June 14, 2011
Nature of Job is Key to Investing
Toronto finance professor Moshe Milevsky has written a new book, so this seemed like a good excuse to revisit his favorite question: are you a stock or a bond?
Milevsky believes financial advisors should ask their clients this question before making any asset-allocation decisions. If someone has a risky job, he argues – if they are a stock – then their portfolio should emphasize bonds.
“If a financial advisor says you have a lot of stocks [in your investment portfolio] and should buy bonds, the response should be, ‘My job is a bond,’ “ he said.
Milevsky is adding another layer to the risk formula usually promoted by financial planners, who typically advise clients to lower their risk as they age. Milevsky wants people to avoid the double jeopardy dramatized by Enron Corp. employees, who had high-risk jobs in energy speculation and put their money into high-risk stocks – even worse, they were Enron stocks.
In a recent interview, he rated a few professions on the stock-bond continuum to demonstrate how his theory works. …Learn More
June 9, 2011
Wives Learn Finances as Husbands Age
A 29-year-old Ph.D. candidate is challenging the belief that elderly women don’t prepare to take over the household finances after their husbands die and leave the task to them.
The stereotype about older women probably springs from pervasive evidence that women generally have lower levels of financial literacy than men.
But Joanne Hsu at the University of Michigan found that women prepare for the high likelihood that their husbands will die first by beginning to acquire financial knowledge. Some 80 percent of the women in her sample are on track to catch up with their husband’s level of financial knowledge. Her study controlled for low cognition, so her findings measure the wife’s improvements that are above and beyond her husband’s. …Learn More
June 8, 2011
Preschool Children Learn about Saving
Paul Solman, a business reporter in Boston for the NewsHour on PBS, put together an excellent piece about educating preschool children about saving. In it, Solman interviews Grover and the children of behavioral economist David Ariely of Duke University, among others.
The piece discusses a research study on self-control among young children, which was covered recently by Squared Away.
The video is worth checking out.
June 7, 2011
Forced into Retirement? Downsize
Laid off from his job as a software engineer, Ken Wadland did something smart: he downsized.
After losing his job in June 2009, it immediately became obvious to Wadland that he could not afford his large house in the Rhode Island countryside. He sold it and purchased a condominium to reduce his housing costs, which are the largest single expense for most households.
The financial-services industry barrages baby boomers with tips for saving and investing their retirement nest eggs. But little attention is paid to the strategy of downsizing, an effective way for baby boomers to improve their retirement security by cashing in on the large amounts of equity built up in their homes over decades.
“I’d rather not have the expense,” Wadland, who is 60, said in this video.
Ken Wadland from Over Fifty and Out of Work on Vimeo.
Wadland explained how he came around to his decision in the online video series, “Over 50 and Out of Work,” which is featured occasionally in Squared Away.
His most recent job was at a large company, which once awarded him for being an innovator. “My passion is solving puzzles,” said Wadland. …
Learn More
June 2, 2011
D2D Lures Traffic to Video Games
The secret to D2D’s success in luring players to its financial video games starts with the $150,000 it spends to design each game with MIT researchers and an award-winning Web designer.
But the Boston non-profit puts just as much emphasis – and an undisclosed amount of funding from The Wal-Mart Foundation – into distributing the games.
D2D has used an e-mail blitz to 100,000 community college students in Indiana and hosted game competitions in city neighborhoods in Massachusetts, Florida, Texas, New York, and Maryland. It partners with large employers, financial companies, state governments, and the military – organizations it recruits to promote the games to its employees, clients, or members. New products aimed at distribution include Spanish-language games and apps for the iPad and Droid.
D2D’s five games have attracted a combined total of 106,000 unique visits since the first and most popular one, Celebrity Calamity, came out a year ago. That’s not quite in league with, say, Disney, which has had 750,000 visitors to its Great Piggy Bank Adventure and an Epcot exhibit in Orlando backing it up, according to T. Rowe Price, the mutual fund company that collaborated with Disney on the game. …Learn More
May 31, 2011
Older Workers Behind the 8 Ball
Rudy Limas, a laid-off truck driver, resorted to applying for unskilled labor jobs – anything to get back to work and support his family.
“They look at your age and think, ‘He can’t handle it’ – even though I can,” the 61-year-old Oregon resident said. “They look at your age [and] they’re not going to hire you.””
Limas’ video interview, included in the online project, “Over 50 and Out of Work,” was selected by Squared Away for a series about the particular financial issues facing people approaching retirement age who lose their jobs.
Rudy Limas from Over Fifty and Out of Work on Vimeo.
May 26, 2011
Retirees: Focus on the Monthly Check
To help retirees choose the best way to spend down the 401(k) savings they have built up over a lifetime, Nobel Prize laureate William Sharpe urged them to focus on a single outcome: the size of their monthly check.
This video was created by Professor William Sharpe of Stanford University.
Financial advisors should say to their clients, “Don’t worry about the strategy or model. Look at the outcomes that matter: what you can spend year by year in retirement,” he said.
Speaking at a conference this week at Boston University’s School of Management, which brought financial practitioners together with top minds in academic finance and Washington think tanks, Sharpe said advisors should present clients with various payout schedules and then explain the probability of success for each one they’re considering. Learn More
About Squared Away
Learn more about our blog and its writer, Kimberly Blanton, a former Boston Globe reporter.
