Monthly Archives: February 2017

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How Can You Protect Your Online Accounts from Hackers?

Some great advice from WSJ (subscription) as identity thieves continue to develop more sophisticated strategies to steal your identity. Moral of the story: You are your own worst enemy when it comes to giving up information when you should not be.

A few highlights and some strategies to protect oneself:

  • Phishing is the most common online scam:
By |February 28th, 2017|Article, Current Events, Identity Theft|

What If…You Had Invested With Warren Buffett in 1965?

Interesting thought experiment (wishful thinking!) that demonstrates the power of compound interest and also that getting the market return over a long period of time hasn’t been a bad strategy either.

Warren Buffett is out with his annual letter for 2016  which is a must-read for investors because of the common sense, homespun advice from the best investor of our time. For those not familiar with Mr. Buffett’s investing prowess, check out the first page of his report which has performance data on his holding company Berkshire Hathaway Hone in on the Compounded Annual Gain (CAG) number at the bottom of the first page and check out the middle column, Per-Share Market Value, and you will see that his CAG from 1965 – 2016 has been 20.8%. Let’s have some fun with an investment calculator and pretend that you were Warren’s neighbor in 1965 and decided to invest $1,000 with Warren (equivalent to $7580 in today’s dollars) AND have continued to hold onto that investment.

Care to guess how much that $1,000 investment in 1965 compounded at a 20.8% rate annually for over 50 years amounts to?

By |February 28th, 2017|Activity, Chart of the Week, compound interest, Current Events, Investing|

Question: What Percentage Of Workers Contribute To a 401(k) Plan?

Answer (courtesy of Bloomberg): About 1/3

Why is this important?

Pensions are becoming increasingly scarce for young people, so the 401(k) will likely become the primary source of financial support for retirees outside of Social Security:

According to a Pew Charitable Trusts analysis of survey data released Feb. 15, only 10 percent of workers over age 22 have a traditional pension. Just 6 percent of millennials have a pension while 13 percent of baby boomers do.

Why are so few contributing to their 401(k)? Here are a few theories:

A Few Podcasts To Get You Thinking…

I had a few long car rides today and wanted to share a few Hidden Brain podcast episodes that you might find useful:

  • Misbehaving (24 minutes): Interview with behavioral economist Richard Thaler of “Nudge” fame. Discusses how traditional economics misses the boat when it comes to the foibles of human behavior (e.g., lack of self-control). Discusses research findings that explain why cabs aren’t available on a rainy day, why we use money differently depending on its source, how self-control is real work (including the marshmallow experiment) and importance of “hot” and “cold” states when it comes to decision-making.

By |February 26th, 2017|Audio Resource, Behavioral Finance, Current Events, Investing, Research|

What Do You Say When You Only Have 90 Minutes To Talk Money With College Students?

I had a great time at Paul Smith’s College (Paul Smiths, NY) earlier this week meeting with about 40 students to answer their questions about money. Thanks to President Dove, Jill Susice and Terry Lindsay for organizing the event and giving me a great opportunity to engage with your students. They were actively involved in the conversation and shared some great money management ideas that they are using in their lives.

Planning for this talk forced me to get to the essence of what I felt was most important when it comes to money management for a college student. Rather than talk at the students I wanted them to be involved too.  I eventually settled on setting up some pollinq questions on PollEverywhere with a few slides prepared also to make key points. In terms of topics to cover, I thought I would tackle budgets, saving and checking accounts, credit scores and credit reports, credit cards, investing and student loans. A lot to cover in 90 minutes but I only had one shot…I hoped for active student participation and I was not disappointed.

I started by asking students what they hoped to get out of the workshop to help me figure out where to focus my time. Here’s a smattering of what they wanted to know (via Poll Everywhere):

By |February 23rd, 2017|Personal Finance|

Chart: How Have World Stock Markets Changed Over The Past 100 Years?

Interesting graphic from a Credit Suisse report comparing the relative size of stock markets in 1899 vs. 2016 (great for a history course):

Screen Shot 2017-02-23 at 9.40.56 PM

Questions to ask:

Question: Who Has The Best Cell Phone Plan?

We know your students love their smartphones. How about putting that obsession to use by having them read this article from the NY Times “Picking a New Phone Plan? Here Are Your Best Bets?” As the article notes, every few months the carriers update their pricing models (check out our earlier posts on the topic here and here):

Shopping for a phone plan can be as daunting as picking a health insurance package. The rates and options constantly change, and it feels impossible to make simple comparisons between carriers. Case in point: The best phone plans we recommended a year and a half ago are now obsolete because the wireless carriers have completely changed their offerings.

The article goes on to highlight the “best plans” for different types of users: Single User, Single Power User, Average Couple, Power Couple, Family of Four, Occasional Traveler. Here are some ideas on how you can structure this as an activity for students to discuss with their parents or guardians (copied from an earlier post):

How Is The New FAFSA Timetable Impacting College Offers?

I was wondering about this question. so was happy to see this article in the WSJ last week (subscription). Our post last September described two of the major changes to the FAFSA. First, families could now complete the FAFSA starting October 1st (previous deadline was January 1st). Secondly, the financial information provided on the FAFSA now will come from prior prior (not a typo) year’s tax return. Let me explain. Those families completing the FAFSA in October 2016 for the 2017-18 school year, data from their 2015 tax year would be used.

The most dramatic impact is that students should expect to receive offer letters from colleges SOONER with about 50% of colleges expecting to send their need-based offers sooner. Here’s the data: