Technology has made incredible strides in the last 25 years, and it will only continue to improve as the digital age advances. The launch of the Internet changed the way we function in society. It has allowed us to stay connected, informed, and involved with just one click. The internet has also provided effortless ways to shop, travel, and manage finances. However, with increased benefits and conveniences comes increased risks. The Internet requires us to remain aware and cautious of these risks. Cyber criminals target older Americans via phishing emails and non-secure website transactions through a facade of charitable donations, health care coverage, dating services, and much more. So, why are seniors easy targets and how can they stay cybersafe?
In one of our recent blog posts, “Are We Rich?” Raising Financially Responsible Kids, Kate Slocum wrote about the ways parents can help teach kids about money. Ultimately, the lessons she laid out can end up being the most important financial behaviors a parent can share with their child in terms of building a healthy and successful relationship with money. However, like with anything we try to teach our kids, those lessons will take time and effort before sinking in.
And while that’s absolutely the right approach, we think parents also deserve a short cut from time to time. So let’s skip the lessons (just this once of course) and talk about giving your kids a head start towards earning their first $1 million dollars. It's the "yes a balanced diet is important kids...but it's 8pm on a school night so we're making this easy and grabbing McDonald's" kind of effort everyone in the family can appreciate.
We can’t help but contemplate unlikely events, both good and bad. When you buy a lottery ticket, you know you will almost certainly not win, but you enjoy the minute-long fantasy of what you would do if you did win. The Tigers could get something going this season and win the World Series, says a hopeful sports analyst on the radio. The medical website shows that your symptoms indicate seasonal allergies, but it could be the rare disease that killed a man last year. There are many books in the world of investing, but many of the bestsellers are about the huge losses that most people thought were impossible. We call these unlikely scenarios extreme tail events or black swans.
During an episode of Comedians in Cars Getting Coffee, Jerry Seinfeld discusses with fellow comedian Kevin Hart the moment when one of his kids realized he was famous. The child was in second grade and came home from school and said “Dad, everyone knows who you are!” That statement apparently was followed with the question, “Are we rich?” In typical Seinfeldism, Jerry answered, “I am. You are not.”
In June of 1812 and the height of French military power, Napoléon Bonaparte crossed the border at the Niemen River and launched an ill-fated invasion into Russia. Commanding an army of 680,000 French soldiers and conscripts, Napoléon by some estimates started with the largest and most powerful military force ever assembled. Ironically, at the start of his campaign Napoléon had no real intention of marching on Moscow. A few quick battles, near the border and it would be over. As every schoolchild now knows, things didn’t quite work out according to plan.
So how did the Tsar’s peasant army manage to neutralize a force whose power vastly exceeded its own? As the war stretched on, it turns out the Russians had two enormous structural advantages: the French supply lines became overstretched with each advancing step towards Moscow, and the bitter cold of the Russian winter turned lethal for a French army that was unprepared. The fatal flaw in Napoléon’s campaign strategy was not that he picked the wrong battles, it was he deployed his forces against one foe when in reality there were three.
When it comes to sustaining a successful investment planning campaign, the challenge of recognizing the threats hiding in plain sight are remarkably parallel to those that confronted Napoléon. Ultimately, every investor needs to understand there are three disguised threats to their financial security and devise a plan that confronts all three simultaneously.
Leo Tolstoy’s “How Much Land Does a Man Need?” is a tale about a peasant named Pahom who’s only grief is “too little land” and claims, “If I had plenty of land, I’d fear no one—not the devil himself!” In true folkloric tradition, the devil overhears Pahom and decides to send him down a path of desire and temptation.
Presented with the prospect of being granted ownership (for a very small fee) of as much land as he can encircle on foot in one day, Pahom is overjoyed and readily agrees. However, like much in life, there is one important caveat: If he does not return to his starting point by sundown, his money is forfeited and he gets no land at all. After a restless night, Pahom sets off at sunrise and quickly becomes enamored by all the fertile land he sees.
The tale walks the line between the admirable characteristic of ambition and the destructive nature of greed. And while Tolstoy acknowledges hard work and discipline as catalysts for human development, he warns that it's also the space where unchecked ambition can turn to excess at best, and greed at worst.
Have you heard about the ivory tower academics who unilaterally made a huge decision affecting billions of dollars last year? To make matters worse, if investors fall into the trap of trading like automatons, this will trigger untold millions in taxable gains in the process!!! I presume you hadn't heard about this investment earthquake, but I bet I have your attention now.
Looking to enhance your retirement savings beyond maxing out contributions to your employer provided retirement account? Hidden deep within your 401(k) plan rules, may be an opportunity to take advantage of one of the best strategies to come along in years. It’s been dubbed the "Mega Backdoor Roth," and with a name like that, it has to be good, right?
Despite what we are sometimes led to believe, building wealth is rarely a rapid, flashy process. It doesn’t require luck, exceptional intellectual power or a network of elite connections. In fact, the truth behind how to build wealth can be explained in just one sentence – Spend less than you make and invest the difference wisely. The simplicity of that statement is likely quite disappointing. Unfortunately, there just aren’t any tricks or secrets that are going to produce overnight breakthrough results. Accumulating wealth is most often a slow, steady process that takes years. After decades of experience working as an investment advisor with people from different backgrounds, income levels and life stages, I can tell you that this pattern is not only evident, it is unmistakable.
In the next 7 days roughly 70,000 baby boomers will reach full retirement age. A similar number will cross that threshold next week…and the week after that, and the week after that, and pretty much every single week until the year 2032. For those of you doing the math at home, it works out to 3.64 million people reaching full retirement age in each of the next 14 years. What’s more, each year the life expectancy for those of us who do reach full retirement age inches out further and further. Longevity is a force multiplier that has material consequences every working American must take into account when contemplating their own income replacement number.