20 Things Rich People Do

I read this from Dave Ramsay. Interesting read, but I wonder how many rich people do all 20 things? I am sure these items will help people feel better, think clearer and be more organized; which should help them be wealthier. Thomas Stanley and William Danko, authors of The Millionaire Next Door inspired this list of the top 10 traits of millionaires.

Elements of an Investment Policy Statement

CFA has released this guideline to help individual investors create an investment policy statement. My preference is for each individual to create one of these documents to help them stay focused on their strategy as well as to help their loved one's understand the plan if they need to assist with managing the portfolio.

Retirement Mistakes

Bud is a fantastic contributor to retirement planning and strategy. Please review his article. The 5 areas he addresses: 1. Funding the unforeseen 2. Planning failures 3. Everything is relative 4. Personal economics 5. Non-financial mistakes. The information is extremely valuable for someone close to retirement trying to make sure they are ready to shift gears.

Global Wealth Update

Thank you WSJ's Jason Bellini for the update. If you have problems with the video here is the source.

State of Your Retirement Savings

I personally enjoy learning about the state of Americans' finances. Here is an article describing our saving or lack of saving for retirement. Andrea Coombes covers many topics in this article.

Fully 57% of people who earn less than $50,000 said they can’t afford to both pay their bills and save for retirement, compared with 35% of people who earn $50,000 or more. Meanwhile, 59% of those surveyed said their top, day-to-day money worry is paying the monthly bills—that’s’ up from 52% who said that in 2012.

Rate Your Financial Capability

FINRA Investor Education has a 5 question Financial Quiz. Take the quiz here. From Marketwatch:

Three-quarters of Americans have “positive perceptions” of their own financial knowledge and math skills. but only 14% were able to correctly answer five financial literacy questions posed by a top regulator’s investor education foundation.

Source

TOP 1%, Keep Making More Money

The gulf between the richest 1% of the USA and the rest of the country got to its widest level in history last year. The top 1% of earners in the U.S. pulled in 19.3% of total household income in 2012, which is their biggest slice of total income in more than 100 years, according to a an analysis by economists at the University of California, Berkeley and the Paris School of Economics at Oxford University. The richest Americans haven't claimed this large of a slice of total wealth since 1927, when the group claimed 18.7%. The analysis is based on data from Internal Revenue Service data. One of the economists behind the research, Emmanuel Saez of the University of California, Berkeley, is a top researcher in the topic of wealth and income inequality. He won the John Bates Clark medal last year. The Clark medal is awarded to the most promising economists under the age of 40. Past winners have includes Paul Krugman of Princeton University, Lawrence Summers and Steve Levitt, co-author of "Freakonomics." In a separate analysis, Saez found the top 1% of earnings posted 86% real income growth between 1993 and 2000. Meanwhile, the real income growth of the bottom 99% of earnings rose 6.6%.

Source: http://www.usatoday.com/story/money/business/2013/09/10/pay-gap-richest-poorest/2793343/

How is your Generation Doing?

Fidelity recently released a study looking at Americans in this demographic breakdown: Generation Y: born from 1981 to 1988 Generation X: born from 1965 to 1980 Baby boomers: born from 1946 to 1964 “Matures:” born from 1909 to 1945 Here is the Executive Summary from the research: Fidelity® Five Years Later Research Executive Summary Here is an infographic for Gen Y. Here is the press release.

Houston this Market has a Problem

From Mark Halbert at Marketwatch:

Based on trailing 12-month earnings, the S&P 500’s SPX current P/E ratio is 18.8. Even if we assume that all 500 companies in the index will report earnings over the next few weeks that match analyst estimates, the S&P’s P/E drops only modestly, to 17.9. Even that lower level is higher than 77% of comparable readings over the last 140 years, according to data compiled by Yale University finance professor Robert Shiller. The average P/E for the S&P 500 since 1871 is 15.5 and the median P/E is 14.5.

Read the whole article.

How to Live in Silicon Valley - Financially

Wealthfront has a great blog post talking about the financial realities facing people that attempt to raise a family, send kids to college, own a home, and retire in Silicon Valley.

4 Ways Gyms Try to Take Your Money

This is a fantastic article discussing the problems we encounter with gym memberships.

Frontline Retirement Gamble

Draw your own conclusions. Here is the Frontline piece.

Female Breadwinners Becoming Normal in America

Thanks to Wendy Wang, Kim Parker and Paul Taylor at the Pew Research Center for giving us this report. Here is an excerpt: A record 40% of all households with children under the age of 18 include mothers who are either the sole or primary source of income for the family, according to a new Pew Research Center analysis of data from the U.S. Census Bureau. The share was just 11% in 1960. These “breadwinner moms” are made up of two very different groups: 5.1 million (37%) are married mothers who have a higher income than their husbands, and 8.6 million (63%) are single mothers. Here is a Marketwatch article about it.

Retirement Balances Significantly Increase with Stock Market Advance

For some investors 55 and older–a group “most vulnerable during the last market downturn given their short timeframe to retirement,” according to Fidelity–the gains have been even better. On average, investors in this category who have at least 10 years’ service at their current employer saw their account balances rise 95%, from $130,700 in March 2009 to $255,000 at the end of this March. (The Standard & Poor’s 500-stock index roughly doubled over that same stretch.) Here is the full article.

Boomers Not Ready to Retire

The stock market is near all time highs, yet Americans are far from being ready to retire. Here is the latest article from CNBC and the executive summary of a report from EBRI (Employee Benefit Research Institute) titled EBRI’s 2013 Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many.

Younger Americans, especially those between 29 and 37 are seeing their wealth decrease in ways that are a bit alarming for our society:

Despite the Great Recession and slow recovery, the American dream of working hard, saving more, and becoming wealthier than one's parents holds true for many. Unless you're under 40. Stagnant wages, diminishing job opportunities, and lost home values may be painting a vastly different future for Gen X and Gen Y. Today's political discussions often focus on preserving the wealth and benefits of older Americans and the baby boomers. Often lost in this debate is attention to younger generations whose wealth losses, or lack of long-term gains, have been even greater.

Gene Stuerle wrote a blog post about it. You can ready the study as well.

How much do you have saved for retirement?

Fidelity released this information around Valentine's Day. CNBC had the best article I read showing us the state of American's 401(k)s:

The amounts that investors have saved through their 401(k)s vary widely depending on a participant's age. Fidelity said the average year-end balances were $143,300 for participants 55 and older and not yet retired; $120,400 for baby boomers born from 1946 to 1964; $59,100 for Generation Xers born from 1965 to 1978; and $15,400 for those in Generation Y, born from 1979 to 1991.

In case you missed it here is CNBC's article.

ECRI updates us on their business cycle data (March 2013 PDF)

National Income and Product Accounts Tables

National Income and Product Accounts Tables

Essential Documents

This is a crucial topic and not discussed enough in America. Here are the files you need to have ready when your heirs come to sort through your affairs after your passing. Please do them a favor and get organized. 25 Essential documents from the WSJ.