Notes From the Fieldby Martin Weil

Archive for the ‘Personal Finance’ Category

October 21, 2014

Wedding Costs and Divorce

This chart has made the news lately, from a study that appears to show that the cost of one’s wedding is highly positively correlated with the probability of divorce.

21_wedding_small However the same study shows that the more people that attend a wedding, the less likely the marriage will end in divorce.  So it seems that to maximize your likelihood of a long-lasting marriage, forget the expensive gowns and lavishly decorated locales. But do have 200 or more guests, only ask them to bring their own bag lunches.

October 14, 2014

Correction Twitter

The thing is, it has to run its course – like a fever, or a greyhound at a Florida panhandle race track.

Josh Brown, The Reformed Broker, in an amusing post on market corrections

October 4, 2014

JP Morgan’s Milestone in Customer Service

J.P. Morgan Chase won’t notify those customers who have been affected by its summer security breach — estimated to be two-thirds of U.S. households — that their personal information was exposed…When asked why, the spokesperson said, “That’s just what we’re doing.”
My business is also in the financial services. If we were to have a breach of confidential client information, we would be required to notify each customer affected.

September 22, 2014

Risks to Wealth



Pointer by The Big Picture

August 6, 2014

The Biggest Problem Is Mental

Buying stocks is an act of optimism. Holding through a sell-off is a function of conviction.

From a post at Yahoo Finance

August 5, 2014

New Research on Aging and Financial Decision Making

… as people age, they become more focused on maximizing positive emotions and social interactions—and more determined to block out negative experiences. This process, which experts call socioemotional selectivity, leads older people—including the affluent—to pay more attention to those who make them feel content and comfortable. At the same time, they are more likely to neglect warning signs that might have been obvious at a younger age.

From the always thoughtful Jason Zweig in the WSJ on new research into older adults and finances.

July 11, 2014

Someone Who Has Thought Through His Priorities

And as a result, he has attained a degree of financial freedom many would envy.

Doug Immel recently completed his custom-built dream home, sparing no expense on details like cherry-wood floors, cathedral ceilings and stained-glass windows — in just 164 square feet of living space including a loft.

The 57-year-old schoolteacher’s tiny house near Providence, Rhode Island, cost $28,000 — a seventh of the median price of single-family residences in his state.

“I wanted to have an edge against career vagaries,” said Immel, a former real estate appraiser. A dwelling with minimal financial burden “gives you a little attitude.” He invests the money he would have spent on a mortgage and related costs in a mutual fund, halving his retirement horizon to 10 years and maybe even as soon as three. “I am infinitely happier.”


Not many people would be comfortable living in 200 sft.  But I wonder how many would have a happier life trading that unused 3rd, 4th or 5th bedroom for a greater degree of financial freedom.

June 25, 2014

Cable Boxes Consume The Electrical Output of Four Nuclear Reactors



According to the LA Times. cable boxes are the second largest household consumers of electricity, only exceeded by air conditioners. Up to 500 watts of electricity per device, even when they are supposedly turned off. Bet you didn’t know that.

In the middle of the night, when most Americans are sound asleep, their lights and appliances off, a power hog is wide awake and running at nearly full throttle: the boxes that operate their cable or satellite television service.

The seemingly innocuous appliances — all 224 million of them across the nation — together consume as much electricity as produced by four giant nuclear reactors, running around the clock. They have become the biggest single energy user in many homes, apart from air conditioning.

During a call to my local provider Comcast, the customer service rep told me there was no one at Comcast who could answer how much electricity was used by each of the boxes the company rents to me. I would have to ask my electricity company. But oh, yes indeed, the boxes never turn off so long as they are plugged in. “They are just like a desktop PC, or an alarm clock,” she added.  Well, no not exactly according to the Times story, more like a washing machine that is running 24 hours a day.

Apparently there is a relatively inexpensive fix that the cable companies could provide, the same ones installed in the aforementioned PCs, in smart phones and other energy efficient electronic equipment. If only there was consumer demand. Consumer demand would, of course, require consumer knowledge, which so far has been in short supply.  Here’s hoping the media pick up on this.

May 23, 2014

What Happens When One Spouse Wants To Retire, The Other Doesn’t?

This is becoming a common challenge as boomers age and spouses find they have different trajectories imagined for their later years.  A client forwards this excellent discussion of the issues that arise from the NY Times. A short list:

  • Different daily schedules
  • Different abilities to travel
  • Different priorities around discretionary spending
  • Whose money is it when only one is still earning?
  • The “leap” when starting to dip into retirement assets can be a bit scary.

These are only some of the challenges and many couple do not even have the basic conversation about how they are going to cope. The situation can be unexpectedly stressful on a marriage. For anyone in, or considering, an extended period where one spouse has left work but the other has not, I strongly recommend the Times article. And making time to discuss and negotiate how to accommodate each person’s wishes.

January 31, 2014

Q: I am 54 with $1M. How long will my money last?

Martin's Answer:

The standard advice is that you can draw between 3-5% per year from an invested portfolio and have that portfolio last 30 years.  There is much debate over what is a “safe” sustainable withdrawal rate but most studies conclude that a 4% draw will survive whatever the markets throw at you over a 30 year period.  In your case that would mean $40K a year, increased annually only by inflation.

There are multiple calculators (search “How long will my money last”) that will give you a straight line estimate for different withdrawal rates.  These are helpful guides but are far from definitive.  The reality is that an investment portfolio of any sort will increase and decrease in value and these unpredictable fluctuations can have a dramatic impact on how long your money will actually last.  The more aggressive the investment portfolio, the more volatile your range of outcomes.  More upside to how long the money lasts, but also more downside.  Generally this is why individuals who are relying on a portfolio to support their current ongoing needs are best advised to invest in a low risk portfolio, one that minimizes the risks of major loss while protecting their savings against purchasing power erosion from inflation. This conservative approach may seem counter-intuitive to some who believe that taking more risk will allow them to earn more and thus take a higher annual % withdrawal.  When withdrawal rates are north of 5%, this is a temptation but it is in effect gambling with the odds against you.

Most people want to know whether their savings will last for their lifetimes because it is not much good if they spend money to last 30 years but they last 35.  To answer this broader question with any confidence requires two pieces of information:  How much you are routinely spending in total out savings and how long you will live.

As for how long you might live, we can only assume “the worst” and that is that you will outlive your expected median life expectancy of 84. Most with educations and some financial means in the US will.  Realistically that implies you will have expenses to support for perhaps 35 years from today.  Some of your present expenses may decrease in time.  Medical for example should decline when you are eligible for Medicare.  And you most likely will receive Social Security benefits at age 67 or after thus reducing the required draw from your assets. But other expenses may increase.

The best approach in my estimation is to have a rough plan for what the future holds financially for you and for this you may want to enlist the advice of a CFP in your area.

Originally posted on Nerdwallet

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