Archive for the ‘Personal Finance’ Category
Millenials and Their Risky Financial Behaviors
20-Something? Know or related to one? This short article should be required reading for those in college or recently graduated.
Only 58% of students from four-year institutions say they feel prepared to manage their money. Three out of five don’t use budgets. 17% say they don’t even manage their money; their parents do it for them. 16% say they lived paycheck to paycheck, and yet only three-quarters stop spending when their bank account balances were low.
@Michael Kitces
Historical Quote of The week
The time to repair the roof is when the sun is shining.
Barry Ritholz cites this John Kennedy quote as the lead-in to his Washington Post article about preparing for a bear market while things are still going great. He advises a thorough review of your finances with an eye towards reducing debts and raising some rainy day cash. Good advice.
Quote of the Month
Exiting a long period of zero interest rates is tricky and a bit unsettling, Some of us feel like the informed citizens of Pompeii around 79 AD: we are grateful for the lovely sea views but worry about the volcano in the background.
Ewen Watt, Chief Global Strategist at Blackrock
Commonsense Financial Advice for Millennials
Item 1 – “Make a realistic budget”
http://www.hewinsfinancial.com/blog/financial-tips-for-millennials-part-1
http://www.hewinsfinancial.com/blog/financial-tips-for-millennials-part-2
This is not rocket science, but these guidelines bear repeating. Great for 20-somethings but they work for just about every age.
If the IRS Calls … Hang Up!
I first heard about this scam from my CPA colleague Peter Montgomery who made an amusing tale out of call he received from a woman claiming to be an IRS agent. According to the linked article, this is a very sophisticated operation and thousands of individuals have been duped.
“The IRS doesn’t call people up out of the blue,” says the article and the IRS.
Timothy Camus, a Treasury deputy inspector general for tax administration, explained to the AP, “If someone calls unexpectedly claiming to be from the IRS with aggressive threats if you do not pay immediately, it is a scam artist calling.”
If you do get a call that you suspect to be a scam, hang up the phone right away, and then report the incident at the taxpayer administration hotline (800-366-4484).
Bill Gross Has His Own Financial Advisor(s)
The once, and perhaps future, Bond King, Gross has been in the news a lot the past year. This post is not about that. Reportedly worth several billion dollars and as astute a financial manager as they come, Bill Gross has one or more financial advisors to manage his own money. Why?
Most people, even those that are successful in the world of finance and business, get their own financial advisor to keep themselves out of trouble. Intelligent people understand the benefits of having an independent third party there to make sure they don’t make any huge mistakes.
So says Ben Carlson, CFA, in this article on the topic.
My favorite anecdote in the article is the story about Oracle founder and mega-billionaire Larry Ellison, whose own financial advisor pesters him quarterly about diversifying what I presume to be a vast over-concentration in his company’s stock. A man after my own heart, the advisor that is.
ABLE Accounts – Congress Agrees on Something
ABLE Accounts, which are tax-advantaged savings accounts for individuals with disabilities and their families, will be created as a result of the passage of the ABLE Act of 2014. Income earned by the accounts would not be taxed. Contributions to the account made by any person (the account beneficiary, family and friends) would not be tax deductible.
For anyone with a disabled family member or loved one, this is a huge step forward. Envisioned as a variation on 529 college-savings plans, these accounts should make life simpler for those facing the enormous financial challenges of providing for a lifetime of support for a disabled person. The ABLE law specifies these accounts are for those persons with “significant” disabilities and with onset of disability prior to age 26. Annual contributions will be capped at $14,000.
Passed almost unanimously by both houses of Congress, the bill goes to the President for his signature. Look for implementation sometime in 2015.
IPOs, Who Are They Good For?
If your model of the stock market is that companies that are building businesses come to the stock market to finance those businesses, your model is wrong. The stock market is where companies that have built businesses go to cash out their shareholders.
The always astute Jason Zweig on why companies really go public. As he says, it is not to raise money to operate, they have already done that by raising private capital. It is to create a market to facilitate insiders and early private investors cashing out their shares by selling into a broader and deeper public market. See this example on Bloomberg about the current financing of Uber.
Quote of the Week
My point is not that mass-mediated financial advice is kinda like professional wrestling. My point is that mass-mediated financial advice is EXACTLY like professional wrestling.
That’s Ben Hunt of Epsilon Theory in an essay exposing (as we have often done ourselves) the VAST differences between the objective counsel provided by a true fiduciary advisor and the breathless infotainment masquerading as “advice” one can get on CNBC et al. This fundamental distinction is worth highlighting as often as necessary.