One of the most common conversations someone will have with their financial advisor is how much do you want in stocks vs bonds? If you can handle more risk for potentially higher return you’d want more in stocks while if you’re really conservative you’d have a lot in bonds. What’s a bond you ask? Basically a borrower takes out a loan and promises to pay you interest in the form of periodic coupon payments and give you the entire lump sum back when that bond matures. Common maturities on bonds include 5, 10, 20, and 30 years. If you invest in your 401k, you probably own some and don’t even realize it. If your parents are approaching retirement they probably have close to half of their portfolio sitting in bonds. Because of the events of the last seven years, bonds terrify me. Bonds as an asset class are the most overvalued they’ve been in at least six decades.
This man above is directly responsible for the mass frenzy that occurs every few weeks when your girlfriend from college posts a pic of the engagement ring and rock she just got from her bae on Facebook or Instagram. You get a call from a friend, “Woa look of the size of that thing! He must really love her!” Well believe it or not, it wasn’t always this way, and it’s a case study on how marketing campaigns are designed to warp our emotions into creating artificial need and separating us from hard earned cash.
This question is probably the most common for people in their 20s and 30s. You’re making some serious bank at your job, but you hate to see all that money go down the drain, so should you buy a house or rent one?
First off, real estate is about location, location, location and so is the decision of renting or buying your house. In San Francisco, according to money.cnn.com , the price/rent ratio is about 30. That’s way to high to make owning a home ever make sense financially unless you want the benefits of being a homeowner vs a renter and want to speculate on the frothy tech scene located in that area. On the other end, you have Detroit at 7, if you wanted to buy a house there you could it just might not come with plumbing.
Folks have asked a lot how to retire in your 20s. The first step is to get out of college without owing your first born child to Sallie Mae. I got lucky and got a scholarship to a state school and worked part time while I was going to undergrad, so I started investing when I was 18. I didn’t have a big balance or a trust fund, rather I just would take whatever I made and instead of buying kegs (ok I bought a couple) I’d take it and buy stocks.
In honor of Father’s Day I thought I’d take a look at the experience of a lot of our dads out there when they entered retirement: they got a pension. Because the millennial generation is less likely to work for the same employer for the duration of a career, less likely to be unionized, and our pension funds are not very well funded, anyone who wants to retire someday must look to a different source of income. The typical work for 30 years and draw a monthly payment for an amount close what you used to make while working is no longer a reality for most people.
What if I told you that I could guarantee you 6% on your money right now without any risk? Would you suspect I was in the mafia? Maybe I was insider trading and trying not to be so obvious as to arouse the suspicion of the authorities. Perhaps I was a stock market genius? Well for a lot of people I can guarantee that return and there’s nothing illegal about the method I’m about to say.
If you walk out into the average parking lot of a Fortune 500 company, it’s like getting front row seats to last year’s Detroit auto show. Everyone has a new car. Brand spanking new, gorgeous vehicles without any weirds stains, faded paint, or dented passenger doors. Looking at them makes you feel great, driving them makes you feel even better. The typical excuse people give is “man I gotta get a reliable vehicle” to make it seem legitimate to go spend $25,000 on a Chevy sedan that will be worth half that in three years. I’m just gonna throw out numbers to make it easier to follow why buying a new car is literally one of the dumbest financial moves you can ever do.
Have you ever wondered how to break free from staring at your computer screen and watching the clock roll by? If you start off at $40,000 a year at 18 or $60,000 at 22, you can save at least 70% of your income and afford to walk away from your corporate serfdom existence decades earlier than your peers.