A roundup of my favorite financial articles from October 2016:
- “Their Up is My Down” by Ms. Montana at Montana Money Adventures
Features of the dominant culture in the United States include materialism, instant gratification, conspicuous consumption, and a mountain of debt to finance it all. Financial choices that support this culture are applauded and celebrated while wise financial choices go unnoticed. My favorite quote from the article is “All of our best money choices are hidden. We can be making huge gains behind the scenes and our friends might never know.” To succeed financially you need to have the courage to go against the dominate culture. This is not an easy path to take, but the rewards are worth it.
- “A Bunch of Things I Did to Get Out of Debt” by Joshua Fields at The Minimalists
There is a lot of wisdom in this short article. The author talks about the things he gave up to get out of debt, but also includes the things he did to replace what he gave up. My favorite quote is “You see, I didn’t simply go without – I replaced expenses with alternatives, which made my momentary forfeiture feel like less of a sacrifice.” Going against the popular culture doesn’t have to be all sacrifice. It often forces us to creatively find free or cheaper alternatives to what we were in the habit of doing that are just as enjoyable.
- “The Golden Mean of Money” by Chad Carson at Coach Carson
The author argues that most of us make one of two mistakes when it comes to money. “You either give it too much importance or too little.” We all know people who fit into one of these two extremes and the results are not pretty. The author applies the ancient Greek philosophy of “the golden mean” to this money conundrum. This is an interesting way to think about money and the article provides some great food for thought as we try to maintain a delicate balance between the two money extremes.
- “How to Build a Paycheck from Your Investments” by Fritz at The Retirement Manifesto
Many of us spend a lifetime saving and investing for retirement and when the time finally comes we don’t have any idea how to turn our retirement savings into a regular paycheck to replace the one we used to get from our employer. This article does a fantastic job of explaining “the bucket strategy” for doing this, which is a strategy embraced by many financial professionals and one I plan on using myself when the time comes. The article includes a link to a spreadsheet you can download to help you implement your very own bucket strategy.
- “The Professor Who Was Right About Index Funds All Along” by Charles Stein at Bloomberg Business
Regular readers know that I am a big proponent of index funds as the best way for most people to invest. One of the first people to recognize this, long before actual index funds even existed, was Princeton professor Burton Malkiel, who wrote about the concept in the first edition of his book A Random Walk Down Wall Street in 1973. Although the idea was initially ridiculed Malkiel stuck to his guns. Now, over forty years later, most financial professionals admit he was right. This is an interesting article about Malkiel and the history of index funds.
- “5 Billionaires Who Grew Up Poor” by Sabah Karimi at Go Banking Rates
Is it still possible to grow up poor and become incredibly, unbelievably rich? This article provides short biographies of 5 people who did just that. Interesting and inspiring.
- “Is This Spending Aligned With My Values?” by Carl Richards at the New York Times
Making wise financial choices doesn’t necessarily mean not spending money, but it does mean not spending money mindlessly. If you have the money, and the purchase you are considering aligns with your values, it might very well be a wise choice to spend the money. That is the argument made by Carl Richards, one of my favorite financial authors, in this article.
- “The Retirement Blunder that 65% of Americans Make, and How to Avoid It” by Paul Katzeff at Investor’s Business Daily
A picture is worth a thousand words and my favorite part about this article is a graph that is worth at least that many. Are you saving enough for retirement? How do you know? The graph in this article can help answer that question. It was a little hard to understand at first, but once I “got it” I was amazed by how much useful information was contained in this one great graph. First, find your income on the bottom axis of the graph. Then, find the color that corresponds to your current age. Finally, follow the bar graph representing your income and age to the left to obtain the multiple of your current income you should have saved for retirement to be on track. If you are on track, congratulations!. If not, it is time to figure out how to step up your game.
- “Trump’s 1995 Return Shows Good Tax Policy at Work” by Megan McArdle at Bloomberg View
Presidential candidate Donald Trump’s 1995 tax return was leaked to the press in October showing that he took an almost billion dollar loss that year. Press reporting on this has been filled with bias and false outrage, but precious little analysis of the actual law that allows this and whether it is good public policy or not. This article is one notable exception. I realize it is much easier to parrot partisan arguments than take the time to understand the actual tax law, but for those interested in an unbiased analysis this is a great article.
- “The No-Brainer Economic Platform” by NPR Radio “Planet Money” Podcast
This podcast was originally aired during the 2012 presidential campaign but not much has changed in the interim. Indeed, it is just as relevant today as it was then. The Planet Money team assembled a panel of economists from across the political spectrum and had them come up with several economic ideas they could all agree would be good for the nation’s economy. All the ideas are unpopular with voters, and therefore rejected by the presidential candidates of the major parties. Interestingly, five of the six proposed policies are supported by Gary Johnson, the Libertarian Party candidate, who is currently polling at about 5 percent. Great listening as you prepare to vote early next week.