible messages we all hear so that we can focus on what’s important to be as healthy financially as possible.

I will use my “financial headphones” to drown out the urge to only pay the minimum on my credit card. I will also fight the temptation to buy anything that I will not pay cash for. Next, I’d use my headphones to drown out the financial talking heads who shout their predictions of the economy and the markets. If I had listened to some of the 2014 predictions,

  • We would be experiencing 50% unemployment, a 90% drop in the stock market and 100% annual inflation, as predicted by economist Robert Weidemer.
  • Silver will have a 50% return (it had a -13.84% annual return in 2014)
  • A barrel of oil will be close to $150 (Brent Crude Oil spot price on Dec 31st was $55.27 per barrel)
  • The Fed will be viewed as acting too timidly and Democrats will win control of Congress. (Tell that to all the Democrats that lost their seats.)

My point is that these “experts” don’t truly know more than you or I do so don’t spend precious time listening to them. Put those headphones on! Instead choose your investments based on your goal timeline and risk tolerance.

For example, my friend has a plan to buy a house this year so her down payment is in a bank savings account. Her tolerance for losing money is zero since she needs it soon. Her short term investment goals are far different than her long term investment goals so she has a different approach to long term investing. Her Roth IRA is invested 70% in stocks and 30% in more conservative investments because she can tolerate short term market dips in order to potentially gain longer term. Blocking out the “expert predictions” can be a valuable thing in your financial life.

Lastly, if I had those magical financial headphones, I’d use them to block the constant message that I need new stuff. When my cell phone contract expires this year, I won’t buy a new cell phone just because I can. My current one works just fine. When I move into my next house, I will only purchase what I truly need – which is very little.

I also plan to turn off the TV and the computer to minimize the amount of advertising that I’m exposed to. I’m starting to think that advertising just might be a little bit too effective today! I have a business trip planned next week and I’ll make sure to pack my noise cancelling headphones. I have learned my lesson and am better prepared for my next plane ride as well as for my future goals.

 

Should You Buy Life Insurance as an Investment?

January 08, 2015

Should you purchase a whole or universal life insurance policy as an investment? We recently received several questions on our Facebook page on this topic so there seems to be a lot of confusion about it. On the one hand, many agents over-sell these policies as a way to earn big commissions. On the other, they can make sense for certain people. Let’s take a look at some guidelines to use to see if it makes sense for you: Continue reading “Should You Buy Life Insurance as an Investment?”

My “NO” Year’s Resolutions!

December 31, 2014

This New Year’s Eve, millions of people across the country will make New Year’s resolutions about things they’d like to do in 2015.  I’m all in favor of this annual tradition but to mix things up a bit, I’m going to suggest a few things that you DON’T want to do in 2015—something I’m calling “No” Year’s resolutions: Continue reading “My “NO” Year’s Resolutions!”

Do You Need Some Financial Flossing?

October 31, 2014

Recently I was talking with one of my coworkers and I said the following about something at work “It’s like flossing…I know I need to do it, and I do, but I try to find ways to postpone it as long as possible!” He thought it sounded like a blog topic about the financial lives of so many people, so here we are! What are some things that we KNOW we need to do financially, but they are so “not fun” that we either don’t do them or we keep putting them off indefinitely? Continue reading “Do You Need Some Financial Flossing?”

Are You Afraid of Your Student Loan Debt?

October 30, 2014

What’s really scaring you this Halloween? If you have student loans, getting that bill might rank pretty high on the list. After all, no one likes owing tens or even hundreds of thousands of dollars  that will seemingly take forever to pay off. That doesn’t mean paying off your student loans should be your only or even top financial priority though. Here are some other goals that you might want to prioritize first. Continue reading “Are You Afraid of Your Student Loan Debt?”

What’s Your Real Risk Tolerance?

October 23, 2014

With panic sweeping the stock market, it’s time to check your risk tolerance score. (You did take a risk tolerance quiz like this before investing your money, right?) The whole purpose of determining your risk tolerance is to use it as a guideline to create a mix of investments that you can “tolerate”…in other words, that you won’t bail out of during times like these. After all, if you do bail out and fail to get back in the market in time (and if you figure out a way to time the bottom, please let me know), you’ll miss the eventual recovery and turn a temporary loss into a permanent one. Continue reading “What’s Your Real Risk Tolerance?”

How to Minimize Your Investment Costs

October 09, 2014

In my last 2 blog posts, I discussed the various ways financial advisors can be paid and how they can present conflicts of interest to an advisor. But how would your actual investment returns be affected? Let’s take a look at some scenarios: Continue reading “How to Minimize Your Investment Costs”

When Should You Sell Your Mutual Fund?

September 18, 2014

As the stock market reaches new highs, have you been wondering if you should sell and take profits before the next eventual dip? If the stock market does take a dip, should you sell and cut your losses? With the launch of our “Ask a Planner Week” on Monday, here was the first question we received: “I have absolute percentage rules for taking profits and losses on individual stocks. When should one consider taking profits or losses on index funds?” Continue reading “When Should You Sell Your Mutual Fund?”

The Three Most Useless Things a Financial Columnist Tells You

September 11, 2014

I often like to question much of the conventional wisdom of the financial services industry so I was intrigued when I saw this article titled “The four most useless things financial advisors tell you” by Howard Gold. Instead, I found myself questioning most of the conclusions in the article itself as pretty useless (with one exception). Let’s take a look at each of these “four most useless things:” Continue reading “The Three Most Useless Things a Financial Columnist Tells You”

Should You Buy Life Insurance as an Investment?

August 21, 2014

In response to this article we published on Forbes, we received this question on our Facebook page:

I recently read your article “Should You Use Life Insurance as an Investment?” on Forbes. I wanted to know how this article would apply to me. I just graduated and started my first job that pays pretty well. I don’t have any dependents so I didn’t think about life insurance until I meet with a financial advisor. He said starting insurance young is a better investment where I could keep safe dollars and be more risky in other parts. Would I be better off buying insurance now and benefiting from compound interest or use that money in other investments? Thanks! Continue reading “Should You Buy Life Insurance as an Investment?”

How to Invest: A Tale of Two Investment Theories

August 06, 2014

My first exposure to investment theories was during an economics class I took in college. I was always sort of a geek when it came to graphs and numbers—which I guess explains my degree in statistics—so I was captivated when the professor drew an example of the efficient frontier on the chalk board. It made perfect sense to me. Continue reading “How to Invest: A Tale of Two Investment Theories”