Email Warnings: Verify Before Trusting
Ronald Reagan was noted for saying, “Trust but verify.” And that was before Al Gore invented the Internet. When it comes to believing forwarded emails with dire warnings, it’s a good idea to go even further and “Verify before trusting.”
Here are a few lines from an email I’ve received numerous times over the past two years: “Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That’s $3,800 on a $100,000 home . . . It’s in the health care bill and goes into effect in 2013. . . . Under the new health care bill all real estate transactions will be subject to a 3.8% Sales Tax. If you sell a $400,000 home, there will be a $15,200 tax.” Continue reading
Lifestyle vs. Quality of Life
By: Lifestyle and Quality of Life are two separate concepts and they are very much in conflict.
The pathetically low savings rate in the United States is a direct result of this conflict. People don’t save because they mistakenly believe doing so will mean a lower quality of life. Rather, it is quite possible (we have plenty of documented cases through our Cash Flow Hydrant™ cash management tool) that saving money while shifting to a less costly lifestyle will result in a substantial INCREASE in your quality of life.
In this case, you really can have your cake and eat it, too.
LIFESTYLE = STUFF Continue reading
How NOT to Save for Retirement
A report by the Employee Benefits Research Institute provides a startling example of how NOT to save for retirement. The study, released in December 2011, examines various aspects of 401(k) account balances. A 401(k) plan typically allows both an employer and its employees to contribute to a retirement account for the employee. The employee controls how much goes into the account and how the money is invested.
This report shows the average account balances in 401(k) plans broken out by age group (workers in their 20s, 30s, 40s, etc.) and by their tenure with their current employer. What the data shows is how strongly (or not) workers have been committed to saving for retirement over periods of 5, 10, 20, 30 years or longer. Continue reading
For Financial Success, Outsmart Your Brain
How’s this for a convincing excuse not to save for retirement? “I can’t help it. The human brain is programmed for financial failure.”
An estimated 80 percent of our decisions are made emotionally. The limbic system is the portion of the brain where our emotions reside. Its role is to protect us. Feelings like fear or anger can cause it to urge us away from a perceived danger. It can respond to feelings of joy or pleasure by urging us toward a perceived benefit or reward. Continue reading
Are You A Market Timer?
“Attention all market-timers: the 2011 investment results are in. How did you do?” If you’re like the typical market-timer, not so well. Which begs the question: just who is a typical market-timer? Well, if you’re reading this, it might just be you.
First some definitions: a market timer is someone who moves in and out of entire asset classes in an attempt to enjoy the run-ups in value and avoid any downturns. The stereotypical example is someone who moves their entire portfolio into the stock market (perhaps in a stock mutual fund) and then jumps back out within a 12-month period, at least once (and sometimes multiple times within a year). If you watch the financial market news channels (like CNBC) and make your investment decisions based on the views presented there, odds are you are a market-timer, even if you don’t realize it. Continue reading
When Investing May Be Like Dieting (other than being hard!)
A woman I know is currently on a vegetable and protein-drink diet, hoping to lose some lbs and look her best for her daughter’s wedding in the spring. The other day she reported that although she had been on the diet for several weeks and lost 16 lbs (which makes her happy, of course) she expressed some frustration that she was now “stuck” and hadn’t progressed further over the last couple of weeks. As those who have dieted in the past know, my friend has probably “plateaued”; the easy-to-lose weight has been dropped and diligent effort and persistence may be needed for further progress. Continue reading
How to Avoid Plan:FAIL
George had it all worked out. He had a great goal. He knew what he had to do and the obstacles that could very likely slow him down. He was all set. Unlike many people, George had a PLAN. The course was all mapped out. All he had to do was take action and in a few years he’d reach his goal.
It never happened. Continue reading
Making Your Money Last In Retirement
How you invest your money during retirement will affect your feelings about your “success” in retirement. Diversification, the idea of investing in different types of assets (like stocks, bonds and cash), always pays off in the long run. With many people living 20 or 30 years or more in retirement, that’s a “long run.”
Recognize there will be times when stocks stink (like 2008 and early 2009). And there will be times when stocks shoot out the lights (like the 1990s). The same is true for bonds, for cash, and for pretty much any investment type. So since the future can’t be known in advance, the wise investor puts her eggs in many baskets—diversification. Continue reading
A Personal Finance Truth You Can’t See
Remember the scene from “A Few Good Men” how Colonel Jessup (Jack Nicholson) responded to Lt. Daniel Kathee (Tom Cruise) when Kathee demanded the truth? Colonel Jessup shouted, “You can’t handle the truth!”
… and Colonel Jessup was right.
Nobody can handle the truth, nor can anybody completely see the truth of any situation for what it is. Continue reading
Are You Ready for a Financial Disaster?
Preparing for an unforeseen financial disaster may seem like an oxymoron. How can you possibly prepare for something that is unknown?
You can, when you remember that the only real “unknown” about most potential financial calamities is their timing. We know perfectly well we’re likely to have emergencies; we just don’t know exactly what or when. They may take the form of an expensive car repair, a trip to the emergency room, the loss of a job, or a significant investment loss. The question really isn’t “if;” it’s “when.”
Here are four tips to prepare for inevitable financial calamities. Continue reading
Ron Peremel
Kevin Condon
