January 7, 2014
Investment Focus: Follow 5 Simple Rules
Vanguard Group Inc. founder John Bogle’s views about investing, not surprisingly, promote the indexed mutual funds that Vanguard offers. But his views have solid support in the academic literature.
Here’s our translation of his five simple rules for investment success – sound advice for readers who want to work on their 401(k) portfolios:
- Remember reversion to the mean. If a company’s stock or the overall market has had unusually strong performance, it’s unlikely to continue at that pace.
- Forget the needle and buy the haystack. Invest in broadly diversified funds, such as index funds that track the market – not in individual company stocks or the money managers who try to find the best ones. …Learn More
January 2, 2014
Resolve Amid the Financial Adversity
More than 60 percent of Americans who participate in their 401(k) retirement plans at work are adding more dollars to their debts than they’re socking away in those plans, according to HelloWallet’s analysis of recent federal data.
This shocking statistic suggests the need for some serious financial planning. Yet the vast majority of people in a recent survey said making a financial plan would not be among their 2014 resolutions.
Why not? Many said they “don’t make enough money to worry about” a financial plan, according to Allianz Life Insurance Company, which conducts the survey.
Okay. But if you feel unable or unwilling to write up a full-blown plan, perhaps you’ll consider one small step: …Learn More
December 17, 2013
Spouses and Their Money: Getting in Sync
Money matters can get complicated for couples who may not see eye to eye. In a recent interview with Squared Away, Kathleen Burns Kingsbury, author of the new book, “How to Give Financial Advice to Couples,” shared her tips and insights for couples trying to meet in the middle.
Q: In a relationship, is money about more than just money?
Kingsbury: Money is often a reflection of our feelings about security, respect, love, power – it really symbolizes these things, whether we’re aware of it or not. So how a couple talks about money and manages their money is a reflection of how they relate to each other in other areas as well.
Q: Explain “money beliefs”?
Kingsbury: A money belief is a thought or attitude toward money that influences your savings, spending, investing and gifting every day. These beliefs tend to reside in our unconscious thought. Because we live in a society where money talk is taboo, we often don’t identify these attitudes. But money beliefs are formed between the ages of 5 and 15 by observing the financial behavior and attitudes of parents or people around us. And these money beliefs tend to be oversimplified, because they were formed in a child’s mind.
Q: Why is it important for husbands and wives to compare their beliefs?
Kingsbury: When couples are arguing about money, they may be arguing about which bills to pay or how to pay for a daughter’s college. But what’s really going on is they’re hitting up against their different money beliefs.
A: What’s an example? …Learn More
December 12, 2013
Navigating the Gift Card Thicket
Too many financial products are far too complex. The pre-loaded cards that people give as gifts during the holidays are a multi-billion-dollar example.
When buying these cards, it’s very hard to know what you’re getting and giving. The big things to watch out for are expiration dates and fees. This isn’t easy.
The federal CARD Act of 2009 covers cards issued by retailers for purchases in their stores and cards issued by banks for use in many places. The law bars these gift cards from expiring for five years after their purchase. They must also maintain their full value for a year. But after the first year, the CARD Act permits one fee per month, and a $5 monthly fee can chew up a $25 gift card’s value pretty fast.
It’s difficult to tell the difference between gift cards and prepaid cards, like Wal-Mart’s Bluebird or the RushCard, sold side by side on grocery store racks. But prepaid cards are not regulated at all by federal consumer protection law, while retail and bank cards are, said Christina Tetreault, an attorney for Consumers Union, the non-profit affiliated with Consumer Reports.
State regulations often offer further consumer protections – and add a layer of complexity for consumers. A card that works one way in a state with strong regulations, such as California, may have few protections if you mail it to a relative in Texas.
The following is just a sample of the intricacies of state regulations. …Learn More
December 3, 2013
Estate Planning 101: Who Knew?
Boston trust attorney Michael Puzo has seen it time and again: people procrastinate about writing a will or putting their estate in order.
“It forces them to face their mortality, and they don’t want to,” he said.
Even those with modest assets – a house, a 401k, and maybe a life insurance policy – should carefully make an estate plan. But are the nuts and bolts of wills and estate planning widely understood?
This question loomed as Puzo translated these legal complexities in a way anyone could grasp during his presentation to employees of Boston College, where Squared Away is based. For readers who may not know where to start, here are 10 fundamentals gleaned from his talk:
A good estate plan achieves four goals:
- Distributes one’s assets to the desired person or people.
- Ensures beneficiaries receive the money when you want them to.
- Makes appropriate bequests either directly or indirectly through a trust, rather than a will.
- Minimizes taxes.
When thinking about a will, get out a blank sheet of paper and write down everything of value that you own, whether it’s a checking account, the house, a wedding ring, or life insurance policy – and who you want to receive each of them.
Many people may be surprised to learn they “have more money than they think they have,” Puzo said.
The difference between probate and non-probate property is critical: …Learn More
November 21, 2013
CFPB Guidance for Financial Consumers
The Consumer Financial Protection Bureau is kicking into gear to help consumers safely navigate the increasingly complex world of financial products.
The federal agency in recent weeks has released information for homebuyers and for seniors seeking financial advisers. It also accepts complaints about a growing list of financial products.
Homebuyers Seeking Help:
Individuals can search CFPB’s website for experienced home-buying counselors, by state. These counselors are approved by the U.S. Department of Housing and Urban Development.
To find a counselor, click here.
Seniors Seeking Financial Advisers: To help protect older Americans from poor financial advice, CFPB has created a handy guide to help them find a trustworthy adviser. The guidance includes the right questions to ask and the importance of proper certification. …Learn More
November 19, 2013
Housing Market Adds to Seniors’ Equity
The equity in older Americans’ homes has risen smartly over the past year, fueled by the housing market rebound. But whether retirees will tap these gains to pay their bills remains in doubt.
Equity values for homeowners who are 62 or older was $3.34 trillion in the second quarter of this year – nearly 10 percent above its $3.05 trillion value a year earlier – according to new data released by the National Reverse Mortgage Lenders Association (NRMLA), a trade organization.
Rising house prices are restoring equity even in places like Florida devastated by the housing market bust. Seniors’ home equity has surged 14 percent there over the past year, to $241 billion in the second quarter of 2013, though it remains far below the levels reached during the bubble.
The equity gains are not being propelled by homeowners paying off their home loans. U.S. seniors owed $1.07 trillion on their mortgages in the second quarter, compared with $1.09 trillion a year earlier, the trade organization said.
The housing market rebound is a reminder that equity is the largest single asset that older Americans hold – it’s worth more than their savings in their 401(k)s and IRAs. But the question remains: does this help them? …Learn More