Over the long term neither farmland nor housing has been a great place to invest money. Robert Shiller writes on New York Times: “Buy land: They’re not making it anymore. That often repeated adage sounds like good financial advice. But over the long run, it hasn’t been. Despite solid price increases over the last few years, land and homes have actually been disappointing investments.” He went on to show that over the century from 1915 to 2015 the real value of American farmland increased only 1.1 percent a year. With a growing population, that’s barely enough to keep per capita real land value unchanged. Real home prices rose even more slowly over the same period with an average of only 0.6 percent a year. To put this in perspective, the real gross domestic product in the United States grew an average of 3.2 percent a year from 1929 to 2015. That’s a much higher growth rate than for real estate. (nytimes.com)
Investing
The Most Important Investment Lesson in the World by Warren Buffett
Warren Buffett has always advised his followers to stick to low-cost, passive index funds, which can offer broad exposure to the stock market and cost a fraction of actively managed funds. “It’s so obvious and yet all the commercial push is telling you you ought to do something different today than you did yesterday,” he said. “You don’t have to do that. You just have to sit back and let American industry go to shop for you.” Buffett added: “No consultant in the world is going to tell you just buy an S&P index fund and sit for the next 50 years. You don’t get to be a consultant that way and you certainly don’t get an annual fee that way.” In fact, Warren Buffett made a million-dollar bet that by investing in a completely unmanaged, broad-market low-fee index fund, he could beat the gains earned by a high-powered hedge fund with a team of managers at the helm. (yahoo.com)
The Richest Generation in U.S. History Just Keeps Getting Richer
“Even after they retire, affluent Americans are growing wealthier, thanks to the strong stock market,” wrote Ben Steverman on Bloomberg. Baby boomers started turning 65 in 2011, marking the unofficial beginning of their retirement years. The timing could not have been better for older boomers, who are already part of the wealthiest generation in U.S. history. Since then, the broad S&P 500-stock index is up 91 percent, including dividends. U.S. stocks hit a record high yesterday. Market performance in the early years of retirement is a crucial worry for anyone living off a nest egg. In the worst-case scenario, stocks crash just as retirees start spending their savings, leaving them in a hole they can no longer earn their way out of. Older boomers have experienced what is arguably the best-case scenario: The S&P 500 has returned 269 percent since its March 2009 low. As a recent study in the Journal of Financial Planning shows, wealthy retirees can be very cautious about spending down their savings. This instinct, along with the stock market’s new record, suggests that many boomers are likely to end up with far more money than they know what to do with. (bloomberg.com)
Someone Pays $3,456,789 to Have Lunch With Warren Buffett
As part of a charity auction on eBay, an anonymous bidder paid $3,456,789 to have lunch with Berkshire Hathaway CEO Warren Buffett. Bidding for Buffett’s annual “power lunch” charity auction closed Friday after a week of escalating offers. Bidders were required to prequalify with a pledge of $25,000. The beneficiary is Glide, an organization that assists homeless people in the San Francisco Bay Area. Buffett pledged he will dine with the winner and up to seven guests at Smith & Wollensky steakhouse in New York City on a mutually agreed upon date. (upi.com)
When is It OK to Dip Into 401(k)?
Morgan Quinn writes: “Taking an early withdrawal from your 401(k) is not only costly in the short term, it can also jeopardize your long-term retirement goals… Because of the severe financial penalties, withdrawing money early from retirement accounts should be done only in an extreme emergency, ideally after any emergency funds and investments have been depleted.” Withdrawing money early from your retirement accounts carries heavy financial consequences, but here are 4 scenarios that’s OK to dip into 401(k):
- You become totally and permanently disabled
- You’re drowning in medical debt
- You’re getting divorced
- You’re starting a business
The Super Rich Start Saving Super Early
One of the main ingredient of the super rich is to start saving super early to be wealthy. Bourree Lam writes on The Atlantic: “There are two personal-finance chestnuts in nearly every article about saving money: Putting money away (instead of spending it) is difficult, and people should generally save more than they already do. But despite these truisms, one subset of Americans seem to be doing pretty well at saving: the super wealthy. This may not seem all that surprising, but the reason isn’t simply that they have more money to save. According to a new survey by Bank of America U.S. Trust, the bank’s private wealth management arm, many wealthy individuals in the U.S. start saving in their teenage years.” (theatlantic.com)
Vanguard Is Unstoppable With $1 Billion Per Business Day in New Investor Money
Vanguard is gradually becoming the number one choice for average investors due to its unique organization structure: Vanguard is owned by the mutual funds it runs. That makes their funds very inexpensive. Ben Johnson writes on Morningstar: “Vanguard is in a rare position. It has risen to the top of its league and continues to experience above-average organic growth. It is now bringing in roughly $1 billion per business day in new investor money on a run-rate basis. More and more investors are entrusting their hard-earned money to Vanguard. One of the few things I could see reversing this trend would be a breach of trust, but that is an awfully difficult scenario for me to imagine. The firm’s ownership structure is designed to minimize virtually all of the most common misalignments of interest that breed distrust and create bad incentives for stewards of shareholders’ capital.” The fund giant is growing bigger everyday with over $3.0 trillion in assets. That is a good news for common investors using Vanguards fund. The larger Vanguard gets and the lower fees go. (morningstar.com)
Illinois Pension Fund to Adopt Index-Based Portfolios After Paying Hedge-Fund Managers More Than $180 Million in Fees
Illinois Pension Fund has paid hedge-fund managers more than $180 million in fees for the past three years while performance generated by these managers was worse than that of a balanced index fund. Marc Levine writes on The Wall Street Journal that The Illinois State Board of Investment, which oversees $16 billion of pension assets, is slashing its hedge-fund portfolio by 70% and replacing about 40% of the high-cost, underperforming investment managers with index-based portfolios. Finally, Illinois state pension system recognizes the Boglehead philosophy: In investing, you get what you don’t pay for. By adopting the use of index funds, state pension systems can eliminate unnecessary costs and limit the incentive of political interference. Mr. Levine also points out two instances of political mischief:
- Federico Buenrostro Jr., the former chief executive of Calpers, California’s public-pension fund, admitted in 2014 to accepting bribes, a felony. Prosecutors said he collected money, casino chips and other gifts from a middleman who connected Wall Street investment firms with the fund.
- In New York, State Comptroller Alan Hevesi accepted $1 million in gifts from a money manager in return for steering him $250 million in state-pension-fund money to invest. Mr. Hevesi spent more than a year in prison after pleading guilty to corruption charges in 2011.
The Inventor of the 401(k) Says He Created a ‘Monster’
American workers now take for granted they can sock away pretax earnings with a company match, but at the time many couldn’t imagine Ted Benna’s idea of turning a little-noticed new subsection 401(k) of the tax code to replace pensions as the bedrock of American retirement. The father of the 401(k) says he created a monster: The plans had grown so overcomplicated and so fraught with hidden fees and opportunities for bad decisions that they were better at enriching the financial industry than the actual savers. “For all its issues, the 401(k)’s biggest value is that it turns spenders into savers,” he said. “Not that I spend much time basking the glory of the 401(k). What matters most to me now is spending time with my grandchildren and my horses.” (marketwatch.com)
3 Tips on Investing in Stocks from Warren Buffett
We all can learn a few things from Warren Buffett, the third richest man in the world and one of the greatest investing minds. Kendrick Chua explained 3 tips on investing in stocks from Warren Buffett:
- Never lose money: When investing, do proper and thorough research. Don’t overlook risk while there is also a need to prevent losses
- Socks or stocks – Buy quality when marked down: Buffett advises us to buy when things are on sale – whether they are socks or stocks
- Be greedy when others are fearful (and vice versa): Buffett advises investors to go against the herd. Herd mentality is common when the market reaches new heights.
Chelsea Clinton’s Husband to Close His Hedge Fund After Losing 90% of Value
Chelsea Clinton’s husband, Marc Mezvinsky, learned a hard lesson about active investing after failing to perform in his hedge fund. After losing 90% of its value, Chelsea Clinton’s husband is reportedly closing his Greek hedge fund. As reported on New York Times, “it was a hedge fund portfolio pitched by Hillary Clinton’s son-in-law, Marc Mezvinsky, as an opportunity to bet on a Greek economic revival. Now, two years later, the Greece-focused fund is shutting down, after losing nearly 90 percent of its value, according to two investors with direct knowledge of the matter who spoke on the condition of anonymity. Investors were told last month that the fund would close.” After all, Chelsea’s husband learned the mistake mostly from the investors’ money. Common investors should stick with index funds. A low-cost indexing strategy beats active management over the long run. (nytimes.com)
Here are 7 Quick Ways to Save Over $100,000
You probably have heard of the latte factor. That little innocent morning latte could cost you tens of thousands of dollars over the course of your working life. If you have trouble saving money for emergency fund, to pay off debt or to invest for retirement, there are some quick ways to save by making small changes to your spending habits. Assuming you plan to retire after 40 more years and that your savings will grow by 7.8% annually, here are 7 quick ways to save over $100,000 during your working life:
- Eating out too much: $207,598
- Taking cabs often: $235,963
- Smoking: $579,957
- Buying coffee every day: $79,085
- Paying for a gym you don’t use: $131,808
- Streaming commercial-free music: $32,919
- Ordering the wine: $151,579
(cnn.com)
Average Worker Needs 1 Million Years to Earn the Wealth of Bill Gates
According to Forbes real-time net worth, the fortune of Bill Gates is worth $76.2 billion as of 5/10/16. People on average hourly wages in the US would need to work for one million years to earn the wealth of Bill Gates, according to financial website THISISMONEY. While the gulf between the world’s wealthiest and the rest of us is widening, the time it would it would take for average earners to earn the wealth of their country’s billionaire is even worse. In Mexico, people in the country would need to work for over 3.8 million years to generate the wealth of billionaire Carlos Slim Helu. In Brazil, it would take a worker there over five million years to earn as much as the fortune of Brazilian billionaire Jorge Paulo Lemann.
Could Gambling be the Secret to Saving When Rates Are So Low?
Jay L. Zagorsky, The Ohio State University
Many interest rates in the U.S. are close to zero and even negative in some parts of the world, like Japan. Not unexpectedly, U.S. savings rates are also quite low as individuals ask themselves: “Why save a lot of money at a bank if I get no return?” This situation has many commentators wringing their hands because low savings rates are a problem for many reasons. Individuals who don’t save face spending their golden years of retirement in poverty, instead of plenty. In addition, people with no savings face financial problems and potential ruin when unexpected large expenses occur and cannot help out their children with large bills like college or a down payment on a first home. In the absence of a rapid increase in interest rates, which appears unlikely, is there anything we can do to change this problem and get people to save more? As odd as it may sound, gambling could be part of the answer. [Read more…]
Should You Follow the 4% Retirement Rule?
The 4% rule derived from a 1994 study by William Bengen in which he found that 4% was the highest rate that held up over a period of at least 30 years. Here’s how the rule works: You start by withdrawing 4% of your nest egg and then adjust the withdrawal amount to keep pace with inflation. So should you follow the 4% rule? Walter Updegrave on CNN Money recommend to start out with a reasonable withdrawal rate between 3% to 4% to support you 30 or more years in retirement. “You can go with a higher rate or a lower one. Just remember that the lower your initial rate, the less income you’ll have to meet your spending needs and the more likely you could end up with a big retirement account balance late in life. Conversely, starting with a higher rate will provide a more comfortable lifestyle, but could subject you to a greater risk of outliving your savings. Once you’ve decided on a withdrawal rate, you should be ready to boost or cut back your withdrawals based both on your spending needs and how much your nest egg’s value is rising or falling.” (cnn.com)
- « Previous Page
- 1
- …
- 3
- 4
- 5
- 6
- 7
- …
- 10
- Next Page »