The majority of financial firms advertising in the issue are completely defunct. Brokerages and various investment opportunities took out many, many ads in this issue. The vast majority of them are now defunct – I tried tracking down several to see what became of their business but they seem to have completely folded. The only ones to have survived are the monsters – Bank of America and American Express, most notably.

What does this mean for you? There’s a decent likelihood that the companies managing your money right now are not going to be around when you go to retire. Interesting thought, isn’t it?

Credit cards were very, very different. The entire issue only had two advertisements for credit cards, one for American Express and the other for BankAmericard (the forerunner to Visa). The American Express card featured a straight 12% annual interest rate. The best part? This fine print from the American Express ad:

The undersigned aggres to be bound by the terms and conditions that accompany each Card (original, renewal, or replacement) unless he cuts the card in half and returns both halves.

Cut the card in half and return both halves? I can’t even conceive of a modern credit card issuer wanting to deal with that.

A generous budget for a seven day trip for two in the south of France? $500. At first, that’s almost shocking, but when you figure in inflation over the period since 1973, the price becomes $2,327.64, which seems much more reasonable for a solid, not overly extravagant vacation for two in the south of France. It ends up being more of a commentary on inflation than anything else. As I read the article, I realized that it’s a pretty solid travelogue for the time and aspects of it are still applicable today.

Ma Bell The ad for Ma Bell (aka American Telephone and Telegraph) was telling not only of the telephone service at the time, but the fact that there was a stranglehold on long distance telephone service in the United States. Person-to-person long distance calls on weekdays (8 AM to 5 PM) were $3.55 for the first 3 minutes. That’s in 1973 dollars – $16.53 in today’s dollars. Yes, if Ma Bell still ran the show, you would be paying $16.53 for a three minute long person to person call in the United States. (For those unaware, person-to-person means that the operator would verify who was being called – remember, this was the days before caller ID). This rate is actually advertised, meaning that apparently these rates were good enough to warrant extra attention. If you’re willing to accept a number of limitations, you can even get a lower rate of $1.35 for the first three minutes (yes, still in 1973 dollars)!

Kind of makes you thankful for today’s providers, doesn’t it? Some prices have certainly lowered since 1973.

Contaminated food was a major concern in this first issue. Basically, many people complained about unwanted stuff in foods, like impurities in flour and such. Today, the bigger concern is that these impurities are natural – that’s why organics have become a popular item. People are far less worried about slight natural impurities in flour and are much more worried about chemical treatment of food, but the concern about the food supply still persists. Why? Food is one of our base needs, and thus it is something that many care deeply about.

Working women in the 1970s had a very raw deal. Compared to then, the genders are much closer to equality. I’m amazed that mothers worked at all in those times, considering their jobs would barely break even. One of the issue’s feature articles focuses on a few of their experiences, including stories of women working full time and only actually netting $45 after the whole week. Seriously, why work? That net pay is far, far less than minimum wage, and a good bit of frugality would have made that difference even in 1973.

People were far less prone to debt. In this issue, people with just a few thousand in total debt were nearly panicking, and there was basically no concept of easy credit. The only mortgages mentioned were very solid fixed rate mortgages with a relatively low interest rate and a low principal, likely due to the firm requirement of a down payment. Credit has gone crazy in this country since 1973.

The subscription price hasn’t changed in thirty five years. The subscription card in the magazine offers one year’s worth of Money for $12 – the exact same price you can get from such insert cards today. Of course, today’s magazine has a much higher ad-to-content ratio, which makes all the difference. I would much rather pay a higher rate for a magazine with minimal ads.

Note: this is a pared-down version of what I originally had intended to present here. I attempted to gain permission to use a small number of scanned pages from the issue, but I was unable to secure permission for these scans from Time-Warner.

The post Seven Lessons Learned From The First Issue of Money Magazine appeared first on The Simple Dollar.

Want to save money? Associate with people who don’t spend like crazy. Your friends are a constant guide for how much money you should be spending. If you find friends that are wisely frugal, your own spending will slow down – and you’ll wind up financially ahead. (p. 28)

If you plan on moving in three years or less, rent instead of buying. The costs associated with buying will eat up any potential equity gain you might get in three years, so you’re way better off renting in the short term. (p. 36)

Don’t rely on a life insurance policy through your workplace. This makes a lot of sense, but didn’t occur to me at first. If you switch jobs, suddenly you have no insurance and you’re older, which means a term policy will cost more. (p. 38)

If your mortgage company fails, don’t worry about it. Someone will buy your mortgage and chances are the servicing company (the place you send the checks to) won’t change. Even if it does, they’ll inform you by mail and you just change the address on the envelope (or on the online bill pay service). (p. 52)

The best time to buy financial stocks is right about now. Most financial companies are in good shape, but the subprime panic has led to a mass exodus and thus lower prices – in other words, bargains. (p. 59)

Unless you really know what you’re doing or you’re requiring them for income, you should always reinvest your dividends. A solid rule of thumb to follow for a long-term investor – I’m reinvesting every cent of my dividends. (p. 77)

Spend 30 minutes and make a video of your home. Make a clear video of all of your stuff and zoom in on the valuables so it’s clear what they are. Then take that tape and put it somewhere safe. Why? Insurance. In case of disaster, that tape becomes gold. (p. 81)

Americans aren’t better off now than they were 35 years ago. There have been advances, sure, but the losses are far worse than the gains. They seemed to try really hard to make it seem more even than it actually is. (p. 110)

Don’t judge your financial status by comparing yourself to your neighbor. There’s a good chance that what their financial situation appears to be is far different than what it actually is. (p. 126)

Unless you’re an art dealer, don’t buy art as an investment. Instead, choose items for their aesthetics and don’t worry about profit at all. (p. 137)

The post Money Magazine – October 2007 appeared first on The Simple Dollar.

People overinvest in their house. The average net worth of people aged 51-56, an age range that’s very likely to own their own home, went up 11.6% from 1992 to 2004. However, subtract their home from that and the net worth is actually down 3.3% over the period, ignoring inflation. What does that mean? People are counting on the value of their home more and more, which means that if housing prices level off for fifteen years like many are predicting, many people are going to have a huge chunk of their money in something that doesn’t grow in value at all. Ouch. A home is a great thing to have, but don’t put yourself in a place where it’s the only thing you have. (p. 21)

The biggest mistake job interviewees make is talking too much. I generally agree with this. The best interviews I’ve been involved with – as an interviewer – were the ones that turned into a conversation. One good tactic is to take full advantage of the part where the interviewer asks you if you have any questions – have at least a few lined up at this point so it seems like you actually are interested in the job. (p. 28)

Time with a financial planner can be a great gift for adult children. I agree wholeheartedly with this idea – an hour or two with a financial planner just as a twenty- or thirtysomething is starting to “get it” in terms of what they need to do with their money can be the best gift you can give. (p. 32)

When you are close to your goal, get out of stocks. This was a really useful article. Using the S&P 500 as a baseline, it made a very clear argument that when you get within a few years of your goal and the stock market isn’t fresh out of a monstrous downturn, you should pull your investments out of stocks. The article used retirement as the goal, but it’s true for any goal you might set – my wife and I have our dream house as an investment goal, for example. (p. 46)

Use a dangling carrot to get contracting work done well and quickly. For example, if you have someone fixing your kitchen and you agree in advance that it’ll be done on a certain date, let the contractor know that you’re having a big party shortly after the completion to show off the new work and might be willing to pass around the contractor’s card if the job is done well. The lure of lots of potential business is often enough to keep the contractor very focused on you. (p. 51)

With current mortgage rates and tighter lending, PMI is often a better choice than a piggyback loan if you don’t have 20% down. Here’s a really nice calculator so you can run the numbers yourself – most recent offers I’ve seen have a PMI of around 0.5%, a base loan between 6 and 7% and a second loan at around 8%. Running the math there shows you the PMI is cheaper, even with the potential reassessment cost. (p. 67)

Performance comes and goes, but costs roll on forever. – John Bogle My favorite quote from a list of twenty great ones. (p. 92)

The college admissions “game” is a waste of money. The article profiles people who have blown five figures on private SAT tutors and college admission preparers and such, then indirectly concludes that they’re a waste of money. Instead, they show a student who got into Harvard and didn’t spend a dime on the junk. What should you do to bolster a college application, then? Spend time on activities related to stuff that genuinely interests you. For me, in high school, I got fired up by the FFA and got heavily involved – my experiences there helped me a lot. (p. 103)

The best strategy for not beating yourself mentally while investing? Get a low cost index fund and forget about it. That’s the general idea behind a lengthy excerpt from the book Your Money and Your Brain. (p. 104)

Some stuff is worth paying extra for. I thoroughly agree with this sentiment in general, but the provided list of things actually worth paying extra for makes many big value judgements for people. For example, I don’t really feel the need to spend $200 on bedsheets. (p. 128)

The post Money Magazine – September 2007 appeared first on The Simple Dollar.

Traveler’s checks are pretty suboptimal in the modern era. Their fees are really high compared to ATM usage. If you’re going to travel internationally (particularly to Europe), just get cash with your ATM card and if you want an emergency reserve, just sock away raw cash someplace safe. (p. 21)

When you’re interviewing for a job, tell a story. Go in there ready to tell a story about your biggest success at your previous job. Better yet, have two or three. Then, when the opportunity presents itself, tell the story – it will do wonders to sell you to the interviewer. (p. 22)

You can do much more with your charitable donation and time if you focus on one charity rather than several. It takes a lot of people making small donations to have the same impact of one person making a solid donation of time and money, so if you really want to help out a charity that really means something to you, focus exclusively on that charity. (p. 34)

If you get a big inheritance, don’t spend it right away. Sit back and actually look at where to put it – you should also contact a CPA and figure out the tax implications before you do a thing. (p. 39)

Why would you want a financial planner? I still don’t understand why a financial planner is useful for anyone who isn’t worth well into the eight figures. With anything less than that, you can easily manage it yourself without a planner eating you alive for the sake of their own profit margins. (p. 43)

The S&P 500 may still be undervalued, after four years of a bull market. I still don’t feel great about investing in stocks right now, but the magazine makes several good points, including the fact that the S&P 500 is still undervalued (a lower-than-average price to earnings ratio compared to the historical average). Interesting… (p. 60)

A diversified portfolio is better than simply investing in what you know. Some investment gurus preach about focusing your investments on what you know, but it turns out that you’re far better off investing in a broad array of things. Another thumbs-up for broad based low cost index funds, I guess. (p. 66)

Their entrepreneurship guide overlaps with most of my guide to self-employment. Much of the same advice is focused on: get your business started while you’re still employed and plan very carefully to make sure you aren’t making a financial suicide leap when you do quit. (p. 81)

People who marry solely for money have issues. Thankfully, the article on how to marry a billionaire was done entirely tongue in cheek (I hope). (p. 94)

Whole Foods isn’t perfect. It’s basically an organized farmer’s market and offers an abundance of organic produce, but that doesn’t guarantee that everything on the shelves there is wonderful. Honestly, I prefer actual farmer’s markets – the prices are better and you actually get to meet the people that make the food. (p. 114)

The post Money Magazine – July 2007 appeared first on The Simple Dollar.

Do a home inventory. If you own any appliances or other items, you should have an extremely thorough home inventory, including makes, models, serial numbers, and so on. Even as a renter, I’ve done a very detailed inventory and I store a copy off-site – when I own a home and have a lot of appliances and furniture, I’ll probably be neurotic. (p. 24)

The Ford Fusion and Mercury Milan are basically identical except for the logo. Why pay $800 more for the Mercury? A similar dichotomy occurs between the Ford Taurus and the Mercury Sable. Don’t buy the more expensive version. (p. 26)

If your parents are getting older, have a heart-to-heart with them about their finances. Make sure they’re in good financial shape, make sure their estate is planned, and make sure they’re not slipping up and making big financial errors. Just sit down with them and talk. (p. 36)

Have a conversation with your spouse about spending. There’s a semi-humorous guide to this serious topic, but the fundamental points are really solid: be willing to compromise, be willing to give up some of your own spending, and make lists together of the things you’re willing to cut out. (p. 43)

The Citi Driver’s Edge Platinum Select MasterCard rocks. I’ve talked about this card a time or two, but Money points it out again. If you drive much to work (and I commute more than ten miles each way every weekday), the benefits on this card can really add up. I think there’s a good chance that I will move to this card as my primary card after we make the house move. (p. 46)

Compare your investment portfolio to a standard index fund portfolio. If your returns aren’t beating comparable funds from Vanguard, why are you sticking with your current mutual funds? The same goes for individual stocks that you’ve held for a while – if they’re not matching a standard index fund, what are you doing? Broad-based index funds make a great benchmark. (p. 47)

Most money market funds are not FDIC insured, so if the companies default, you get nothing. You can get as high as 6.2% or so in a money market account, but they’re often invested in bonds that are shaky investments. This article gives an example of a money market account that is invested in Ford bonds with a pretty poor bond rating because Ford is in such a precarious financial position. If Ford implodes, then the money in that account is gone for good. (p. 66)

How can you get an 18% (or so) return with no risk on a $5,000 investment? Pay off your credit card debt. If you carry forward credit card debt while also investing in other things, you’re inexplicably choosing to lose money. (p. 78)

Don’t lend money to family or friends. 43% of family loans aren’t repaid and 68% of people who give loans to family members or friends wind up regretting it. Just avoid the bad feelings and adopt a no-loan policy. (p. 102 and 104)

Quote of the month:

The only way to be assured of higher expected return is to own the entire market portfolio.

- Bill Sharpe, Nobel Prize winner in economics (p. 107)

The post Money Magazine – June 2007 appeared first on The Simple Dollar.

“Two cycle billing” is insidious. Do you have a Discover card, or a credit card issued by Washington Mutual? They do “two cycle billing,” which basically means if you pay off your balance one month, you’ll still pay interest on half of that balance next month – even though there’s no balance on your card. Each month, you’re billed for interest on the average of this month’s and last month’s balance. That’s a rip off. (p. 19)

Reason #978 to invest in index funds over managed funds: they’re not nearly as taxed. Managed funds often have tax consequences due to the buying and selling of assets; index funds rarely make such moves. Unless you like giving portions of your “gains” to Uncle Sam on a regular basis, stick with the index funds and turn those short term capital gains into long term gains. (p. 21)

Consider all of the costs before signing up for a career switch. This is the only thing that’s keeping me from jumping on board and becoming a full time writer – I’m just not convinced I’m covering everything. (p. 30)

Earn up to 30% tax free! How? By paying off your outstanding credit card debt. If you have credit card debt, pay it off before even worrying about investing, because the long-term benefits of eliminating credit card debt are better than almost any investment you can find. (p. 38)

Paying off a mortgage is a great investment. It’s incredibly stable and offers a return around 6% (on an 8% mortgage). This is substantially better than most other stable investments – the stock market can beat it, but it’s not a guarantee. (p. 40B)

If you get started early (well before 30), you don’t need to save 10% of your salary for retirement. I’ve been saving at least 10% since I was 23, and according to this article, I can cut it back to about 7% and still retire at 65. Too bad – I want to retire earlier, so I’m keeping it at at least 10%. In fact, once we’ve made the move to buy a home, I may bump it up from there. (p. 50)

Life cycle funds vary widely. The article compares the AllianceBernstein 2025 fund and the TIAA-CREF Lifecycle 2025 funds and shows that their component investments are very different from one another and, as a result, their returns are very different, too. Just because two target funds have the same year doesn’t really mean much at all – investigate them anyway. (p. 54)

Scared to pick a fund? You can pick a mutual fund just as well as an investment advisor. Just trust yourself a bit. I followed my own path and wound up in the Vanguard 500 and I couldn’t be happier about it. (p. 56)

Invest in stocks, not real estate. That’s the conclusion of a lengthy comparison of the two investment vehicles. (p. 98)

Quote of the month:

I’m inclined to think there’s a good chance that the return on real estate will be negative, substantially negative, over the next 10 years because all booms reverse in the end.

- Robert Shiller, author of the book Irrational Exuberance, who called the end of the dot.com boom almost to the day (p. 83)

The post Money Magazine – May 2007 appeared first on The Simple Dollar.

Assuming you want to retire at age 60 and plan to have no pension and no job in retirement, you need to have…
1.6 times your salary in savings at age 35
3.5 times your salary in savings at age 40
5.8 times your salary in savings at age 45
8.5 times your salary in savings at age 50
11.9 times your salary in savings at age 55
16.0 times your salary in savings at age 60

These figures assume a 35 year retirement starting at age 60 with 80% of your current salary each year, and with Social Security kicking in at age 62. It also assumes a 4% annual real rate of return (that means it includes inflation) on your investment and that you’ll withdraw 4% of the total balance the first year and then the same dollar amount adjusted for inflation each subsequent year.

So let’s look at what this looks like for a real person. Joe has a salary of $50,000 and wants to make sure his portfolio is doing good.

At age 35, he should have $80,000 socked away. This is a tough one to get to – Joe’s better off starting as early as he can to get to this number. If he puts $5,000 away each year starting at age 25 in an account that earns 9% annually, he can get to that number, though. $5,000, broken down, means a little less than $100 a week, so putting away $100 a week is a good place to start. If you start later, you need to put more than that away each week: if you start at age 28, for instance, you need to be socking away $160 a week.

At age 40, he should have $175,000 socked away. If Joe made the threshold at age 35, then he can make it to this threshold by socking away about $120 a week into that same 9% account.

At age 45, he should have $290,000 socked away. If Joe made the threshold at age 40, then he can again make it to this threshold by socking away that same $120 a week into that same 9% account.

At age 50, he should have $425,000 socked away. That same $120 will actually be getting Joe a little bit ahead of pace: if he met the threshold at age 45 and keeps socking away that $120 into that same 9% account, he’ll be just shy of half a million at age 50.

At age 55, he should have $595,000 socked away. With that same $120 a week plan, Joe will have almost $800K socked away at age 55. That’s pretty close to what he’ll actually need to retire at age 60.

At age 60, he should have $800,000 socked away. With that same $120, Joe will have $1.2 million in the bank.

What about raises? The numbers in Money Magazine take both inflation and raises into account. Each time your salary goes up, your actual numbers that you need to hit will go up as well. That’s why proportional saving is the key: it ensures that your retirement will grow to match the lifestyle your salary affords you.

So… how much should I be saving for retirement each week if I want out at age 60? It depends on your age. If you can get 1.6 times your annual salary into retirement savings at age 35, then you need to be putting about a quarter of a percent of your annual salary into your retirement plan each week to be able to retire at age 60 and just enjoy life. So, if you make $50,000 a year, that means an investment of $125 a week into your 401(k) and/or Roth IRA should be sufficient to lead to an enjoyable early retirement.

The post A Closer Look At Money Magazine’s Retirement Benchmarks appeared first on The Simple Dollar.

A nice rule of thumb for comprehensive and collision auto insurance. If your car is worth less than ten times what you pay each year for collision and comprehensive insurance, drop them. They’re not worth the money on an older car. (p. 18)

If you’re depressed, buying stuff doesn’t help. It took me a lot of years to figure this out, but the things that really bring me joy don’t cost very much at all – reading a book, sleeping, exercising, playing with my son, listening to old records, blogging – why should I spend a lot of money? (p. 28)

Should you ask for a prenup? The magazine offers a guide to asking for one, but what about when two people go into a marriage with almost no assets? It’s hard to predict what’s going to happen and a prenup is a blind guess that may end up causing really unfair situations later on. On the other hand, if one or both people come in with assets, a prenup is a good idea as insurance against the unexpected. (p. 38)

If your children expect you to hand them money, something needs to change. I’m in favor of an allowance system with very clear responsibilities, and if the child doesn’t meet those responsibilities, they don’t get the allowance. The article advocates a similar system. (p. 44)

Wine is becoming a strong long term investment. One big problem: if I had a case of 1982 Burgundy in my basement, I’m sorry, I would simply be unable to avoid enjoying it. (p. 63)

Four blue chips have increased profits for twenty straight years. Home Depot, General Electric, Wal-Mart, and Walgreen have all shown profit growth year in and year out for two decades – they’re about as steady as you’re going to find. (p. 74)

If you’re 35 and want to retire at 60 and assume you’ll have no pension and no job in retirement, you need to already have 1.6 times your salary in savings. I’m 28 and my total retirement savings is about 0.75 times my annual salary. I am definitely on pace to beat that target number for age 35. (p. 82)

GTD works for tax preparation. David Allen gives a bunch of useful advice on how to get your papers organized for tax season. Basically, just store everything that might have tax consequences in a folder and deal with it in April. Simple – just like GTD. (p. 115)

Price matching guarantees rip off the lazy. Generally, if you see a “price match guarantee,” the price is actually inflated. This way, some people will buy thinking they’re getting a “deal” without actually doing the legwork and others will buy with the deal in hand. The two balance each other and overall the seller just sells even more at, on average, the price point they wanted anyway. (p. 129)

Quote of the month (p. 97):

There’s a big cocktail party on Martha’s Vineyard. Someone comes up to this writer, I think it’s Joseph Heller[author of Catch-22], and says, “Joe, see that guy over there? He’s a hedge fund manager, and he made more money yesterday than you made on all the books you have ever published.” Heller looks over, pauses, and says, “Yeah, but I have something he’ll never have: enough.”

Ask yourself this: do you have enough? It’s an interesting question to think about, actually.

The post Money Magazine – April 2007 appeared first on The Simple Dollar.

What is the “Money 70″? The Money 70 is a list of mutual funds selected by Money Magazine and followed in each issue of the magazine. You can read the full criteria for selection here, but the basic nutshell is that the funds on the list are generally low cost, focused on shareholder interests, and have a consistent investment strategy. It’s really a healthy list of well-run mutual funds from a variety of investment firms with a variety of goals and strategies.

Does this list match your investment philosophy? As I mentioned yesterday, I generally like index funds because they provide diversity without much expense; however, the Money 70 list contains 43 actively managed funds and only twelve index funds. In my opinion, the twelve index funds they show are stellar and the truth is that there are simply far more managed funds out there than index funds because lots of investors either want to beat the market or want a fund that is really conservative that won’t sink in a down market, two things that index funds don’t really protect you from.

I could repeat the contents of the list here, but a simple link to the Money 70 list saves the effort and provides a nice summary table. If you find a fund on that list that looks really interesting, I strongly recommend looking it up at Morningstar, as discussed earlier today.

The post The Money 70: A Great Place To Start Looking For Mutual Funds appeared first on The Simple Dollar.

Anyway, here are the ten things that really stood out at me from the issue:

People are pretending to be hotel concierges to scam people out of their money. Don’t give your info away, ever. I’m even going to blow it up this time for you to read clearly. Never, ever give any personal information to someone who calls you; if you feel compelled, look up their number on your own and call them back. There are so many clever phone scams out there that you simply cannot trust someone at their word over the phone when it comes to your personal information (p. 24).

Don’t just hire a home builder and walk away expecting a perfect house. Many people got lemon houses in the last several years. You should make sure that your builder is licensed, know whether or not they can handle the job, have a lawyer read the contract (especially parts dealing with arbitration – get specifics or strike it from the contract), and visit the job site regularly and look for things that stand out to you (p. 47).

Rebalancing your portfolio is good. If you started out with a portfolio that was 50% in an S&P 500 index fund and 50% in treasury notes in 1989 and left it alone, you’d believe you were a big winner in 1999 when the stock portion had grown faster than the bonds and filled up 70% of the portfolio. However, from 1999 to 2002, your portfolio would have lost 17% of its value and even today you’d be in worse shape than if you had just rebalanced the portfolio to 50% stocks and 50% bonds each year. In short, rebalance regularly or take it on the chin if a bubble bursts or a market goes south (p. 56).

“Finish this sentence: I always wanted to ___________.” My answer was automatic: I always wanted to write a pile of books. I’m working towards that goal more than ever before – and I’ve never felt better about it (p. 98).

UnitedHealth Group is abysmal for health insurance. They deny 14.4% of claims. The industry average is 4.2%. That’s absolutely unacceptable for anyone – UnitedHealth is apparently in the business of taking people’s money, not helping with medical issues (p. 117).

If you check your email more than twenty times a day, you probably have a problem. Email addiction is a serious problem, and it costs you money by making you less productive because of the constant interruptions. I had to make myself cut my email checking down to a regular schedule during the day because I would get nothing done; now I just have a couple email sessions each day and I feel vastly more productive (p. 28).

If your spouse is suddenly earning more than you are and it bothers you, talk about it. By choosing to keep that feeling bottled up inside, you’re setting the stage for marital problems later on. Set some time aside and talk about how that changes things and how that makes you feel (p. 36).

Morningstar is getting better. Their star ratings on mutual funds are getting better as time goes on. Right now, five star funds at Morningstar are generally low-cost funds with stellar returns and aren’t focused on whatever sector is “hot” at the moment like they used to be (p. 62).

My exact NCAA basketball tournament bracket strategy is now being given away in mainstream publications. So I guess I might as well confess. All I do every year is pick the favorite in every single first and second round match. Then for all of the remaining matchups, I pick the team that won the most of their last fifteen games of the season (the conference schedule) until the Final Four, where then I pick the underdog (based on seed) in each matchup. I am competitive year in and year out with this strategy. And it’s basically in print in this issue of Money (p. 20).

Quote of the month (p. 82):

I tell my students that they should study not for their first job but as if they’re going to have six or ten careers.
- Olivia Mitchell, Wharton School of Business

Whenever I read things like this, I worry about the future. All the time, I visit workplaces where things are held together by an individual in his or her fifties or sixties that has been there for thirty years and knows the whole system inside and out. That’s invaluable human capital and it’s being flushed down the toilet. I realize times have changed, but people that have extensive knowledge of a workplace and a system are incredibly valuable people to have around, and the changing culture is making them into dinosaurs.

The post Money Magazine – March 2007 appeared first on The Simple Dollar.

As usual, I attacked the issue with a highlighter in hand, marking up anything that I want to think about later. Here are the ten most interesting points (from my perspective) that I dug out of the issue:

Health care stocks are potentially undervalued. Two things stuck out here: the S&P Healthcare index is undervalued (in terms of P/E ratio) compared to the average of the last ten years, and health care spending is going to boom in the coming years as the boomers get old.

Installing stone tile in the entryway creates a great first impression for your home – and can thus increase the value. This is a simple enough task that even I can do it, and stone-tiled entryways do look nice. I just didn’t make the connection to an increase in property value.

Exchange rates with South America are much better than with Europe. In other words, if you’re desiring an international trip this year, Buenos Aires is much cheaper than Paris.

For exchanging gifts with your significant other, agree on an annual cap so you don’t spend too much money on silly gifts. This would be a great idea – if I could get my wife to agree to it. She’d probably think I was trying to get out of gift-giving occasions.

If you have a Roth 401(k) available to you, take advantage of it when you’re young. When you’re young, you’re in a lower tax bracket, so you can effectively put less pre-tax money into a Roth 401(k) now (because it’s taxed less) than you will be able to later on in life (when you’re being taxed more). If you reach a salary that you think is higher than your retirement salary, put money in a regular pre-tax 401(k) instead.

If I were to invest in a managed mutual fund, the Vanguard Windsor II looks impressive. I had a lot of fun looking through their mutual fund listing and finding some interesting ones, like this one. It has only a 0.35% expense ratio and beats the S&P 500 both over one year and five years. Too bad it costs $10,000 to get in the front door, so I’ll mark it down as a “someday.”

If you get a windfall, don’t invest it all in something risky. View it as a core of a potential nest egg and invest most of it in a similar fashion to your retirement money. That way, when things inevitably happen, you have money stowed away for the long run.

Are material goods really “abundance” or not? There’s a lengthy article that basically revolves around that question. Are we better off than our grandparents were at our age? We have much more impressive goodies and bigger homes, but does this stuff equate to a better life? I’m not convinced of it, considering the increased job riskiness that workers today face.

For my semi-traditional gift of a box of chocolate to my wife on Valentine’s Day, I might want to consider getting the Harry and David Grand Collection instead of the usual Godiva box. It’s a better deal and supposedly has better chocolate – Godiva has been going downhill lately, so I’ve been looking for another option.

Quote of the month, from Acorn Fund’s Ralph Wagner:

Being disciplined, being honest, having a set of rules and following them no matter what, thinking long term, controlling your emotions – these are all useful. But only so useful and only in part of life. You don’t want to treat your wife or your kids like an investment.

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