A peanut butter and jelly sandwich

April 24, 2017

By Kerry Hannon nytimes.com   Article

Rethinking Retirement for Longer Lives With Fewer Safety Nets

“Five days a week, Kim Moske makes a peanut butter and jelly sandwich and brown-bags it to work. ‘I’ve been doing that for 30 years and saving what I would have spent eating my lunch out someplace,’ she said. … That is a small gesture, but it is indicative of the advantages of making daily choices to help save for a financially secure retirement.

Ms. Moske, 56, lives in Delaware, Ohio, and is a project manager for a small manufacturing firm. … She started to save and invest in her late 20s. … ‘My father worked very hard his entire life and made a good income, yet he died penniless at age 78,’ she said. ‘I’m frugal to a fault. Therefore my retirement is in pretty good shape.’ …

When Ms. Moske was 26 and working full time to pay her way through college, she signed up for a class on finance and investing. ‘I didn’t know a stock from a cornstalk, but I realized that I needed to take control,’ she said. ‘My husband and I immediately started living on less than what we needed, saving and investing.’ …

Then, six years ago, her husband died from injuries sustained in a fall. That caused a seismic shift not only emotionally, but also financially, as she had to live on one income. … I meet with a financial planner once a year to make sure I am on track, and I check retirement calculators all the time.’ In many ways, she is an anomaly.

‘Work More, Save More or Both’

… ‘Nearly half of families have no retirement-account savings at all’  … The median retirement savings figure among all working-age families in the United States is just $5,000; the median among families with savings is $60,000.

… 55 percent of American households risk not being able to cover essential expenses like housing, health care and food in retirement. … ‘We are now living longer and have to recognize that we either have to work more, save more or both’ ….

‘The 65 retirement age for Social Security was put in place in 1933 when retirement lasted eight to 10 years’ … ‘In the old pension system, people didn’t have to make decisions on how much to contribute to a retirement account, which investments to grow their nest egg, how big of a nest egg they would need, what to do with the nest egg when changing jobs and how much to withdraw on an annual basis in retirement.’ …

It is essential to get a “snapshot of your financial picture ASAP’ …. For example, how much have you already saved for retirement? How much are you saving annually as a percentage of your income? Can you bump it up? How is it invested? Have you used a retirement calculator to run the numbers? Have you worked with a financial planner to help you create a blueprint?

Even people who save conscientiously, he said, are not necessarily paying close attention to the details of the financial products they purchase, investment fees, planning for health care in retirement, inflation and other factors that will affect their future.”

Race to the top or the bottom?

April 24, 2017

By Seth Godin via sethgodin.typepad.com/seths_blog/   Article

Cost reduce or value increase?

“Organizations that want to increase their metrics either invest in:

Creating more value for their customers, or

Doing just enough to keep going, but for less effort and money.

During their first decade, the core group at Amazon regularly amazed customers by investing in work that created more value. When you do that, people talk, the word spreads, growth happens.

Inevitably, particularly for public companies, it becomes easier to focus on keeping what you’ve got going, but cheaper. You may have noticed, for example, that their once legendary customer service hardly seems the same, with 6 or 7 interactions required to get an accurate and useful response.

This happens to organizations regardless of size or stature. It’s a form of entropy. Unless you’re vigilant, the apparently easy path of cost reduction will distract you from the important work of value creation.

The key question to ask in the meeting is: Are we increasing value or lowering costs?

Race to the top or race to the bottom, it’s a choice.”


When you’re in your 20s to 30s

April 24, 2017

By Arielle O’Shea via marketwatch.com   Article

Make these 5 essential investing moves when you’re in your 20s to 30s

“Research from the Transamerica Center for Retirement Studies indicates that nearly three-quarters of millennials are saving for retirement and that we started doing so at an earlier age than previous generations. Wells Fargo data show that of those who are saving, half are putting away 6% of their income or more. What we’re not so hot at, according to many of these same surveys, is investing. … Here are five crucial moves millennials can make to overcome their investing anxieties.

1. Get an education

… Khan Academy is a good place to start, as is NerdWallet’s guide on how to invest in stocks. …

2. Say hello to risk

… Investments that require you to take on risk, like stocks, have to offer you a premium for doing so. Could you lose money and never collect that premium? Sure, but that’s unlikely when you’re in it for the long-term. History illustrates this: A portfolio of 100% stocks had an average annual return of 10.1% between 1926 and 2015, according to a study by Vanguard. A portfolio of 100% bonds returned roughly half that, averaging 5.4%. To put that into real-money terms, if you invested $5,000 for 50 years at a 10.1% return, you’d have $614,000. At a 5.4% return, you’d have just $69,000. …

3. Take that risk through index funds

That 70% would be a reasonable stock allocation for your retirement portfolio — and even that might be on the low side. At this age, you should have most of your long-term savings invested in stocks. The best way to do that is not by dumping your money into Apple stock, but with low-cost index and exchange-traded funds. … You can buy a couple of funds that hold the stock of U.S. companies, one that holds international companies and one that holds emerging-markets companies and you’ll be reasonably diversified. …

4. Put a lid on fees

You can’t control the ups and downs of the stock market. What you can mostly control are investing costs — fees charged by your index funds (called expense ratios), administrative fees in your 401(k) and transaction fees incurred when you buy and sell investments. … If an index fund’s expense ratio is more than 0.25%, you can likely do better with another.

5. Use a Roth IRA or a Roth 401(k)

… Why choose a Roth? If your income is lower now than it will be later — a likely scenario for many young professionals — you’re locking in at lower tax rate. And because you’re not getting a tax benefit now, you get to pull out the money — both your contributions and investment growth — tax-free in retirement. To see how valuable that is, use a Roth IRA calculator.”

The dentists are hurting

April 24, 2017

By  via bloomberg.com   Article

Family offices, dentists and quants

“The foundational story of the American financial system is one of upper-middle-class financial capitalism, in which the ideal imagined investor is a thoughtful, financially literate but non-professional small investor who, with the help of a trusted adviser, buys stock in individual companies because they have good businesses and are fairly valued. Much of what is interesting in modern financial markets comes from the fact that that story is no longer true, is indeed viewed as a laughable myth by many savvy people. Who buys individual stocks? It has become an old-timey hobby for the modestly wealthy and eccentric, like model railroading.

So now there are huge public companies that are mostly owned by index funds and “quasi-indexers,” diversified mutual funds who own stock in all of the companies’ competitors. But our corporate-governance system is based on that older story of stock-picking individuals, in which managers’ duties are generally thought to be to their shareholders as shareholders of that company, rather than to the shareholders’ broader interests as holders of the market portfolio. There are tensions there. Or you have market-structure rules intended to protect individual investors, so they can compete fairly against the big institutions, even though a moment’s thought will tell you that’s impossible: The institutions have way more money and technology and time and access than the individuals do, and will of course have advantages in making investing decisions. …

Nobody buys stocks any more: Now, either you buy an index, or you buy a whole company. More people are using the most generic budget form of investing, and more people are becoming institutions themselves and getting involved directly in dealmaking and corporate management. The old story, of broadly dispersed individual shareholders in a single company who delegate management authority to professional executives, is no longer the norm.

Dentists.The foundational story of the American financial system is one of upper-middle-class financial capitalism, in which the ideal imagined investor is, let’s face it, a dentist. Dentists are the traditional backbone of our financial markets, educated people with money to invest but no professional investing expertise. But with the hollowing out of the investing middle class, the dentists are hurting ….”

Life sucking beast

April 17, 2017

By Dan Rockwell via leadershipfreak.blog  Article

4 ways to Improve the Life Sucking Beast of Hierarchy

“Hierarchies done poorly are life sucking beasts. But there is no perfect organizational structure.

Advantages and dangers of hierarchy

#1. Advantage: Clear lines of accountability.

… The reason you care about something in hierarchical organizations is the person over you cares about it.


  1. Pleasing higher ups and neglecting lower downs.
  2. Following instructions and not rocking the boat is advantageous.
  3. Leading is about position not competence.
  4. Success is about compliance not creativity.

#2. Advantage: Clear communication channels.

Communication goes up and down the chain of command through bosses.


  1. Bosses craft messages for personal advantage. …
  2. Teams don’t know what’s happening in other departments.
  3. … Leaders feel pressure to know everything that’s happening. …

#3. Advantage: Speed in turbulence and crisis.

Everyone looks to ‘the’ leader to set direction and make decisions when times get tough.


  1. … People down the chain are afraid to make decisions out of fear of people up the chain.
  2. Paperwork becomes burdensome.
  3. … Truth-telling is rare.

4 ways to improve hierarchies:

  1. … Make pleasing customers more important than pleasing higher ups.
  2. Establish cross functional teams that have authority to make decisions and take action.
  3. Expect higher ups to walk around and talk with people. …
  4. Place recordings of most meetings on the company’s intranet so all employees can tune in and keep current.

Warning: Poorly functioning hierarchies improve slowly. They don’t enjoy being disturbed.”

Best investment advice

April 17, 2017

By Matt Turner via finance.yahoo.com   Article

Warren Buffett just shared his best investment advice, and said the ‘elite’ have wasted $100 billion ignoring it

“Warren Buffett’s Berkshire Hathaway is out with its annual letter to shareholders. … ‘Over the years, I’ve often been asked for investment advice, and in the process of answering I’ve learned a good deal about human behavior,’ Buffett said in the letter. ‘My regular recommendation has been a low-cost S&P 500 index fund,’ he said. ‘To their credit, my friends who possess only modest means have usually followed my suggestion.’ …

Not everyone listens to Buffett’s advice, however. … ‘Instead, these investors politely thank me for my thoughts and depart to listen to the siren song of a high-fee manager or, in the case of many institutions, to seek out another breed of hyper-helper called a consultant.’ … ‘Can you imagine an investment consultant telling clients, year after year, to keep adding to an index fund replicating the S&P 500? That would be career suicide. Large fees flow to these hyper-helpers, however, if they recommend small managerial shifts every year or so. That advice is often delivered in esoteric gibberish that explains why fashionable investment ‘styles’ or current economic trends make the shift appropriate. …

… ‘the financial “elites’ – wealthy individuals, pension funds, college endowments and the like – have great trouble meekly signing up for a financial product or service that is available as well to people investing only a few thousand dollars. This reluctance of the rich normally prevails even though the product at issue is –on an expectancy basis – clearly the best choice. My calculation, admittedly very rough, is that the search by the elite for superior investment advice has caused it, in aggregate, to waste more than $100 billion over the past decade. …

‘Much of the financial damage befell pension funds for public employees. Many of these funds are woefully underfunded, in part because they have suffered a double whammy: poor investment performance accompanied by huge fees. The resulting shortfalls in their assets will for decades have to be made up by local taxpayers.’

‘Human behavior won’t change. Wealthy individuals, pension funds, endowments and the like will continue to feel they deserve something ‘extra’ in investment advice. Those advisors who cleverly play to this expectation will get very rich. This year the magic potion may be hedge funds, next year something else. The likely result from this parade of promises is predicted in an adage: ‘When a person with money meets a person with experience, the one with experience ends up with the money and the one with money leaves with experience.’

Want to be an exceptional leader?

April 17, 2017

By Jeff Haden via inc.com   Article

Want to Be an Exceptional Leader? Science Says Think This Way (Because Most Bosses Don’t)

“Praise can be incredibly motivating. Praise can be extremely encouraging. Praise can be hugely inspiring. If you do it the right way. Take the wrong approach, and praising an employee can actually have the opposite effect. The difference lies in whether you assume skill is based on innate ability…or on hard work and effort. …

According to research on achievement and success by Stanford psychologist Carol Dweck, people tend to embrace one of two mental approaches to talent:

  • Fixed mindset: The belief that intelligence, ability, and skill are inborn and relatively fixed–we ‘have’ what we were born with. People with a fixed mindset typically say things like, ‘I’m just not that smart’ or ‘Math is not my thing.’
  • Growth mindset: The belief that intelligence, ability, and skill can be developed through effort–we are what we work to become. People with a growth mindset typically say things like, ‘With a little more time, I’ll get it’ or ‘That’s OK. I’ll give it another try.’

… When you praise employees only for their achievements–or criticize employees for their short-term failures–you help create a fixed mindset environment. In time, employees come to see every mistake as a failure. They see a lack of immediate results as failure. In time, they can lose motivation–and even stop trying. After all, why try, when trying won’t matter?

Fortunately, there’s another way. Make sure you also praise effort and application.

  • ‘Hey, you finished that project much more quickly this time. You must have worked really hard.’
  • ‘Great job! I can tell you put a lot of time into that.’
  • ‘That didn’t go as well as we hoped…but all the work you put in is definitely paying off. Let’s see what we can do to make things turn out even better next time.’

… By praising effort, you help create an environment where employees feel anything is possible–as long as they keep working to improve.

The same principle applies to how you encourage employees. Don’t say, ‘You’re really smart. I know you’ll get this.’ … Instead, say, ‘I have faith in you. You’re a hard worker. I’ve never seen you give up. I know you’ll get this.’ The best way to consistently improve employee performance is to create and foster a growth mindset. Not only will your team’s skills improve, your employees will also be more willing to take more risks.”