Archives For Miscellaneous

If this is true, it’s sad:

“The younger workers are often off task, engaged on social media, on the internet, texting on phones and other unproductive activities.

“The Department of Labor must realize that if we are supposed to pay them overtime for work they should do during normal work this will make us have to focus on micromanaging employees and reducing compensation to reflect actual productivity of a mandated 40 hour or less workweek.”

I see it a lot when I go to the grocery store. The parking lot attendants are usually looking down on at their phones. That can’t be productive. If this behavior is carrying over into the professional jobs, we’re in trouble.

Thoughts?

Here is the scenario:

You’re either retired or getting close to retirement. Not to be rude, but you are “prime meat” for advisors. They love your demographic because it usually means a nice lump sum for them to work with.

You either get invitations in the mail or someone calls you to invite you to a “free” dinner. All you have to do is listen to a financial consultant’s (investment advisor, insurance salesman, etc.) presentation.

Before you decide to go, let me share a few tips with you.

1. Understand that the advisor is trying to SELL you something. Whether it’s his or her services or some kind of product or idea, the intent is to get clients.

2. Once you understand number 1, you would be wise to be skeptical of EVERYTHING they say.

3. If they are talking about some kind of insurance product (IUL, equity-indexed annuity, variable annuity, etc.), they’ll usually start off by trying to scare the audience with talk about how risky or volatile the “stock market” is, which is true. It is “risky”, but most retirees don’t have 100% of their assets in the stock market. If the salesperson starts throwing around numbers, BEWARE!

The S&P 500 Index that is quoted in the media is a price index. That means it does not include dividends. So, although a price index is a decent barometer, it is not good for
comparing investments because a person who invested in a mutual fund or exchange-traded fund that tracked the S&P 500 Index would receive dividends as part of their return. So, it is misleading on the part of the salesperson to use the S&P 500 Index price return when drawing a comparison to what they have to offer.

How misleading?

Take a look at the following graphic I took from a book I received recently. This book was published in 2015, so I’m not sure why they stopped at 2012 (I will note that 2013 and 2014 were both up years as you’ll see in a later graphic). He also has the wrong return for 2012. It should be 13.41%, not 10.20%. You can click on the graphic to see a larger version:

Table from pg 15

That table is based on the S&P 500 Price Return Index. Yes, the author does mention that the table does not include dividends, but I question his motive for not including them. The next graphic will show you why:

S&P 500 TR vs S&P 500 Price
NOTE: Does not include fees or taxes.

Obviously, leaving dividends out of the equation highly favors whatever product it is getting compared to. That’s why you should be prepared to ask the following question:

“Are the returns you are talking about real returns that include dividends?”

If the answer is “No” or “I don’t know”, you need to get up and walk out. They are being dishonest and purposely misleading the audience.

4. Ask about surrender periods and charges. Some strategies using insurance have long surrender periods of 7 to 15 years. A surrender period is a time period in which you must pay a fee in order to terminate your policy. The amount declines over the years.

5. Be wary of bonuses. Remember, there is no such thing as a free lunch. If a company is going to give you a 10% – 25% bonus, it’s coming from somewhere.

6. If it’s complicated, forget about it. Retirement planning doesn’t have to be complicated. The vast array of products (most of them unnecessary) is what complicates things. Insurance products are among the most complicated because there are so many of them and each company has its own spin, which makes them difficult to compare.

7. Ask them point blank how much they will make off your transaction. Don’t feel embarrassed to ask. It’s your money. If they say, “The insurance company pays me,” leave. That’s not the question you asked. If they avoid answering the question, don’t do business with them.

8. No matter how good the deal sounds, NEVER sign or agree to anything during that presentation. Instead, get as much information as you can and leave. Then, once you are home, read all the information and ask any questions you may have. I would even suggest you get a second or third opinion. Find a fee-only advisor through NAPFA.org and go see them. Expect to spend $250 – $500, but that’s a lot less than you could lose if you make bad decision.

Sadly, most of the people reading this blog post probably already know this stuff. Here’s to hoping this information reaches those who can use it.

For more information, check out this article from FINRA.

A lot of you may already know this. This is for those who don’t.

I’m on facebook a lot. One of the annoying things about facebook is the content changes so quickly. I can be reading something, exit facebook, come back, and the article I was reading is gone.

Then, one day I discovered a way to save articles. This is a really useful feature that I don’t think a lot of people know about. I have an iPhone, iPad, and Windows computer. I know the feature is available on all on three of those, so I would think it would be available on Android products too.

Here’s how to save links, articles, posts, and videos in Facebook iOS app:

1. Tap or click on the down arrow.

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2. Save the article, link, video, etc.

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3. To access your saved items later, click on the menu icon in the lower right corner of the screen.

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4. Open the Saved Items folder.

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I came across this list of 50 Life Lessons Parents Should Teach Their Kids this morning. There is some good stuff here. Some of my favorites:

4. Run your own race, not the race that other people expect you to run.

5. You cannot always choose your circumstances, but you can always choose your attitude.

7. Successful people do what other people aren’t willing to. Success is a mindset, not a goal to be attained.

10. Don’t blame others for your frustrations and disappointments. If you blame others, it means you haven’t taken full responsibility for your life.

12. Watch as little TV as possible – preferably none at all. You’ll lead a more productive life this way.

23. Become an organised person. Being disorganised is one of the biggest causes of stress.

24. Don’t ever stop learning. The more you learn, the more you’ll appreciate the beauty of the world around us.

40. Become a person of integrity. Do what you say you’ll do, and people will trust you. Without trust, it’s impossible to build strong relationships.

41. Learn to manage your thoughts and emotions. How you respond to frustrations and disappointments will largely determine your success.

42. Set big goals, but break them down into small steps. This way, you won’t feel overwhelmed. It’s also more likely that you’ll take action.

50. Happiness is a choice more than it is a feeling.

I could have just included the entire list, because they are all that good. Those were just the ones that really stood out to me.

Related to this is a list of my favorite maxims from John Wooden and some advice from his father that I posted several years ago.

I found this ad in today’s WSJ. I scanned it in and pieced it together (you can click on the picture to see the full ad):

WSJ Lawyer Ad 11-23-2015

Question: how can this lawyer legally call this person out like this? Thoughts?

My Kids…

November 21, 2015 — Leave a comment

My wife and I are very blessed…

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I have an inquiring mind. I must know stuff. One of the things I have wondered about was how the World Series plays out. For instance, when a team wins the first game, how often have they gone on to win the series(63.2% of the time). I googled to try to find the information, but it wasn’t available as far as I could tell. So, I fired up Excel and ran the numbers myself.

The Mets and Royals just finished up game two of their series. The Royals won that game and now have a 2-0 lead in the series, which heads to New York for the next three games (only two if the Royals end up sweeping the series).

Although it is rare, it is not unheard of for a team to come back from being down 2-0 to win the series. It has happened 10 times in the history of the 7-game World Series. That said, as you can see from the graphic below, the odds are in the Royals’ favor:

World Series History (After First Two Games)

So there you have it (in case you were wondering). As my friend Brad pointed out on one of my facebook posts about the series, correlation does not necessarily mean causation. If anything, it shows just how difficult it is to come back from losing the first two games. Oh, and in case you were wondering, no team has ever come back from a 3-0 (at least not in the World Series).

Enjoy the rest of your day. Thanks for reading.