This time last week, I added an item to my to-do list: Start writing my next client note. The topic was going to be “Sideways Markets Can Be Difficult to Deal With, Too,” or something to that effect. What a difference a week makes!
Let’s talk about austerity. No, not the austerity proposed in Greece (although I’m probably the only one not writing about Greece). Rather, I’m talking about personal austerity. I frequently recommend that families develop an austerity budget. Let’s describe what this is and how it might help you.
Every parent knows that having kids complicates your financial life. The most recent federal estimate puts the average cost of raising a child born in 2013 until age 18 at nearly a quarter of a million dollars — $245,340 to be exact. And that doesn’t even take into account saving for college.
Your actual cost will vary, of course, according to who you are and where you live. The bottom line, though, is that you’ll need a sound financial checklist when planning for a child. It should address your employer’s family leave policy, as well as anticipated child care costs, health insurance and, eventually, paying for college.
Recently I fielded an interesting question from a young investor: “How can an average college grad accumulate $1 million?”
Now, $1 million is not what it used to be. It is certainly not the ticket to the good life that it was 20 or 30 years ago. But it’s still a really nice down payment on it. Plus, they always say the first million is the hardest.
Like many of you, Colleen and I have children who we hope to send to college. And like some of you, we have a significant amount of liquid cash and investments. Mathematically, it would probably make a lot of sense to front-load the 529 plans for our two girls, or at least one of them.
As a species, humans are woefully ill-equipped to be successful with their finances.
Thousand of years of evolution on the savannah have given us a host of instincts that kept us alive. Those same instincts have a tendency to trip us up when it comes to financial decisions. The list is long and illustrious and includes stunners such as:
I was talking with a client recently. She was expressing some concern for her investment accounts based on a recent article she read in the New York Times. We talked through some scenarios with regards to how this might affect her investments and long term plans. Although we walked away with the realization that there were not any major changes to her investment plan needed, we did realize something else. Volatility is back.
Many investors quiver with fear over a bear market. This is like being afraid of high tide at the beach. Like high tide, bear markets are a natural part of the investing rhythm, so you should get used to them.
October takes on a different twist with two young children. We spend most of our time discussing the merits of Halloween costumes: Princess, Lady Bug, or Butterfly, oh my!
Life is never boring in the McCann household.
This quarter, I thought I would share an equally exciting topic. My most common piece of advice…
Sumer is here and the weather is beautiful in San Jose. The McCann clan has settled into a blissful summer routine. We had lots of family fun last quarter and are looking forward to a relaxing summer. As relaxing as things can be with two children under the age of three!
The markets have been relaxed lately as well. Every potential global upset has produced a “Meh, whatever…” from the stock markets as indexes repeatedly reach all time highs. Pundits, however, have no shortage of things to talk about. Is it just me, or does everything seem to have a partisan slant lately? You can get your liberal news, your conservative news or your funny liberal or funny conservative news. But you can’t just seem to get… news. Maybe I’m being nostalgic, but I just don’t remember so much of an agenda back in the Walter Cronkite, Tom Brokaw and Peter Jennings days. Which is unfortunate, because to be successful investors it is best to have a clear-eyed view of the investing landscape. Which brings me to my topic for this quarter…
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