I make $6.50 an hour. Am I poor? by Karen Datko:
I am no longer proud.
Pride should not be tied to how much money you have. It is, often, but it shouldn’t be. If you act foolishly or you waste money or you act irresponsibly being ashamed is possibly reasonable. When you have extra money, you can waste some and not feel ashamed because you have some to waste. But when you are doing your best you should be proud no matter how much money you have. Buying more pairs of shoes, or fancy coffee or a new video game or the full cable TV package… is not what you should take pride in.
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In an instant, retirement savings vanish by Bob Sullivan:
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Few consumers appreciate the fact that, unlike credit card and checking account transactions, there are no federal consumer regulations specifically protecting consumers in the event of brokerage account hacking
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Both credit card transactions and electronic account transfers, such as online banking payments, are governed by Federal Reserve regulations that strictly limit consumers’ losses from theft. Consumers who report credit card fraud are only liable for $50
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Despite the lack of legal compulsion, some investment firms have taken to offering broad consumer protections anyway. Both e-trade and Charles Schwab offer credit-card style guarantees. Money stolen from Charles Schwab’s Web site will be returned to consumers as long as the theft is reported in a timely way, said Schwab’s Greg Gable.
This risk is something the government should address. The risk is to the economy at large, as well as having extreme consequences for individual investors. We need to do as much as possible to encourage retirement savings. Not providing government backing (such as provided by FDIC…) is a mistake. The funding should be similar to that for FDIC where member banks are assessed fees to cover the costs of the program based on the risks seen in that institution.
FDIC has done a great job of creating an environment that gives individuals confidence in the system and encourages economic development. Securities Investor Protection Corporation is another possible model but for something so important to the economic security of the country (and individuals lives) direct government involvement makes sense to me.
How to make your kids millionaires by Walter Updegrave:
Your first goal: Encourage them to contribute enough to get the employer match, without worrying about sorting through all the investment options. Just have them stick the money in a target retirement fund (or if that’s not an option, a stock-index fund).
You can talk to them later about boosting their contribution and fine-tuning their strategy.
Related: Saving for Retirement – Start Young with 401k and Roth IRA – what is a 401k? – articles on investing for retirement
Rentometer is a cool interactive web site that maps rental prices near your rental (either as a renter or an investor). The site is new and expanding so the features are a bit limited now but still it is worthwhile and the new features will really make it great (active rental listings…).
Related: Real Estate Investing Articles
Google to Let Workers Sell Options Online:
A good idea that reduces friction in the marketplace. Options are transferable, the problem with employee granted options is there is no reasonable marketplace to exchange the options for cash (the friction is very high). Google’s engineers focus on reducing friction in many processes. Many others just accept that the level of friction is inevitable. Google realizes it is not. More on Google Management.
Putting away some money is vital, even if you are young and in debt by John Waggoner:
Starting small – If you don’t have a 401(k) available, at least open a Roth IRA. You contribute after-tax money to a Roth, but you pay no taxes on your withdrawals at retirement.
More on Roth IRA’s.
Retirement planning has some pretty straight forward aspects and some difficult to predict aspects. If you don’t save substantial amounts of money over a long period of time there is little hope for a good retirement nest egg (outside of things like winning the lottery or living off an inheritance). So consistent savings over a long period is normally a requirement. You can get decent estimates like saving 8% of your income from age 30 to age 65 (in a 401k, Roth IRA…) but how you investments perform during that period will have a large impact on your success (as will how much risk you want in retirement, the state of health care at that time, inflation, tax rates, your health insurance…).
This is a good article discussing some options as you close in on retirement and the financial picture become clearer: Two More Years for a Better Retirement. From Fidelity: Survey: One-Third of Americans Delaying Retirement.
One alternative to delaying retirement is to start saving more earlier but the overall data shows few are taking that option.
I do not believe we will have a huge decline in most housing markets see: Housing and the Economy. Still the article below is packed with great information. Definitely worth reading. Other related posts: 30 Year Fixed Rate Mortgage Rates – Europe and USA Housing Price Boom – How Not to Convert Equity – Beginning of the End of Housing Bubble?
The Coming Collapse in Housing November 17, 2006
by John Mauldin
I am convinced that the housing bubble is gigantic and will burst before long with massive implications here and abroad. In fact, it’s the key to the global economic outlook.
Setting the Scene
House prices in recent years have leaped well beyond their normal relationships to the CPI.
Even when the increasing size of houses–the McMansion effect–is excluded, inflation-adjusted house prices have jumped as never before in over a century.
The booms in Spanish and Irish real estate make the US real estate boom look timid
Cotis from the OECD has acknowledged that several big countries are at risk of a housing downturn: with the USA, France and the UK topping the list. But, given the extreme dependence of both Spain and Ireland on housing, both countries are even more exposed to a sharp correction.
Standard & Poors is placing Google in the S&P 100. Google is close to $500 a share today. Here are our thoughts before Google was added to the S&P 500:
The price of a share of Google stock rose 5.7% to $255.45 today. The stand “explanation” “reported” by the media is along the lines of this quote from CNN:
I don’t understand how these types of “explanations” are accepted by the media and their customers. If some investor really was surprised that Google was going to be added to the S&P 500 they shouldn’t be investing in the market, they should just buy an index fund and leave well enough alone.
If CNN (and the others [MarketWatch Potential index inclusion drives GOOG"], Reuters (via CNBC)… reporting the same story) really believes the increase of 5.7% is due to a rumor that Google could be added to the S&P 500 I don’t know what to think of the other reporting they do. Even when much smaller companies are actually announced as new additions to the S&P 500 and that company’s addition really was questionable (for say anytime in the next year or two) they don’t go up 5% in price. But, if CNN doesn’t believe it, wouldn’t that be worse? It just seems financial reporting is more concerned with finding some explanation even if that explanation lacks almost any merit.
SmartMoney’s “explanation” was much better: “Google (GOOG) shares shot up nearly 6% to the latest all-time high with nary a provocation.” But if you don’t know anything about investing this seems like SmartMoney don’t know what the others are reporting. I don’t know whether SmartMoney actually made a good editorial decision or they just wanted to vary the language a bit. Read more