Easy Change

 This morning I've watched an interesting video on Consuelo Mack: WealthTrack. Here, Consuelo's guest, a longtime contributor, Christine Benz, a personal finance expert from Morningstar joined Consuelo for a discussion on issues related to retirement, in particular in the current market environments. This conversation is even more interesting against the backdrop of The Great Resignation. I found Christine's advice to be particularly interesting on a couple of fronts. Her advice in dealing with talking about retirement in general, in particular for people who are in the process of thinking about retiring early gave me pause. She is considering the traditional advice of a 4 percent withdrawal rate to be dangerous and indeed, actually concerning. According to the recent research she cites, a 3% withdrawal rate is a better option. Even more than the four percent rule, I think that her comments on annuities are particularly interesting. While annuities have been given a bad nam...

 At this point, it seems like a well-known strategy for handling inflation: ibonds. While there was not much press about this, it is in fact something that I did late last year in order to capitalize on the fact that this interest rate was bound for up to 10000 dollars as part of my allotment for 2021. Then now that we're in the new year, I have moved another 10000 into the account. All of this can be done easily at http://treasurydirect.gov if you're willing to give up the fact that the money is locked up, that the interest rates to be paid will be somewhat lower than you could earn in the market, and you're able to ensure that you're not needing the money for the near future.  For me personally, I find that this is a great way to lock up about 25% of my emergency (safe) money instead of putting it into a High Yield Savings account. This interest rate changes every six months, but even if it is much lower, I think that we're going to be in much better shape than if...

 There are a number of items in the news lately that give investors a large amount of concern. There is a looming debt ceiling issue in the United States that continues to be an issue as it does not seem like it is going to be resolved in the near term. However, from the news I've seen it seems like the consensus view is that the ceiling will be raised, eventually.  The second issue is that there is a non trivial amount of debt that has been issued by the Federal Reserve. Even if you believe/support Modern Monetary Theory , the amount of money that has been issued is huge. Close to 1 20 Billion Dollars per month has been injected into the US Economy. The tapering of these purchases is looking like it will start happening, but it is definitely challenging to know the exact timing. The Infrastructure Spending bill total is at 1 Trillion dollars at this point. And the news is that the house of representatives is voting on it this week.  So, with all of that news in the ba...

 It has been a while since I talked about my experience in real estate and with the craziness of covid, it seemed like a decent time to talk about this. I have spent some time thinking about this given that I live in a high cost of living part of the United States. What this means in short is that it generally costs me more than average folks to pay for my basic expenses like housing, food and healthcare. While I am fortunate in that I have a degree that pays well , I'm not so naive to think that is the end of the story. What makes sense for me at this stage for my life is different than what seemed reasonable in my 20s. Now, by the zillow zestimate , I have about 40% equity in my home after a little more than 3 years. Looking back briefly, it has been an interesting ride. I bought the property with about 20% down about 4 years ago. Then, I spent about 10k on repairs/painting etc. Next, I went to pay off ahead of schedule, often sending in principle payments of several hundred dol...

 So in my previous post, I detailed that I had started to experiment with Options Trading. None of this is advice, but just a description of my experience and thinking. I think that this was an interesting part of my experience in the past year because I didn't previously understand the appeal of some of the more complicated parts of the financial system despite being interested in it for a very long time.  In the past few months, I've begun to take additional opportunities when I can with the shares that I own free and clear via covered calls. I've heard about this option more and I encourage people to read about it more if they are interested. However, this strategy works well for me. In my case, I own a large number of shares in my trading account of certain stocks or ETFs.  It is my intention to buy more if we ever see a market drop. That said, I certainly don't intend to sell. Even in a crazy, 80% style drop like the great depression. I'm holding to zero. It...

 In all the time that I have been investing in the stock market, both as an individual investor and as a future retiree, I've never invested in stock options. However, in the world of stimulus checks, these have become more and more popular and even more so in the world of meme stocks like Gamestop GME . What is an Option In my brokerage account I had to first ask for permission to trade options. Presumably, this was to ensure that I had enough money and I understood that there were risks that were not clearly understood to the average stock market investor. Indeed, in some cases your losses could be severe -- much more severe than in the case that you actually bought a stock. Put simply, a put option is a bet the price of a stock will go down. A call option is a bet the price will rise. On a stock that is at 100, you could buy a put at a strike price of 90. That means, you're betting that the price will drop below 90 dollars, and the put option gives you the right to sell the ...

 In recent weeks my circumstances have changed with my retirement account and the bulk of my retirement savings is in a self-directed rollover IRA. I am able now to look and invest more broadly. This has caused me to be more and more interested in mutual fund alternatives like ETFs.  ETFs are Exchange-Traded Funds which are a newer investment vehicle that are traded on the open market during the day with most mainstream brokerages and you're able to know the going price during the day instead of waiting for the close of market to have the mutual funds be priced. Also, whereas traditional mutual funds often have a fee in order to get in, many of the ETFs have no load and also very low expenses.  Impact to the Market I've followed Consuelo Mack WealthTrack for some time. This week's guest is a longtime expert in the industry and while he previously has favored mutual funds, in particular index funds, he now believes that their days are numbered.  Indeed, Morningstar ...

 I attended an interesting presentations given by IShares/Blackrock with the goal of showing how to use their ETF products to capitalize on investing themes for 2021: Gargi Pal Chaudhuri - Head of iShares Markets & Investments Strategy Dorothy Lariviere - iShares Product Consultant iShares (by BlackRock) - 2021 Outlook: New President, COVID-19, and Policy I found that this presentation was quite interesting. The presenters included two women which was a pleasure to see and they were quite intelligent and well-spoken. I don't advocate for any particular investment or forecast, but I thought that the summary was interesting and if you want to review the particular symbols they mention as ways to act on these themes, they are included at the end. US GDP Forecasts Above 6% for 2021 This presentation included a forecast that perhaps is not too shocking, but a positive report that GDP looks to be positive and a substantial number. The drivers for this include the ongoing fiscal and...

Are we recovering? "Optimists point to the rapid decline in the unemployment rate after the first wave of the pandemic—from nearly 15% in April to 6.7% in November— as a reason for a speedy recovery. Pessimists' go-to statistic is the high and rising rate of the long-term unemployed, those who have been out of work for more than six months. It has risen from 0.7% of the labour force in February to 2.5% today."  -From The Economist - Jan 2, 2021 (America's Jobs Market. Speed Limits) The article recounts the fact that many people who are long-term unemployed have indicated that they are only temporarily laid off, while history and shows that over time, many of these jobs may not come back. Many people have dropped off the rolls altogether and are no longer looking for work. According to Jason Furman and Wilson Powell III of Harvard University, the real unemployment rate is 8.5%.  Within the sectors of knowledge work, there has been a dramatic overnight shift to large nu...

 In the book A Random Walk Down Wall Street  author Burton Malkiel argues that the stock market is, as the title suggests, a random walk. In the book, which is cited and echoed by famous industry titans like Jack Bogle of Vanguard fame, it: 1. Makes little sense to think that you can beat the market. Indeed, on average you'll lose money when picking stocks. 2. In looking at when to invest and cash out of stocks, if you try to time the market you'll inevitably do worse.  This advice really stuck with me and I still believe this to be the case. But in the current environment, as many smart people do, I do find myself asking myself if it is different this time. Much of this is due to the performance of "broad market" indices. Diversification is the idea that by spreading your investment over many companies, you lower the volatility. You might have less upside, but you also have less downside risk. In the end, you're hoping the market as a whole does well, more than a...

  The Economist writes on January 16, 2021 that "the pandemic has ushered more robots into factories, warehouses and back offices." and that "they are here to stay." The article cites information surveyed from a variety of manufacturers and shows that the increase is marked for these firms' increase in digital consumer interaction and collaboration along with Artificial Intelligence and automation. So, in short, what does that mean for society and how will that impact investing into the future? Society continues to find new and innovative ways to make our lives better with technology. The amazon effect on retail has translated into the destruction of brick and mortar. Many people are happier with this setup. For advocates of online shopping, they are spending less time doing these errands and more time on hobbies, with family, or able to do other things that they feel are a better use of their time.  Amazon continues to forge ahead with its use of technology, u...

Reflecting Back.  Tax time always is a chance for me to look back after the business of the holidays is behind me. I had a few thoughts that I figured I would jot down as I wrap up the end of this year. In short, the amount of time seems somewhat compressed. I'm surprised that when we get to March, it will be a full year of the pandemic life. Living at home, working at home, with minimal options for socialization and the like.  Mental Health seems to be taking a real hit for many people, perhaps unsurprisingly in the wake of the pandemic, all while thousands of people continue to be dying. All of that serves as a stark reminder of how lucky those of us are that are blogging about money and personal finance who have not been harshly touched by this event.  Taxes are important, but having some gratitude and reflection on the good things that have happened this year can be a good aspect of the process too. Documents On Time All that said, the tax documents arrived early this...

 There's a big series of controversies these days with covid. And politics has not been a simple matter to stay out of. Many people have had enough. Benz puts all of this aside quite nicely in this video with Consuelo Mack this week. The full video here but I will highlight a few interesting points that I think are worth considering.  Starting with the numbers, Benz notes that there are 20.6 million job losses and a 14.7 million US unemployment rate. So, there continues to be real impact to large numbers of people in the economy. And the pandemic rages on: 20.7 million US covid cases .  When it comes to investment choices, Consuelo continues to bring up There Is No Alternative. More than a catchy acronym, the idea that people are searching for yield is a concept that might be driving stocks to ever higher prices. Benz dodges this well, and generally does a good job of providing advice which is applicable regardless of what your investments are in.  One key departure...

  The Economist , dated Dec 12-18, 2020, has a cover story, "Will Inflation Return ?". The question is not if, but when. According to the article, three arguments for increased inflation include the following: 1. Pent up demand 2. Aging societies which reduce the number of overall workers 3. Complacent politicians, who are happy to spent more, even if it goes over 2% inflation targets in order to satisfy liabilities, specifically mentioning those related to health care for an aging population, see point 2 above. I find the article a competent summary, to be sure. And the question to me is not whether there will be inflation. There will be. The question I am having for myself is twofold: 1. When will it show up? 2. How will it show up? I find that this, along with many other macro-level items are some of the most interesting aspects of finance for me. While they are tough to bet on individually, that is exactly what I am going to discuss here.  Regarding when it will show up, ...

Three next thoughts. As part of the process of going through Covid, and coping with the economic slowdown, I am having three thoughts that are driving my financial decisions that I thought I would share: Nothing that people are doing to live and be happy will go away permanently. The implications for this are pretty big. That means, people will continue to eat, sleep, breathe, exercise, have sex, have children, build businesses and homes, and travel.  Just sit back and think about that for a minute. With all of the doom and gloom that is in the news about the virus, people have begun to feel deeply depressed. I think we may see things that will irrevocably change our way of life in the western world. This may change our way of choosing to live, partially due to regulations, and partially due to preferences.  But I feel confident there will also be a true reversion to the mean. (When is the question.) Sitting in August, I already see it. And so I think that there is a real oppo...

I have been struck over the past month how many things have really begun to come together recently in my life. I went through a rather difficult period for about 18 months and now things are feeling somewhat better. I thought that in this post I would discuss a little bit about the relationship between your health (both emotional and physical) and your financial situation. For me, there is undoubtedly a relationship between these two things. After my divorce, I found that I was really struggling with a variety of different issues. I had to move multiple times, I was suddenly single, and also was older (much older) than I was when I first 'dated' in college. I am not terribly novel in terms of the story but my story might give someone some help, so I think it is worth sharing. It can be helpful to have a measurement of the different aspects so that I can describe them. The measurements will surely be different for you, but I find the following measurements helpful: For fin...

I'm going to Grad School! For me, in my mid-thirties was the last time I would have expected to be doing this. After over 8 years at my job, I realized that I needed to learn new technologies and also revamp my skills. One might ask why not use Coursera or some other free tools to learn new skills (and I will talk about those in a separate post). In particular there are three items that I am trying to address with grad school: 1. Name Recognition/Degree Currently I hold a Bachelor's Degree of Computer Science. Unfortunately, the school I went to is a well regarded liberal arts university where only BA degrees are offered. In my field, many people want to see a BS. And I personally understand why the difference matters. My education certainly had plenty of theory and programming, but being a liberal arts degree (a double major with a foreign language), I feel strongly that this puts me head and shoulders above many people who are poor communicators in IT, but behind those wi...

Go all cash. It is not a revolutionary idea. Don't wait for something amazing and new in terms of an idea in Personal Finance. It's just cash. That's what I am thinking about as I head into this Month. Sitting now on the 5th, I was considering whether or not I should just go all cash for a month. But let me start with my motivation: I feel like I spend a lot of money. I mean A LOT. More than I should. Perhaps more than anyone should. And that makes me wonder if perhaps the credit card and my personal good fortune to have a good salary really has kept me entirely insulated from how expensive everything is and what my spending habits are. Again, not revolutionary, but this morning it really hit me for some reason.  After I completed this exercise, I found two key takeaways: 1. I spend entirely too much money on coffee out. For me that was a response to spending so much time at my desk at work. I needed an 'excuse' to get outside. Near my office, there is 'ch...

Comparative Compromise, Coping with Change This is the last article in a series of short posts about reflections on divorce. While I would not wish this on anyone for a variety of reasons, not the least of which is the financial impact that such an event can have, I certainly feel excited to be working through this process and wanted to take just a few moments to share some of the insights that have really affected me. One of the biggest skills that you need to cultivate as part of the divorce process is being comfortable with change an uncertainty. While this is a financial blog, there are several items that I found very helpful in this manner and these have had immense benefits for my entire life, not just my finances. The Untethered Soul - By Michael Singer Living Beautifully with Change and Uncertainty by Pema Chodron Besides these books I also found three additional pieces of advice are extremely helpful: 1. Go easy on yourself. In a word: compassion. With all of the ...

Dating with Data, Digging for Gold This article is part of a series on divorce which describes my experiences as part of going through a divorce. In short, I found that the dating world had changed somewhat by the time I returned to it as a result of my divorce. Now, the internet has changed dating, changed it even more than when I had originally met my spouse on America Online almost 20 years ago. Now the internet bustles with all sorts of applications for smart phones related to dating. Many of them are related and part of larger conglomerates at this point. I wanted to take this post really to just give my own personal impressions of dating as a result of this experience. I personally used an app called OKCupid which I found to be very good and helpful. Here are the things I liked: 1. It provided pictures and some opportunity to give a description. 2. It did not require for other people to know I was looking at their profile. 3. It allowed me to be able to answer questions...