Think of confidence as a continuum: Lack of confidence is paralyzing, self-confidence is good, but overconfidence is deadly. Successful investors seek to find a balance between rashness and timidity. Understanding the psychology that causes us to act overconfidently will help you avoid it.
The essence of successful financial planning is using your money to meet your life’s goals. Curiously our minds tend to fall prey to the fallacy that behavioral finance calls “mental accounting”.
Our first reaction to a complicated situation, usually instinctive, often does not serve our best interests. One heuristic that the brain uses to solve complex evaluations is to make an initial guess and then adjust from that point. This mental process is called “anchoring.”
You can both diversify for safety and boost your returns by adding international investments to your portfolio.
A year ago when the markets were all setting new highs, people were asking what they should do with their retirement portfolio. I answered, “Rebalance.” Now that the market is setting new lows, I get the same question, and my response hasn’t changed.
You can hedge your assets against underreported inflation and protect your retirement goals.
Inflation at this rate causes serious harm to our nation’s economy and its citizens.
Officially, inflation today is calculated about 4%. Unofficially, it is over 7%.
David Marotta discusses retirement and how to avoid several common pitfalls in planning for the last 30 years of your life.
Certain assumptions such as maximum safe withdrawal rate are critical in order not to compromise a long and successful retirement.
Eight exceptions to the age 59.5 rule allow for penalty-free withdrawals.
You can’t spend money apart from your lifestyle because that’s the definition of lifestyle.
Tax rebate stimulus checks are a cheap and inefficient gimmick.
How to structure your finances to love and respect your spouse.
The subprime mortgage meltdown has cost the world 15% of its market capitalization, about $9 trillion. The primary culprit who caused all of this financial loss, pain and suffering is not the mortgage companies.
Systemic problems in your portfolio will continue even after the markets rebound.
If the federal tax cuts expire, we will have to work an extra week for the government.
A $360,000 investment can remove over $2 million from their taxable estate, savings $900,706 in estate taxes.
It used to be that becoming a millionaire was regarded as a huge achievement. In today’s dollars, however, it is fairly trivial. The new rich is over $5 million.
Investors are fickle. Investing should not be. When your investments go down, even slightly, you may be tempted to make poor choices.
Gold may glitter, but it is still better to own the mine.
Avoid debt and don’t burden your family with any expenses after you are gone.
Historically, income taxes have not been this low since 1931.
Psychologists suggest we feel a loss about 2.5 times as much as an equivalent gain. Even with a brilliant investment plan, it takes diligence to overcome our emotional biases and avoid making investing mistakes.
The correct rate for the capital gains tax is zero, zip, nada. Perhaps it is even negative!
Here we offer some sound advice on how to put the money you’ve saved to work for you.
If you’re like most of today’s college graduates, you may find yourself ill prepared for the real world of financial responsibility. You never saw how your parents lived when they were first married and struggling. Consequently, you may be basing your after-school expectations on an upper-middle-class lifestyle. Here is my financial advice for those of you learning to live on your own.
Just over two years ago, we warned our readers that real estate prices might be peaking and ready to correct.
The markets are inherently volatile. Remain humble. Diversify. Avoid fear.
You owe it to yourself and your family to make certain you keep your financial New Year’s resolutions this year.
Scrooge’s riches did not make him happy. Fezziwig’s celebration did not make him poor.
Ebenezer Scrooge’s nephew Fred is the character young people most easily relate to. He is young himself, carefree, in love and enjoying life with his friends.
You can use both investment losses and investment gains to good tax advantage.
If you think hiding money under your mattress is a risk-free way of building wealth, think again.
Unlike Medicare Part B, a Medicare MSA account caps your liability.
In some cases you will have to pay the $135 deductible plus 20 percent of the remaining costs.
Excess contributions to your HSA can be withdrawn after age 65 without penalty just like a traditional IRA.
Use a 529 college savings account to save for college.
Only contributions made to charity before January 1, 2008 can be characterized as qualified charitable distributions.
Below the line deductions are uncertain. Like many items in the tax code the correct answer to “Will they reduce my taxes?” is: “It depends.”
As Glinda advises us, “It’s always best to start at the beginning,” and at the beginning of the tax return is determining your filing status.
Most Americans look backward and only hope that Uncle Sam will return some of what they have already paid, but those with wealth look ahead and adjust their affairs according to the tax code.
Last week we listed the ways university student are enticed into using credit cards. This week we will examine the economical impact of those initially small and convenient monthly payments.
Although 60% of college student’s pay off their balance each month, that leaves 40% who do not.
Marvel only gets 31% of its revenue from publishing comic books.
Sand can be used to further diversify your portfolio.
Even if you only use index funds, you should blend dozens of them in an asset allocation aimed at reducing risk and increasing returns.
A lesser-paying job may be better for your long-term career because of the skills you will gain.
On average, international stocks appreciate more than US stocks. What’s more, companies located in countries with the most economic freedom typically appreciate more than the broader international average.
Learning how billionaires amass their wealth may expand your financial horizons and possibly stimulate some ideas that could lead to your name being added in the future.