Wise Money Decisions

The mainstream press provides more bad financial advice than good, so it’s important to highlight the good advice when it appears.  

From Ron Lieber at the New York Times:

“It’s a question we’ve all asked in our darker moments of late: Why not just put all of our investments in cash, 100 percent, just for a little while, until things calm down?…

“By fleeing for the comfort of safe and insured, however, investors with a time horizon beyond a few years may be doing real damage to their long-term finances. If you’re tempted to make a big move to cash right now, you’re doing something called market timing. It’s an implied statement that you’ve figured out the right moment to get out of stocks - and will also know the right time to get back in.

“So let’s dispense with the first part straightaway. The right time to move out of stocks was a year or so ago, before various stock indexes the world over fell by one-third or more.

“If you missed that opportunity, you’re hardly alone.

“But if you sell now, you’ll be locking in your losses. And once you’re in cash, there isn’t much upside. In fact, with interest rates low, you’re likely to lose money in cash, because inflation will probably eat up the after-tax returns you earn from a savings or money-market account.”

I don’t have enough time to blog about all the interesting articles I come across.  So I throw them into a recommended reading list.

Here are some from this past week:

Will McCain’s plan for a tax credit for health insurance spell the end of the employer-based insurance system?  It’s too early to follow McCain’s and Obama’s every move so I haven’t paid attention to McCain’s plan.  In a nutshell it seems he’s proposing a tax credit for buying your own health insurance.  The idea is to level the playing field between those that look for and purchase their own insurance and those that obtain insurance through their employer. 

The article is focused on the mechanics and not on the politics (otherwise it wouldn’t show up on this blog), but it seems to be written with the assumption that keeping our employer-based insurance system is best.  Needless to say, that’s a large assumption.

Every day there’s a new article out on how to save gas.  They all have the same formula.  They tell you how much you spend on gas and how much you can save if you follow their tips.  The tips are always the same: light on the accelerator, cruise control, fill up tires, roll up the windows on the highway. 

The linked article includs a few less common tips though: turn off the ignition when traffic is at a standstill (I’m glad this hasn’t caught on cause it would drive me crazy waiting for everyone to start their car every time traffic moves 20 feet), and don’t make left turns.  Apparently three right turns can accomplish the same thing as one left turn.

This hard-hitting expose on how California government workers pull in 6-figures on overtime and bonus pay.  The poster child is the state prison nurse that made $310,000, mostly from overtime.  The top bonus went to the chief investment officer of California’s pension fund: $403,000 in incentive pay, brining his total take-home to $945,000.  A decent year.

Finally, North Dakota farmers are becoming millionaires.  The estimate is that one-third of the residents of Mountrail County, North Dakota will be millionaires in the next 5 years because of oil found under their land. 

The only problem for the sweet old couple in the picture accompanying the story, is it happened so late in life they may not be around to spend it all.