I was recently quoted in an article about what parents-to-be should look for when buying a home. There are several great issues to keep in mind. But the author saved the most important for last – Affordability.
Nine Connections You Didn’t Know Between Happiness and Retirement
Money Magazine recently wrote a great article about happiness and retirement. Here are a few key take-aways:
- People rate happiness highest in their teens and twenties. Then it drops down between their 30’s and 60’s. But it rises again in retirement.
- The age at which folks are happiest, according to a study by Wes Moss, is 85!
- According to the Moss study, retirees can buy happiness. The more money in savings/investments the happier the retiree. But anything over the $550,000 level isn’t as effective at increasing happiness. There is a leveling off effect that occurs.
- Retirees have more enjoyment in spending money that comes from a pension or social security rather than spending money from investments in their 401(k)/IRA or savings.
- The Moss survey suggested that retirees with 4 hobbies are happier than those with 1 or 2.
- Retirees who find a part time job tend to have fewer major diseases. In many cases, they can find jobs that are fun or connected to a hobby.
- Retirees who rent tend to be happier than those who own their own homes
- Retirees who live within 10 miles of their children tend to be less happy than those who live farther away. The reason why remains a mystery.
- The satisfaction someone receives from spending time with friends and family is highest among those aged 65+.
Do You Have an Out-of-Whack Portfolio?
Research out of Investment Company Institute found that 11% of investors have not rebalanced their investments in the last five years. As the US stock market continues its bull run, the value of US stocks represent a larger and larger portion of the portfolio.
All of a sudden, a portfolio that was balanced five years ago could be taking on more risk than you originally planned. Money Magazine states that a portfolio in 2009 invested 60% in stocks and 40% in bonds may have a current mix of 75% stocks and 25% bonds. If you’ve not looked at your portfolio over the last few years. Now is a great time to get started. Here is a summary of steps to take:
1) Gather all of your statements – Investments accounts with us, accounts held elsewhere, 401(k) statements, etc. Tally up your overall asset allocation.
2) Find what looks out of line – Does one mutual fund represent more than 25% of the portfolio? Does one stock represent more than 10% of the portfolio? Is one asset class accounting for a large portion of the portfolio?
3) Look to rebalance – identify the appropriate asset allocation (primer found here). You may also want to spend some time developing an asset location strategy, if we haven’t guided you already.
A Salary Guide Refresher
Our clients ask us on a regular basis what they should be doing to reach their financial goals. This piece helps to break the big tasks down based on age. It’s a good place to start if you or someone you know is trying to build a plan for reaching their goals.
NU Fixed Account Rate Declines
NU Retirees: For over a year, the interest rate for the Fixed Account in the 401(k) plan at Fidelity has been declining. The decline has continued into 2015 with the rate reducing from 2.25% to 2.0%. As we have mentioned in the past, we now view the fixed account as a proxy for cash.
We’ve written a lot over the past year about how to view cash in your portfolio – posts can be viewed here.
Are You Spending Too Much On Coffee?
If you’re like the average American who regularly buys coffee, you spend close to $1100 a year on coffee (Source). That breaks down to about $4 a day, every weekday. Over time, that really adds up. At the end of 30 years, you’ve spent over $30,000 on coffee.
Talk about too much caffeine! Will you look back and wish you did something different with that money?
Here’s what happens if you did: Instead of a daily coffee run that runs about $4 each weekday, you take that money and invest the savings every year for 30 years. At the end, you could have a portfolio worth close to a whopping $180,000 (assuming a 10% rate of return, which is fairly realistic, given the S&P 500’s arithmetic average rate of return was 11.29% between 1964 and 2013) (Source).
Can’t live without coffee? Try buying cheaper coffee. Or cut the donut. But even if you bought a coffee for $2 (instead of $4) and invested the difference over the same time period, you still end up with a respectable amount saved – $85,000.
Kind of makes you wonder if you don’t already have enough caffeine in your diet.
