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.
If You Die Without a Will, Who Gets the Money and Who Gets the Kid?
CNN Money explores different scenario to see what happens when you die without a will.
- Who gets the money if you die without a will? If you die without one, you cede control to the state where you lived and all proceeds will roll into your estate and be distributed according to state rules. Its laws will determine who your heirs will be and the state will choose the executor of your estate. While inheritance laws differ from state to state, they generally favor spouses, registered domestic partners and blood relatives as heirs.
- Who gets the kids if you die without a will? A will is also extremely important for parents, because it’s the primary instrument by which you name the guardian of your minor children, and otherwise provide protections for them when you’re gone, said estate planning attorney Jeffrey Molever of JUX law firm in Minneapolis. Without a will, the court will appoint their guardian. “The judge will gather as much information as possible about the children, their family circumstances, and the deceased parents’ wishes and try to make a good decision. The primary rule is that the judge must always act in the best interests of the children,” according to NOLO.
(cnn.com)
Hillary Clinton Made More in Speeches to Big Banks Than Most of Us Earn in a Lifetime
As reported on The Intercept: “Democratic presidential candidate Bernie Sanders this week assailed rival Hillary Clinton for taking large speaking fees from the financial industry since leaving the State Department. According to public disclosures, by giving just 12 speeches to Wall Street banks, private equity firms, and other financial corporations, Clinton made $2,935,000 from 2013 to 2015.” Clinton’s most lucrative year was 2013, in which she made $2.3 million for three speeches to Goldman Sachs and other Wall Street banks. (theintercept.com)
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)
Poverty is Linked to Obesity
In modern world, poor people are more likely to be obese than wealthy people. Thomas Corley of richhabits.net found that povery and obesity are linked together in his research. Here’s what he found:
- 66% of the poor were overweight by at least thirty pounds. 79% of the wealthy were not
- 25% of the wealthy visited fast food restaurants three times or more each week. 69% of the poor admitted to eating at fast food restaurants at least three times a week
- 57% of the wealthy counted calories vs. 5% of the poor
- 70% of the wealthy ate less than 300 junk food calories each day. 97% of the poor ate more than 300 junk food calories each day
- 76% of the wealthy exercised aerobically 30 minutes a day, four days a week. 73% of the poor did not regularly exercise aerobically
- 25% of the wealthy visited fast food restaurants three times or more each week. 69% of the poor admitted to eating at fast food restaurants at least three times a week
- 53% of the poor admitted to having some health issue. Only 18% of the wealthy had health issues
Corley explains: “Poor people have Poverty Habits. They don’t watch what they eat. They eat too much junk food, go to fast food restaurants too frequently and they don’t exercise regularly.” (richhabits.net)
Millionaires Chalk Success Up to Hard Work and Family Values
Jackie Wattles writes on CNN Money: “Most high net worth Americans say they worked their way up from a lower class. That’s according to a report released by U.S. Trust on Monday, based on a survey that asked 684 adults in the U.S. with $3 million or more of ‘investible assets’ hundreds of questions.
About 77% of those surveyed said they grew up in the middle class or lower, including 19% who say they were poor. And they credit their success to three somewhat surprising factors: Hard work, ambition and family upbringing. Respondents even went so far as to say that these influences were much more important than ‘connections’ or ‘innate talent.’ The survey was also a shout-out to strict parents. About 80% of respondents said their parents were firm disciplinarians. They also named ‘academic achievement,’ ‘financial discipline’ and ‘work participation’ as the family values that were most emphasized in their homes.” (cnn.com)
Want a better life? Move here
The Organisation for Economic Cooperation and Development releases its annual Better Life Index to ranks the world’s developed economies according to 11 different criteria it views as essential to a happy life. To allow you to compare well-being across countries, the criteria includes housing, income, jobs, education, health, life satisfaction, and work-life balance. Here are the top 10 places to move for a better life:
- Australia
- Sweden
- Norway
- Switzerland
- Denmark
- Canada
- United States
- New Zealand
- Iceland
- Finland
(cnn.com)
Maintain Your Excellent Credit to Save Over $6,000 for Car Loan
According to 2016 Auto Financing Report from WalletHub, buyers who have fair credit will end up spending about six times more to finance a vehicle than someone with excellent credit, which equates to $6,304 in additional interest payments over the life of a $20K, five-year loan. As the auto industry witnessed its highest sales in 15 years, WalletHub realeases a study to help you make an informed decision about your next vehicle. Here are other key findings:
- Interest Rates: For new cars, interest rates are at their lowest point in the past three years, with the average new-car loan today charging 17 percent less interest than the average used-car loan.
- Credit Standing: Buyers with fair credit will end up spending about six times more to finance a vehicle —about $6,304 in additional interest payments over the life of a $20,000, five-year loan — than consumers with excellent credit.
- Financing Sources: Consumers in the market for a new car should begin their search for financing with car manufacturers (rates at 38 percent below average) and credit unions (rates at 29 percent below average). Secondary options include national banks (rates at 2 percent above average) and regional banks (rates at 30 percent above average).
- Transparency: Car manufacturers continue to lack transparency when it comes to leasing offers, with the average automaker receiving a WalletHub Transparency Score of 4.68 out of 10.
Cash Now Used for Fewer Than Half of All Payments by Consumers
With cashless payments gaining popularity, cash was used in Britain for fewer than half of all payments by consumers for the first time in 2015. Cash made up 45.1% of payments in 2015, compared with 64% in 2005, and is expected to fall to just a quarter by 2025. As cash will be replaced with payments by contactless cards, consumers need to cautions about spending. Research from Drazen Prelec and Duncan Simester of the Sloan School of Management at MIT shows that consumers spend more money when using a credit cards rather than cash. (theguardian.com)
12 Things the Rich Do Every Day
So what do the rich do every day that the poor don’t do? Drawing from the study by Tom Corley, Dave Ramsey summed up the differences between the habits of the rich and the poor. Here are 15 things the rich do differently from the poor:
- 86% of wealthy love to read vs. 26% of poor.
- 81% of wealthy maintain a to-do list vs. 19% of poor.
- 80% of wealthy are focused on accomplishing some single goal. Only 12% of the poor do this.
- 80% of wealthy make Happy Birthday calls vs. 11% of poor.
- 67% of wealthy write down their goals vs. 17% of poor.
- 88% of wealthy read 30 minutes or more each day for education or career reasons vs. 2% of poor.
- 67% of wealthy watch one hour or less of TV every day vs. 23% of poor.
- 6% of wealthy watch reality TV vs. 78% of poor.
- 79% of wealthy network five hours or more each month vs. 16% of poor.
- 84% of wealthy believe good habits create opportunity luck vs. 4% of poor.
- 86% of wealthy believe in lifelong educational self-improvement vs. 5% of poor.
- 74% of wealthy teach good daily success habits to their children vs. 1% of poor.
Apple CEO Tim Cook Reveals His Three Keys for Personal Success
Tim Cook is making his first visit to India as CEO of Apple and Cook reveals his three keys for personal success to young people during an interview. Business Insider reported that during a local game a sportscaster asked Cook about his impression of the sport and his experience in India. He also asked Cook what his message was to young people who might want to replicate his success. Sportscaster Alan Wilkins asked: “We have a lot of young viewers… if you had three key points for personal success from the chief executive officer from Apple, what would you say to our young viewers?” Cook replied: “Do what you love, and put your whole heart into it, and then just have fun.” (businessinsider.com)
A Mobile Home in Malibu Sold For A Record $5.3 Million
In Malibu, a mobile home recently changed hands for a record $5.3 million. The wealthy owner wished to stay anonymous. Located in the confines of the Paradise Cove Mobile Home Park, the triple-wide mobile home was briefly listed for sale in March for $5.5 million before closing off-market. Set on a bluff overlooking the coastline, the manufactured house has features akin to the typical luxury home in L.A with beamed ceilings, hardwood floors, skylights and a pair of gas fireplaces. (latimes.com)
Mob Burns Venezuelan Man Alive Over $5 As Justice Fails
The mob burns Venezuela man alive over $5 as the country sinks deeper into chaos and the justice system falls apart. Five dollars might not be a lot for you, but in Venezuela it could have bought a family a week’s worth of food. The AP reported: “The mob didn’t know at first what Roberto Bernal had done, but he was running and that was enough. Dozens of men loitering on the sidewalk next to a supermarket kicked and punched the 42-year-old until he was bloodied and semi-conscious. After all, they had been robbed of cell phones, wallets and motorcycles over the years, and thought Bernal had a criminal’s face. Then a stooped, white-haired man trailing behind told them he’d been mugged. The mob went through Bernal’s pockets and handed a wad of bills to the old man: The equivalent of $5. They doused Bernal’s head and chest in gasoline and flicked a lighter. And they stood back as he burned alive.” One of the participant, Eduardo Mijares, said: “We wanted to teach this man a lesson. We’re tired of being robbed every time we go into the street, and the police do nothing.” (ap.org)
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