This Week in Your Wallet: Not One Financial Answer Fits All
Should you be managing your own money? Or – are you better hiring help? Longtime readers know that my overarching sentiment is that when it comes to money management, there is work to be done (although it can be minimized with automation and the selection of large, diversified funds) and someone has to do it. That someone can be you. But if you’re not willing – or if life keeps getting in the way – delegating is the way to go.
The Wall Street Journal weighed into this topic recently and added another few considerations to the mix. For example: Your emotions. Are you able to remove them from the equation? Or do you find yourself purchasing (or holding onto) particular investments for sentimental reasons. Do you still own the first stock you ever selected? Is your company stock position a little too large for your own good. If these things sound familiar, asking a pro to weigh in is likely a good move.
Or, are you too hardheaded? If you’re the sort of person who always believes that your decision is the right decision – a tendency that likely shows up in parts of life other than money – chances are pretty good you’re not going to take the advice you’re given. In a survey from the Employee Benefit Research Institute, 23% of workers said they paid for an advisor, and of this group, 73% didn’t follow through with the paid advice. Those in favor of going at it alone also argue that today’s apps and software make money management (almost) a breeze.
If you’d like to split the difference, you can get the best of both worlds and join me for a very special Money School class tonight, Simple Investing with Tim Mauer. Tim is a certified financial planner and the Director of Personal Finance at the BAM Alliance. Tonight Tim will teach you how to create a portfolio that will take you to retirement and beyond. And I’ll be there to get the party started.
Steps to maximize your 401(k)
On the topic of retirement, last week on the blog we welcomed Roger Wohlner, an Illinois fee-only financial advisor and blogger at The Chicago Financial Planner. Since I met Roger at a FINCON conference last year, he’s become a frequent source of mine for reporting – and last week he shared his advice for making the most of your 401(k) plan. For instance, he says to take charge of how much you’re kicking into your plan rather than just defaulting. Many plans that auto-enroll employees do so at a 3% contribution rate. It’s not enough. Learn how to increase your contributions – and where to put them here.
Forget the flip flops
For many people (myself included), retirement sounds like sun, sand and a waterfront view (i.e. Florida and California). The balmy approach may be best for your state of mind, but according to Bankrate, not for your wallet. The Bankrate.com research says that retirees are better off in states with colder climates. As CNNMoney reports, the best state to retire in is South Dakota. Why? Low taxes, little crime and high-quality healthcare. Fellow Midwestern states, North Dakota and Wyoming, and Mountain states, Colorado and Utah, complete the top five. For more, head over to the full article.
More miles for your money
If you’re shopping around for a brand new car, you’re in luck. For the first time ever, over 50% of current year models (2014) get more than 23 miles per gallon, according to the Consumer Federation of America. So if you’re looking for a fuel-efficient car, you don’t have to go out and buy a subcompact anymore, says Jack Gillis of CFA. While you have more cars to choose from with subcompacts, compacts and midsize vehicles, large class sizes and SUVs have more to offer this year.
Bad news for bigger families (and soccer moms): It’s slim pickings for minivans and pick-ups. Even though you can find a car in each category that goes over 23 mpg, these size classes are where manufacturers need the most work, says Gillis. If anything, he says a major takeaway (from this milestone) is that carmakers will have no excuse for getting to 54.5 mpg by 2025. For more, steer this way.
Black-market wedding gowns
“It looked like a drunken monkey put it together with a stapler.” That’s how Christine Stachurski’s fiancé described the bargain ($136) wedding dress she ordered online to Reuters. With the average wedding dress costing $1,281, it’s no surprise that brides on budgets are looking to cut corners. But for Stachurski, it resulted in poorly cut, low-quality cloth. She’s not alone. According to the American Bridal and Prom Industry Association, roughly 600,000 dresses were illegally sold in the U.S. last year by counterfeiters operating through foreign sites. Be safe and try to find inexpensive dresses at U.S. retailers with an online presence, like David’s Bridal. For more, head to Reuters.
Have a great week,
Jean
