Category: Investing
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Rules to Retire By
Educate yourself for a job that pays a decent income. Morgan Housel points out that “a job you merely like that pays a decent income can eventually offer a level of financial flexibility that lets you pursue passions.” Save 10 to 15% of your income for retirement. Live below your means. Andrew Tobias says there is someone making 10% less…
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Investing for Retirement
The Time Value of Money I spent more than half my working life saving in whatever guaranteed pension plan my employer offered, but a change to a 401(k) plan finally forced me into making my own investment decisions. My Portfolio After a lot of reading and some false starts, I retired with these assets: The…
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Savings & Withdrawals
A Savings Model Instead of using ballpark numbers like 25 times your annual expenses, or 8 times your annual salary, a better approach to estimate retirement savings needed is to use your personal history of income and expenses, adjusted for changes in retirement. You can do this with a program called FIRECalc. This chart shows my actual balance history, predicted…
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The Effects of Asset Allocation
Stock funds for growth, bond funds for stability The Vanguard Total Bond Fund VBTLX passed through the Great Recession in good shape, even though it typically holds about 25% mortgage-backed securities. First and foremost, it’s a bond fund with low stock market correlation. But it also held higher quality bonds and more U.S. Government securities than other…
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The Great Recession, Condensed
and with glossary. Subprime mortgages, side bets, greed, and fraud. The causes of the Great Recession were subprime adjustable-rate mortgages, and speculation using financial instruments that leveraged the actual market a thousandfold. In other words, greed and fraud. This is a bare-boned explanation of the greatest economic collapse since the Great Depression. In 2010 the Dodd–Frank Wall…