I advocate investing in low-cost index funds as opposed to trying to find actively managed funds that outperform the market. Many studies have shown that, over time, this will almost surely give you the best results. So how did this method work in 2014? The January/February issue of Money Magazine had some interesting statistics. The…
One of the most important financial decisions you will make is how to invest the money you are putting in your 401(k). Target date funds are the default option for most retirement plans, but in a prior post I showed that target date funds aren’t the best option for most people. If target date funds…
Stock markets have had a rough couple of weeks to start the New Year. They recovered a bit Friday but they are still down considerably since January 1. Although the year is young the Dow has already suffered several triple-digit losses, sometimes on consecutive days. When this happens people become restless and wonder what they…
William of Occam was a Franciscan friar, theologian, and philosopher who lived in England from 1287 to 1347. He is known to us today mostly from the problem solving principle he formulated known as Occam’s razor. Although he never said it this clearly Occam’s razor can be summarized as follows: The best solution to a problem…
“If you choose not to decide, you still have made a choice.” –Progressive rock band Rush in the song “Freewill” The Economist Magazine reports that a study was done at an upscale California supermarket. A table was set up in the supermarket with a choice of 24 gourmet jams that shoppers could sample. Shoppers who…
“The great paradox of this remarkable age is that the more complex the world around us becomes, the more simplicity we must seek in order to realize our financial goals. Never underrate either the majesty of simplicity or its proven effectiveness as a long-term strategy for productive investing. Simplicity, indeed, is the master key to…
The other day I saw a cartoon of a turkey jogging on a treadmill. Hanging on the wall behind the turkey was a calendar turned to the month of November with a Thursday late in the month circled in red. By getting fit the turkey was hoping to make himself unfit for Thanksgiving dinner. The…
I grew up before computers, video games, the internet, i-Pods, i-Tunes, i-Phones, i-Pads, Facebook, and Twitter. Back then people had to entertain themselves and one way this was done was through sing-a-longs. When I was a kid many community and church gatherings had sing-a-longs and one song that was often sung was a silly old…
Understanding the importance of investment costs requires understanding the difference between a percentage point and the percent that something is to a whole. My wonderful wife Alice and I learned this lesson in an unforgettable way recently when dealing with something far more important than investing. In July Alice was diagnosed with breast cancer. It…
Some of you are probably familiar with the famous Marshmallow Test. In the 1960s psychologist Walter Mischel designed a simple experiment to test the self-control of preschoolers. Mischel would let the students pick from a variety of treats. He would then tell them they could eat the treat immediately, or they could wait until he…
