December 22, 2014 - Huffington Post - Buckle Down Or Mess Around? You Decide
President Obama's executive order granting legal status to 5 million undocumented immigrants could be the headline of the year. You may or may not agree with our President's actions, but there's no denying why so many folks decide to risk life and limb and make their way to America the Beautiful. If you are lucky enough to be a U.S. Citizen, you are blessed with opportunities for social mobility and self-determination that much of the world's population envies.
In our great country, you get to decide at a relatively young age whether you're going to buckle down in high school and become incredible at math or science, spend your time excelling on the basketball court, practice your saxophone threehours a day, or blow-off your homework to hang out with your friends. Read more
December 1, 2014 - NerdWallet - The Best Money Moves for December
1. Invest in your future self: Contribute to your 401(k).
In 2013, 42% of middle-class Americans said that it was impossible for them to pay their bills and still save for retirement, according to a Wells Fargo study. But even if you can’t get anywhere near the annual 401(k) contribution limit of $17,500, try to put aside as much money as you can, says Ken Stanley, a NerdWallet advisor from Harper Stanley Financial Services. “If you have the opportunity to contribute to a 401(k), especially if your employer is matching the contribution, please don’t leave any money on the table,” he says. Jonathan DeYoe, NerdWallet advisor and principal at DeYoe Wealth Management, adds that it’s important to re-evaluate spending at the end of the year and see if you can afford to contribute more. “Your future self is really going to appreciate your current self’s savings,” Read more
November 25, 2014 - Huffington Post - Mindful Investing At Market Highs
You may have heard that the stock market is at "all-time highs." This trend portends either unparalleled disaster or boundless opportunity for investors - depending on which media savant is reading the tea leaves. One subset of pundits is calling for an imminent correction of the S&P 500. Another subset expects a market correction, but the timing is uncertain. It might happen next month or next year, and it could result in seven to ten years of average or below-average returns, although the crystal ball is a bit murky on the details. Still other pundits believe that this new "all-time high" could easily become yet another new "all-time high" in the days and weeks to come. And it's hard to ignore the small band of maniacs who insist we're at the beginning of a new era and you are insane not to bet your entire wad on the latest social media, biotech, nano-tech, or 3D printing craze. Read more
November 17, 2014 - Huffington Post - No Regrets: Three Money Mistakes To Avoid
Everyone has financial regrets -- including you. I know this because you (or someone who looks, sounds and worries an awful lot like you) just collapsed on the couch in my office and started confessing a litany of financial sins:
There's an over-priced shack you bought at the top of the real estate market, or a dream home you didn't buy when the market collapsed. There's an extravagant vacation you shouldn't have taken or another cheap pair of shoes you couldn't resist. There's a low-paying job you quit right before Google bought the company, or a high paying job you accepted Read more
November 12, 2014 - Huffington Post - Notes from the Soccer Pitch: 'Winning' Is Reaching Your Goals
I just finished watching my son's 5th soccer game in 3 days. His team, the Mavericks, took 2nd at the Danville Stampede Invitational Soccer Tournament. In the final match, his team was facing a team they had beaten earlier in the tournament. The Mavericks went down 1-0 in the first 20 minutes and never recovered their winning momentum. They ended up losing 3-0, as their heads bobbed lower and lower.
November 4, 2014 - Business Insider - What A Natural Disaster Can Teach Us About Investing
"We don't know. We can't see the future. The flow does what the flow does."
— Rod Macland of Pahoa, HI to CNN reporters at KITV—TV
As folks in Pahoa, Hawaii waited to see whether lava flowing from the eruption of the Kilauea Volcano would run right over their homes, one resident shared this gem of wisdom with CNN reporters.
His words are just as applicable to stock market pyrotechnics as they are to the unpredictable whims of Mother Nature. Read more
October 22, 2014 - Huffington Post - Monkey or Tai Chi Master? Dealing With Market Volatility
The practice of "mindfulness" obliges us to see reality for what it actually IS, not what we want it to be. Sometimes this can be difficult, especially when it comes to our investments. We fail to recognize that volatility IS the reality of the stock markets. During times when the direction of markets has been almost straight up (the last 37 months), or a downward plunge (2008-2009), many of us forget that straight up or down is NOT the natural state of the markets. But our forgetfulness does not change the fundamental IS. Markets are volatile. Period. Read more
October 14, 2014 - Huffington Post - When Investing, Be Mindful of 'Knowledge' Limitations
We practice asset allocation, disciplined diversification and rebalancing. We do not buy individual securities looking for the proverbial "pop." We do not trade. Not that it can't ever work out, only that it doesn't reliably or predictably do so. Success (after transaction costs and taxes) in trading seems to come slightly less often than 'luck' or the bell curve suggests it should.
In the last 12 years, I have routinely and repeatedly counseled clients (for reasons below) against this behavior. And yet, almost predictably, it starts to show up when Shiller's CAPE ratio gets high.
Up until last week, over the last 4-5 years I can count these conversations on one hand. However, in the last ten days, I have had four conversations about individual stock trades that a variety of clients has wanted to place. Read more
September 16, 2014 - Business Insider - There Is No Secret—If You Think You'll Work Forever, You're Deluding Yourself
It is incredibly well understood that when it comes to retirement planning, earlier is better. Financial success has always been more a function of "time in" the market than it has "timing" the market.
Still, during public presentations I increasingly hear the statement, "I haven't really planned for my retirement … I don't plan on retiring." About half of these folks are in their late 20s and early 30s, and we can forgive them their naiveté. They will eventually learn that retirement is not optional, and they will begin to plan for it. The more quickly they come around, the happier they will be in retirement. Read more
September 16, 2014 - Nerdwallet - Market Forecasts: Whom Do They Benefit
On the one hand, consider John Kenneth Galbraith’s comment that “the only function of economic forecasting is to make astrology look respectable.”
On the other, consider that there are numerous magazines, federal bureaucracies, radio programs and 24-hour cable stations dedicated to doing just that.
This is cognitive dissonance writ large, yet it’s absolutely our reality. Why? If economic and, perhaps even more so, market forecasting are exercises in futility, then why do people still attempt to forecast?
One reason: incentives. Read more
September 5, 2014 - Nerdwallet - Overcoming Hurdles To Financial Literacy
There is a lot of talk about financial literacy in America these days and for good reason. Most of the talk focuses on improving our financial intelligence, filling our minds with the knowledge of how to do the right thing.
Probably the most cited research on basic financial knowledge comes from the FINRA Investor Education Foundation (take the quiz here). There are five literacy questions in the quiz along with a broad effort to collect information about personal financial decision-making. Some findings from the 2012 effort are:
19% spend more than they make (a slight improvement over 2009) Read more
August 1, 2014 - Nerdwallet - There Is No Secret—the Financial World Isn’t Rigged
Money is not a mystery. There is no secret. Nothing is rigged, and no one is doing any rigging.
But words like “secret,” “rigged” and “mystery” are loaded with us versus them attitude and they sell books, CDs and ads.
The formula goes something like this: Write a book (or article or blog post) with a serious “us” versus “them” slant. Make sure you are representing the “us” side to agree with a vast number of people, then load it with opposition and invective. Your readers will love you and tell their neighbors who will also read it, then look for your next book. This is increasingly the secret of success in non-fiction literature and web-marketing. Read more
July 13, 2014 - Nerdwallet - Planning and Portfolio Meet at the Behavioral Crossroads.
The single best piece of advice, which I received early in my career and have given hundreds if not thousands of times in the past 20 years, is a combination of planning and investment advice.
Before you invest you have to know what you are investing for.
“Making more money” is not an investment goal.
“Beating the market” is not an investment goal.
“Beating your neighbor, friend, or wife’s brother” is not an investment goal.
Each of these is a setup. The things that you might do to accomplish each of these things, the things you might do to produce bigger and better returns in some short period of measurable time are often the very same behaviors that ultimately produce smaller and worse returns over your entire investing experience. Read more
July 13, 2014 - The Christian Science Monitor - Saving for retirement? How to soothe fears of not having enough money.
If we didn’t always want to spend it on something else, we would all habitually save more.
In a recent survey, 55 percent of Americans said they fear not having enough money to last through their retirement. The Bank of America’s Merrill Edge survey, reported in USA Today, polled 1,000 people called the emerging affluent — those with $50,000-$250,000 in investments, excluding their homes and other real estate. First, note that the people in this category are already better off than the majority, and it bears repeating that these people have saved more than most Americans, and still they are worried about retirement. Maybe they are more prone to anxiety or maybe there are many people who underestimate their future needs and we have a serious problem on our hands. Read more
If we didn’t always want to spend it on something else, we would all habitually save more.
In a recent survey, 55% of Americans said they fear not having enough money to last through their retirement. The Bank of America’s Merrill Edge survey, reported in USA Today, polled 1,000 people called the emerging affluent — those with $50,000-$250,000 in investments, excluding their homes and other real estate. First, note that the people in this category are already better off than the majority, and it bears repeating that these people have saved more than most Americans, and still they are worried about retirement. Maybe they are more prone to anxiety or maybe there are many people who underestimate their future needs and we have a serious problem on our hands. Read more
The single best piece of advice, which I received early in my career and have given hundreds if not thousands of times in the last 20 years, is a combo of planning and investment advice… Before you invest you have to know what you are investing for.
“Making more money” is NOT an investment goal. “Beating the market” is NOT an investment goal. “Beating your neighbor” is NOT an investment goal. Each of these is a setup. The things that you might do to produce or accomplish each of these things (and hundreds of similar things) are often the very same behaviors that ultimately produce smaller and worse returns over your entire investing experience.
This is because the human mind is naturally a speculator (not that it is good at it, but that is the natural tendency). Humans tend to equate price (what everyone seems to be willing to pay for an investment) with value (the intrinsic, even if only projected, real future cash flows available from the investment). By equating them, we are attracted to higher priced investments and we are afraid of lower priced investments. Note: this is, I hope obviously, exactly backwards. Read more
Many folks dream of building an income stream that’s independent of their employment. Whether you are considering quitting your job and striking out on your own or are just thinking about building a little something on the side, there are a few basic things you should do while you still have an income from other sources.
These are the ultra basics. In the insanely depersonalized world of Internet marketing and sales, there are hundreds of things you need to get right to be successful. For every story about “How I made a million in Internet sales,” there are at least 1,000 who made nothing and just wasted a bunch of time. Of course, we rarely hear about the failed attempts, so we all think it should be easy.
I believe there are four things that set successful folks above those that, in the end, will discover they have wasted their time. Read more
Working in financial services can be intensely frustrating. Most people you work with on a professional level are smart and mean well, but many just don’t have their act together. Part of the problem is the extremely low barrier to entry on Wall Street, and part of it is greed—a combination of greedy participants and a greedy public. When I started at Dean Witter in 1996, the main question in the interview was, “How do you feel about cold calling.” I hated cold calling, but it was an interview and so I presented a bit warmer to the concept. Read more
I have been a wealth manager for nearly 20 years, but before this I was working on a master’s in Tibetan Buddhism—specifically phenomenology, the study of how we perceive and experience the world.
It is through that lens that I’ve come to see that perhaps 95% of client issues are related to spending. And because of this, I believe it is the problem of our age. We receive so many more signals to spend and buy, it is a wonder we save anything.
I think what mindfulness lets us do is slow down our thinking. I teach my 9-year-old son a form of sitting meditation where we watch our thoughts arise and fall away, as a method to help him create mental space that will allow him to make better decisions. I tell him that if he can slow down his thoughts and find space to pause before an action—throwing a ball across the room, pushing his sister, sneaking a cookie—he will have an opportunity to see clearly the consequences of that action and decide whether the consequences are worth it. Read more
When I speak at a college or graduate school, my message is always the same: Today, this month, this year is your moment of maximum opportunity. Every day that ticks by is a day that is gone forever. If you have things you want to accomplish, things you want to learn, things you want to do — start today, RIGHT NOW!
This absolutely goes for personal financial planning. In the world of investing, our best possible friend is time.
The more time you have, the more secure you can make your own life, the more fantastic experiences you can create for you and your family, the better lifestyle you will enjoy and the more you will be able to give back to your community. Time is essential and more time is better.
If you can do these four things starting today, you will be in great shape for the rest of your life: Read more
Thanks to Michael Lewis’ new book, “Flash Boys,” the conversation about high-frequency trading is currently everywhere. While I certainly credit Lewis for having his finger on the pulse and knowing when (and how) to release an important book to create a broad readership and a vast popular appeal, I remain blissfully unconvinced of the importance his message has for you or me in our personal financial lives. Read more
Fewer employers offer traditional pensions anymore. Many that do are ditching their plans and giving employees lump sums. Here’s what to know about your options.
With traditional plans, called defined benefit, employees don’t contribute and companies put away the money for retirees to draw on. The retired employees’ salaries, length of employment and other factors determine retirement benefits. Companies continue to slash these in many ways.
The percentage of the largest U.S. companies offering the traditional defined benefit pension plan to new salaried employees continues to fall. A record high of 70 companies in the Fortune 100 offered new hires only a 401(k) or similar employee-fueled retirement account in 2012, compared with 63 companies in 2010. Read more