David John Marotta and Megan Russell co-author a syndicated financial column featured in several newspapers across the country.
A U.S. Public Interest Research Group report in 2004 found that one in four credit reports have serious errors that could significantly lower your chances of being approved.
Laws have always regulated who may marry, the obligations related to marriage and children and whether and how a marriage can be ended. Governments have always put their own social agenda above the pluralism of personal choice.
A gone-fishing portfolio has a limited number of investments with a balanced asset allocation that should do well with dampened volatility. Its primary appeal is simplicity. As a secondary virtue, it avoids the worst mistakes of the financial services industry.
Think of static asset allocation as where to set your sails and dynamic asset allocation as a way to keep your balance as your boat glides and sometimes bounces through the waves.
What we would really like to measure are the changes in price (P) that cause a company with a good long-term track record to look relatively cheap. Economist Robert Shiller created just such a measurement.
The Marotta allocation method is a proportionally weighted allocation based on the square of each Sharpe ratio. Squaring the Sharpe ratio drastically reduces asset categories in proportion to their distance from the efficient frontier.
Crafting portfolio asset allocations is a combination of art and engineering. Just as a blending of colors can produce cerulean, so a blending of indexes produces a unique shade of risk and return.
The efficient frontier measures all investments on a scale of risk and return. Risk is commonly placed on the x-axis, and return is placed on the y-axis.
A stock’s valuation is measured on a continuum from “value” to “growth” In broad strokes, value stocks are cheap and growth stocks are expensive.
The second factor of investing is size as measured by a stock’s total capitalization. Over time small cap will outperform large cap even after factoring out measurements of volatility.
Modeling investment returns seeks to find an equation to predict your expected returns as much as possible. The simplest equation for the markets would be “Return equals 11.71%.” This has been the average return from 1927 through 2010, the zero factor model.
Social Security benefits can represent a big stack of cash. A typical monthly benefit of $2,200 has a present value well over $500,000. Consider all your Social Security options carefully to avoid making a costly mistake.
Nearly everyone is an excellent candidate for a Roth conversion this year. You can always undo part or all of a Roth conversion with what’s called a recharacterization, so you can’t convert too much.
Nearly everyone is an excellent candidate for executing a Roth conversion this year. But it is helpful to have a target amount in mind before you begin.
You may be a good candidate for a Roth conversion in 2012 if you can answer “yes” to any of these statements.
A tax tsunami is coming at the end of this year. This will be your last opportunity to safeguard your assets in a lifeboat and avoid getting swamped with taxes.
Now at year end, I will review how freedom investing fared in 2011 and in the decade since 2002.
Lots of articles steer you to the best credit card by categories–one if you want airline miles, another if you need to transfer a balance. This is not one of those articles. The millionaire mindset does not want airline miles and doesn’t carry a balance.
The world markets groaned as the burden of the rising American debt and the European deficit weighed down more productive countries.
For a small business, marketing and advertising seeks an answer to the question “How will prospective customers find me?” Most small businesses would benefit from enhancing their website presence by blogging and social media connections.
Computing your net worth annually is like taking a sextant reading to chart your course toward financial security. Net worth gives you a snapshot of how much money would be left if you converted everything you owned into cash and paid off all your debts.
Most investors do not have a balanced portfolio. And by chasing investment returns they miss the easy money they could make from having a good asset allocation in the first place and rebalancing it periodically.
Financial resolutions usually don’t even last until the end of January. Making a permanent change in our behavior requires both time and a steely resolve. We can only develop financial character one action at a time. Here are seven practices to take you from pauper to prince or princess if you add one each year.
Other than Ebenezer Scrooge in Dickens’s story “A Christmas Carol,” Tiny Tim is certainly the most memorable character. Dickens used the boy in the story to soften the hearts of both Scrooge and his readers toward the worthy poor.
To interest me, a game must have a simple but thought-provoking premise that allows for deep strategy. I’d never played Farmville but decided to recently because the parent company, Zynga, is going public this Thursday, December 15, 2011.
True life planning begins when you realize you are unique. There will never be another you in the history of the universe. Your calling is yours alone. Understanding yourself is the first step in managing your financial affairs to support your life plan.
In the midst of this turmoil, especially after this past summer’s sharp drop, many investors wonder if they should put all of their investments into something safe and avoid the markets altogether.
My original attraction to libertarian ideals started in political theory and theology rather than in politics. This is not surprising because I did both part of my undergraduate work and three years of my postgraduate work in philosophy and biblical studies.
Our daily articles this month at MarottaOnMoney.com are focusing on the ideas of libertarian politics. Last week I listed the first three reasons why I lean libertarian. Here are four more reasons I lean libertarian.
My youthful utopian idealism gave way slowly to my present midlife perspective. My life’s philosophical and experiential odyssey overturned many of my presuppositions. I learned over time that many of society’s assumptions are provably false. But it took courage to integrate this radical reevaluation of life.
Just because something costs a lot doesn’t mean it is an investment. An investment is something that pays you money.
Starting October 1, price controls were set by law on debit card swipe fees. Such populist well-intentioned legislation reduces economic freedom and slows economic growth.
What makes Catan particularly interesting is that just producing the most resources is not sufficient to win the game. Knowing what mix of resources you need to meet your objectives is critical.
This summer many things that should do better over a long-term investment strategy did not. This situation is not unusual for one quarter’s worth of time. Such a result only makes reversion to the mean much more likely in the coming quarters.
I love strategy games. Many people dismiss games as a waste of time. But at their best they teach principles of cause and effect that we can use as paradigms for real life.
Most of us rationalize why we can’t get our finances together right now. Many Americans prolong these excuses during their entire working careers. Here are three lies you must stop telling yourself in order to build a solid financial foundation.
CNBC’s million-dollar portfolio challenge begins next week. Participants can trade a fictional account of stocks and currency. Prizes are given over each of the 10 weeks, and then a grand prize winner is awarded a million.
Libertarians and economists both recognize that countries with more economic freedom experience higher gross domestic product (GDP) growth. That growth translates into higher stock returns for investors savvy enough to look for governmental fiscal restraint rather than government stimulus.
If you look at Social Security as a system of taxation and redistribution, it takes from a single minority male worker and gives to married white women who never contributed. And if you look at Social Security as a forced retirement savings program, it produces such a terrible return we might as well invest in gold. Neither perspective is worth continuing. Social Security as we know it needs to be abolished.
Social Security has been called the third rail of politics. Good thing I’m not a politician. Someone has to make the tough decisions.
I recently read two articles that provided insight on how investors should respond to a market downturn.
Calling this a “Tea Party downgrade” might be true in one sense. There weren’t enough members of the Tea Party to overcome the stubbornness of those refusing to make real spending cuts.
Last year people who took our advice saved literally thousands of dollars on their Virginia taxes. A dollar saved on your taxes is more valuable than a taxable dollar earned in income.
Our country’s debt and deficit is difficult to understand in the abstract. Translating it to the numbers on each taxpayer’s credit card can help us see how our country’s spendthrift ways have debilitated economic productivity.
The Obama administration has been claiming that failure to raise the debt ceiling would be the end of the world. We are all tired of failed apocalyptic predictions. Perhaps all that will end is politics as usual.
Adding bonds to an all-stock portfolio can boost returns and lower volatility, especially in choppy markets. Bonds should be a small but important part of your gone-fishing portfolio allocation.
Hard assets have been one of the most significant asset classes over the last decade. From all indications, it will continue to be a critically important investment category to protect your portfolio from the effects of inflation and the continuing devaluation of the U.S. dollar.
Last month the Obama administration announced it would release 30 million barrels of oil, the largest ever, from the U.S. Strategic Petroleum Reserve. Only those without an understanding of basic economics would applaud such a move.
Even in our gone-fishing portfolios we suggest investing more overseas than in the United States. For most investors, foreign stocks will be their largest and most important allocation. Including the right mix of foreign stocks will help you relax and go fishing no matter which foreign seas are in turmoil.
Creating a gone-fishing portfolio begins with a top-level asset allocation. We use six asset categories. The three for stability are short money (maturing in less than two years), U.S. bonds and foreign bonds. The three asset categories we use for appreciation are U.S. stocks, foreign stocks and hard asset stocks.