November 13, 2015

Now may be a good time to convert a traditional IRA to a Roth

One upside of the current stock market slump is that now may be a good time to convert part or all of a traditional IRA to  Roth IRA.
Check out's "Convert IRA to Roth calculator"

"In 1997, the Roth IRA was introduced. Since then, many people have converted all or a portion of their existing traditional IRAs to a Roth IRAs, where interest earned may be completely tax-free. Is this a good option? A conversion has advantages and disadvantages that should be carefully considered before a decision is made. This convert IRA to Roth calculator estimates the change in total net worth, at retirement, if you convert a traditional IRA into a Roth IRA."

Checking out on-line education programs

Much of the blame for skyrocketing student education debt can be attributed to for-profit colleges and online programs. It is essential to carefully check out programs before enrolling. A helpful resource is: ( Use this website as the first step in checking our potential programs.

November 5, 2015

5 Fiancial Goals for Teens & Young Adults

Check out this post from Squared away and watch the 11 minute Ted Talk by Alexa von Tobel.
She proposed these five financial priorities (with minor alterations by Squared Away):
  1. Follow a budget.
  2. Have an emergency savings account.
  3. Strive to become debt-free. Pay credit cards in full.
  4. Negotiate your salary.
  5. Save for retirement to secure employer’s 401(k) match.

Investing Should Be Painful!

Alan S. Roth write in the Nov. 2 issue of Financial Planning 
"In the real world, risk correlates with reward.... Our minds, though, are often disconnected from reality, and we view risk and reward as disconnects."
"People base their judgments of an activity or a technology not only on what they think about it, but also on how they feel about it."
If their feelings toward an activity are favorable, they are moved toward judging the risks as low and the benefits as high; if their feelings toward it are unfavorable, they tend to judge the opposite — high risk, low benefit. Of course, the pattern isn’t logical, but it’s how humans think."
"In his 2011 book, Thinking, Fast and Slow, Nobel Economics Prize winner Daniel Kahneman discussed our two ways of thinking:
System 1: Rapidly, automaticly, frequently, emotionally, stereotypically, subconsciously.
System 2: Slowly, effortfully, infrequently, logically, calculatingly, consciously.
Essentially, system one is rooted in how we feel, while system two is, supposedly, rooted in logic. Two critical points, however, are that both systems reflect how we think, and that we typically don’t know which system we are thinking with. We assume we are always using logic when making decisions."
"System 1 feels more pleasure and pain. It views the stock market as high reward and low risk at the height of bubbles, and high risk and low reward at the bottom.
System 2 always considers stock investing to be risky, but leads to the conclusion that stocks are a better buy after a half-off sale than after the price has doubled. Our thoughts also assess the high probability that capitalism will survive. When stock prices reach an all-time high, System 2 knows there is a low probability that stocks will rise indefinitely without the arrival of a bear market."
"Research indicates that System 1 typically prevails in investing. Most data show investor returns typically lag fund returns due to poor market timing. Fund flow data reveal we buy more stock funds near the top price and sell more near the bottom."
"Behavioral finance readily explains how we can think we are being logical while doing illogical things...."

Read Roth's full discussion at:

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