Young families with an eye to the future are faced with a daunting choice – to save earnestly for a secure retirement or to save for their children’s education. Can you do both? Certainly it is possible; however, with the cost of a college education and retirement (thanks to health care costs) rising faster than the rate of inflation, just...
After costs, the return on the average actively managed dollar will be less than the return on the average passively managed dollar for any time period. —William F. Sharpe, 1990 Nobel Laureate The efficient markets hypothesis implies that no active investor can consistently beat the market over long periods of time, except by chance. Yet active managers continue to test...
The saving versus paying off debt is an age-old quandary that has plagued people since the advent of consumer debt. Pose this question to a group of financial planners and the responses will be split, roughly down the middle. While there might be as many advocates for savings as there would be for paying down debt, the broad consensus will...
The current economic environment has caused most everyone to reconsider their personal finances with many people having to drastically change their spending and savings habits. Out of this economic malaise may come an opportunity to finally instill the right habits in your teens that can carry them into adulthood on the right financial footing. Just as our parents and grandparents...
This isn’t our parents’ or grandparents’ retirement anymore. Just a few decades ago, many retirees enjoyed the full benefits of the “three-legged stool” of retirement provide by guaranteed pension payments, savings, and Social Security. In addition, they didn’t have to be very concerned with how much of their income translated into actual purchasing power because, except for the mid to...
Who doesn’t like options? We love them when buying a car, and we expect them when ordering lunch off a fast-food menu. When buying life insurance, however, too many options can not only increase confusion, it can often lead to making the wrong choice, or worse, no choice at all. With life insurance, it’s not quite as simple as choosing...
One of the principal tenets of investing is that no one single investment is right for everyone. Every investment has certain characteristics, risks, and objectives that must match those of the investor, and fixed annuities are no different. Although fixed annuities have become more popular in light of the recent financial turmoil and the carnage it has left behind in...
If you have read any literature on retirement planning or have received advice from a financial professional, chances are you were presented with the 70% rule, the one that suggests that retirees will need between 70 and 80% of their pre-retirement income in order to maintain their standard of living. There are several flaws with this formula, the least of...
As anyone would have expected, the extraordinary convergence of extreme stock market volatility, low interest rates, declining home values, diminished retirement savings accounts, and chronic economic sluggishness has taken a severe toll on the American psyche. For many investors, it may have forever altered the way in which risk is perceived and managed. Understanding your risk tolerance is one of...
A will is the foundation of your estate plan and it is essential if your financial affairs are to be settled in accordance with your wishes. If you die without a will, or “intestate” as the law refers to it, essentially the state becomes your executor and your property will be distributed according to its laws. Drawing up a will...
If you listen to any of the world’s leading investors they will tell you that nothing is more important to long-term investment success than a clear investment philosophy. More important than a sound investment strategy? Yes, they will tell you, because strategy, while important, is nothing more than a manifestation of an investment philosophy. Strategy can evolve as circumstances might...
The decision to go forward with your plans to start a family is a joyous one, but it can also lead to increased stress especially if your financial house has not been child-proofed. Considering that, on average, the cost of raising a child now exceeds $300,000, there’s little margin for error for most young families that have other important financial...