After ignoring Wall Street, let’s get on with our life one blog at a time … by Julie Klingler

It’s time to close out 2012.  With the New Year just around the corner, you may find yourself boxing up the last of the holiday décor, cleaning out closets and drawers, and putting a finale on the end of the year.  But one year end chore often overlooked is reviewing your current financial state – a task often put on the back burner or not addressed at all.  Forbes recently published an end of year checklist to make sure you head in to 2013 on a positive note.  The list may not include all you personally need to review but can get you started in the right direction.  Happy New Year!


The Clash of the Cultures: Investment vs. Speculation

 

John Bogle, retired chairman and founder of Vanguard, is commonly referred to as the “Grandfather of Index Funds.”

Although he didn’t invent these investments, his tireless efforts at introducing them to the general public way back in 1976 is generally regarded as the primary cause for their widespread popularity today.

This trend of investing in low cost index funds, the backbone of the Coffeehouse philosophy, continues to grow, as indicated by the enormous inflow of money into Vanguard’s family of funds this past year.

This past October, “The Clash of Cultures – Investment vs. Speculation” was published.  Written by Mr. Bogle, he details the pervasive culture of speculation that has creeped into our world of “investing.”

John Bogle’s brash and straightforward style of addressing these investing issues confronting our society – is refreshing.  In it, he writes. . .

“Today’s dominance of a culture cased on short-term speculation instead of long-term investment has major implications that go far beyond the narrow confines of our financial sector.  It distorts our markets and ultimately distorts the way our business are run.”

I know you will enjoy the book as I did, and always refreshing to come across new work that continues to advocate the principles found here at the Coffeehouse.

Thank you Jack Bogle!


After ignoring Wall Street, let’s get on with our life one blog at a time … by Julie Klingler

Depending upon who you work for, there can be some nice perks that come with the job.  From virtually free health care, complimentary gym memberships, free bagels, and bringing your dog to the office, the Seattle area is home to a few thriving corporations that offer creative incentives to attract and retain good employees.

As competition increases, companies may need to “up the ante” and this may come in a new benefit Smart Money reports on, Company Matching 529 Plans.  In this particular case there are a few caveats to the plan and it may not attract all interested parties but it may provide a little perspective on where companies are moving in the future, who they are trying to attract, and a positive move toward restoring employee benefits that may have been suspended during the recession.  Interesting food for thought eh?


After ignoring Wall Street, let’s get on with our life one blog at a time … by Julie Klingler

I must admit, I have been sucked in by effective commercial marketing and the magic of Christmas.  Our family has joined the millions who own an “Elf on the Shelf”.  What’s that you say? Well for $29.95 you can purchase a small felt doll that gives you high hopes of good behavior from your children until Christmas arrives.  Too good to be true or a ridiculous price to pay for a doll I could have made on my own? You bet.

I held out as long as I could.  I thought we didn’t need one of these “elves” but for $30 I figured I would split it between both of my children, so I dropped the purchasing cost down to $15 per child.  Then I figured I could keep the magic of Christmas going for at least a good 5-6 years, maybe even longer. My annual elf expense has now been diminished to a few dollars.  I can justify nearly any purchase.

In the evening, our “Marvin” (you name the doll, register it, and receive official adoption records) travels back to the North Pole reporting on our son’s behavior to Santa.  Trick is that we must move our elf nightly so that the children know the elf reported to Santa and has returned to a new landing spot.  Nobody may touch the elf or he loses the ability to return to the North Pole.  I won’t tell you how many times I’ve awoke in the night in a panic wondering if we moved Marvin.  I have been held hostage by a doll, a small cheap felt doll all to keep the magic of Christmas alive.  The marketing gods got me – hook, line, and sinker.

 

 


After ignoring Wall Street, let’s get on with our life one blog at a time … by Julie Klingler

On Cyber Monday, I received an overabundance of emails from retailers advertising sales, discounts, and more online deals than I could comprehend.  But one email caught my eye from Patagonia.  The words “Don’t buy what you don’t need” was blasted across my screen when I clicked on the email.  I can’t think of a more appropriate time we need to hear this message.  I realize Patagonia has a bigger agenda in getting consumers to recycle, reuse, and simply consume less through their “Take the Common Threads Initiative” but the reminder is necessary.  That same day, I had just watched a disturbing video of a Georgia Walmart during Black Friday where frantic shoppers were pushing and shoving for smart phones.  Now I doubt many of the shoppers really needed the smart phones but often greed and deep discounts bring the worst out in humanity.

I hope this message is a little reminder for us all to keep the season of gift giving in perspective, figure out what’s really important, and realize stuff doesn’t last forever, but the relationships we build with others do.


After ignoring Wall Street, let’s get on with our life one blog at a time … by Julie Klingler

Today’s the day we take a moment and reflect on all the things we are thankful for.  We won’t rant about beating the market, fiscal cliff predictions, or why index fund investing is the way to go.  We simply want to express our appreciation to all of you who read our blogs, newsletters, tune in for our webinars, and spread our investment message.  When our tag line reads “How to Build Wealth, Ignore Wall Street, and Get on With Your Life” we truly are trying to give you the financial freedom to spend time on the things that matter most in life and hopefully are thankful for today.

So from our Thanksgiving table to yours – Happy Thanksgiving.  We send a simple THANKS to all of you living the Coffeehouse way.


After ignoring Wall Street, let’s get on with our life one blog at a time … by Julie Klingler

For a while now Bill has discussed the troublesome issues with 401(K) plans and the financial fiasco surrounding these accounts.  On Tuesday, The New York Times published a story about a company revamping their retirement offerings, “A 401(K) that promises never to run dry”.  United Technologies is offering retirement plans using target date mutual funds while incorporating annuities to ensure a monthly stipend during retirement.   They also enroll employees into the program if they haven’t selected a plan on their own – sort of a “forced retirement plan”.

On paper a plan like this may work; however with a complicated system comes a lot of fine print and investor education that has to occur.  History has shown that we as investors aren’t always financially savvy nor have the correct information.  It will be interesting to see how these plans play out as more employees enter retirement but refreshing to see companies taking a closer look at the 401(K) dilemma.


After ignoring Wall Street, let’s get on with our life one blog at a time … by Julie Klingler

I found this bank by Money Scholar showcased in the December issue of the Oprah magazine.  It is such a simple teaching tool for kids; I had to share with you all.  Rather than all of the money going into one “pot”, this bank has four separate compartments for spending, giving, investing, and saving.  Money Scholar offers the bank in everything from a cupcake, purse, car, and even a baseball mit.

Often times our attitudes and how we manage money originates from our childhood and the people around us.  Unfortunately, not everyone’s parents take the time to explain responsible money management. This bank can provide a teaching tool helping our youth learn to divide their earnings and practice simple investment methods.  Gift the gift of learning this holiday season and add a little “incentive” to start on the right investment track.


This is the first headline I read on this Election Day when I connected to the internet this morning.

It got me to thinking how pervasive the “trading” mentality is among Wall Street and investors alike.

It seems like this trading mentality seeps into almost every discussion and every advertisement of portfolio management.

If it isn’t the election of today, it was the European crisis of last year and the fiscal cliff of next year.

We are nudged on in so many subtle and not so subtle ways to keep track of the events of the day, and manage our portfolios accordingly.

The market crash of the recent past makes us even more susceptible to keeping an eye on the news, because no one wants to go through THAT again!

Ignoring the events of the day from a trading perspective does not mean we ignore them from a human interest perspective. Quite the opposite, in fact. The more we are engaged with society, the better off society is, because it means that we care about what’s happening.

From an investing and financial planning perspective however, the challenge before us, especially for owners of common stocks, is to recognize that our goal isn’t to navigate around the short term events of the day, it is to capture the market’s entire return over the next ten years and beyond.

The next time you are urged to tinker with your portfolio, remind yourself you are focused on ten years out, not the next ten months.


After ignoring Wall Street, let’s get on with our life one blog at a time … by Julie Klingler

Saving for a rainy day and developing a long term financial plan is Coffeehouse principle #1.  Never has this principle rang more true than in the events of Hurricane Sandy.  It‘s often, after times of crisis that we evaluate our emergency kits, action plans, review insurance policies, and wonder if we’ve got enough in emergency savings.  Money surely would not have stopped Hurricane Sandy’s path, but a little money can provide resources, shelter, transportation, and ways to pay the bills for the next six months when you’ve got to pick up the pieces.

It’s hard to determine when and where the next crisis will be – it may not even be catastrophic.  However, having a rainy day savings to help alleviate and carry the burden that often comes in these situations can ease much of the stress that comes along.

Take this opportunity and figure out how much money you might need for a six month period and make sure you’ve put that aside.  Don’t worry if you’re not there yet or haven’t started – take a little from each paycheck, raise and bonus, and extra money you come across.  As we say here at the Coffeehousesave and invest your next pay raise, save and invest your next bonus, save more than you spend.

And for all of those on the East Coast still picking up the pieces, our thoughts and prayers are with you.


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