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What’s First with Your Next Dollar: Investing or Paying Off Debt

Today’s young professionals often begin their careers staring at a mountain of debt: student loans, car notes, credit card balances and not infrequently a mortgage. When constructing your personalized financial plan, a review of your debts and investment assets is the first step in answering the question: Should I use available income to pay down debt or should I invest it for the future? The an...

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Are You a Hole-in-One Investor or a Scratch Investor?

Here’s a quick tutorial for nongolfers; the rest of you skip to the next paragraph. The term “scratch” golfer refers to someone who shoots even par on average. A typical golf course has 18 holes. Each hole is either a par 3, par 4 or par 5. If a hole is a par 3, and you get the ball into the hole in three shots, you have made par and shot “even” on that hole. Most golf courses have a par...

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Countdown to Retirement

When you get to within five-to-ten years of when you expect to retire, the planning usually gets more serious. So far, you’ve probably thought about how much money to save every year, but now you need to think about lots of other issues that will guide you to a better estimate of how much you need to accumulate. What Are You Retiring To? What is it that you want to do? Have time to read? Work ou...

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The Fear of Offending

We often let things go, even to our detriment, to avoid offending someone. This fear of offending can keep you in a bad relationship, keep you from making progress in your career or keep you from making sound financial and investment decisions. Many of us were brought up to be polite and even defer to others. Politeness and deference is good for social circumstances and getting along. It is not s...

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Getting Back to the Basics by Getting the Definitions Right

Mark Twain once wrote, “The difference between the almost right word and the right word is really a large matter. ‘Tis the difference between the lightning bug and the lightning.” That man had a way with words. And although Samuel Clemens was known as a notoriously atrocious investor, many of his quips are wonderfully analogous to the world of finance, perhaps none more so than the prece...

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Should You Worry About an Inverted Yield Curve?

Ever since December 3, 2018, when the yield curve inverted (with the yield of 2.83 percent on the five-year Treasury note one basis point lower than the yield of 2.84 percent on the three-year Treasury note), I have been receiving calls and emails from investors worried about the impact of an inverted yield curve. The reason they are anxious is the much-publicized relationship between inversions a...

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Money and Marriage: The Financial Plan for Marital Bliss

Marriage, it turns out, is even more than hefty emotional commitment, a blending of families, and the awesome chance to add another crazy aunt or uncle to your family tree. Specifically, when you are married, you become a single economic unit. Your partner’s successes are your successes; similarly, your partner’s debt or any fallout from a bad financial decision lands on your plate as well. Gi...

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A Second Quarter Review of 2019 ‘Sure Things’

At the start of 2019, I compiled a list of predictions that so-called financial gurus had made for the upcoming year, along with some items I heard frequently from investors, for a consensus on the year’s “sure things.” The turn of the calendar means it is now time for our second quarter review. As is my practice, I will give a score of +1 for a forecast that came true, a score of -1 for ...

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How to Craft a More Fulfilling Vacation Using Insight from Business and Investing

Been there, done that. You’ve visited the tropics, the mountains, the lake. You’ve sailed on a cruise and made the pilgrimage to Disney, perhaps each twice or more. Most were fun, restful—maybe even restorative or memorable. But something was lacking. Something was missing. As you dream up your next vacation, it’s hard to find something sufficiently tempting, beyond more of the same. Yes, ...

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Set Your Goals

When a new client comes to our office for the first time, we typically start by asking “How can we help?” Starting a relationship with a financial planner is almost always precipitated by something happening in the client’s life—they want to retire soon, they just received an inheritance, they just learned they are seriously ill, they are dealing with the complexities of life with kids, pa...

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The Historical Imperative for International Diversification

I’ve been getting lots of questions about the benefits of international diversification. The questions are variations of “Why do I want to own these poorly performing investments that also create currency risk?” Among the two most well-documented investment biases are home country (leading to dramatically overweighting one’s home country relative to global market capitalization) and recen...

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Why Dismissing Social Security in Your Retirement Plan Is a Mistake

When the subject of Social Security comes up during retirement planning conversations, both younger and older investors often greet it with a healthy dose of cynicism. Such discussions tend to include comments like, “Oh yeah, sure. If there’s even anything left for me” or “Isn’t Social Security going bankrupt?” Sometimes I hear a more draconian stance, like, “I just plan on it not be...

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Do You Really Want to Retire?

Recently, the “I want to retire” mantra seems to be an ever more common theme. I am even hearing a greater number of people in their early 50s, with successful careers and some with high-paying positions, say they want to retire. Marsha is a highly educated college professor, researcher, speaker and author. She loves the prestige of her occupation, the intellectual rigor, and being a leader i...

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Preparing for Parenting: Staring Down the Financial Precipice

Adding a family member is an exciting time. Decorating the nursery, picking out names, going to baby showers, and attending parenting classes all prepare you for your baby’s arrival home. But with the joy of a new family member comes additional responsibility. A whole lot of it. After all, your child is 100% dependent on you for all his or her needs. Once you learn the exciting news, preparing f...

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Life 2.0

Most of us have caught ourselves day dreaming about what could be someday. I see this happen a lot with clients in their 50s, but it can also happen earlier. I’m a good example of Life 2.0. I started my working years as a professional cellist. I had a great career playing with top performers all over the world. But by my early 30s, I needed to explore something new. So I went back to graduate sc...

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Your Home Is a Personal Asset

Your home is your sanctuary. It is your comfort zone and where you spend a good deal of your time. You sleep, cook, eat and entertain at home. For some, you may even work from home. It is no surprise, then, that we want our homes to be comfortable and nice. We want to be proud to show off our home to guests. That is why we keep putting more and more money into our homes. There is always a pro...

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Annual Portfolio Performance: A Valuable Metric?

I’m going to start by providing some basic facts (not opinions, facts). Then, I’m going to ask you a few questions, and I’m hoping you’ll write down your best guesses as to the answers. C’mon, it’ll be fun! The facts: You may have heard that the stock market has returned about 10% annualized for the last 100 years or so. This is very close to accurate, although it’s not quite 100 yea...

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Important To-Do’s Before Sending Your Child Off to College

The day has come. Your little baby has grown up and is now ready to leave the nest. He or she has graduated high school and the next big step is awaiting. Whether it’s college, a gap year, a year abroad or some other life adventure that lies ahead, this time can be filled with much emotion for you and your child. As departure day gets closer, you’re probably focusing on last-minute shopping li...

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Factors Are For Holding

In their June 1992 Journal of Finance article, “The Cross-Section of Expected Stock Returns,” professors Eugene Fama and Kenneth French revolutionized the way we think about investing. Prior to the publication of this study, the prevailing theory (known as the “capital asset pricing model,” or CAPM) was that the risk and return of a portfolio was largely determined by one factor: market be...

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What’s in a Fund Name?

Most of the focus of the literature on active mutual funds has been on the question about their performance and the related issue about whether or not active fund managers have skill. On the other hand, the composition and characteristics of mutual fund portfolios have largely been ignored. Recent Research Martin Lettau, Sydney Ludvigson and Paulo Manoel contribute to the literature with their Dec...