John Bogle on Costs

I found this post over on the Catallarcy blog discussing John Bogle's "Costs Matter Hypothesis" vs. the "Efficient Markets Hypothesis." It is an interesting read.

Costs matter no matter what. The financial advisor who tells you that costs don't matter is not acting in your best interest. The old saying "you get what you pay for," simply doesn't work in the mutual fund industry. In most cases, the more you pay the less you get.

That's my two cents.

Tags: Mutual Fund Fees, John Bogle

Home Financial Files - Organizing Your Finances - Part V

This is part V of my "getting organized" series.

The first four parts in this series can be found here:

Part I

Part II

Part III

Part IV

PERSONAL DOCUMENTATION

• List of credit cards and numbers (you can just make copies of the actual cards)


• *Passport


• *College degree


• *Professional license


• *Marriage license


• *Separation/divorce papers


• *Copy of Social Security card and latest statement


• *Health information (vaccinations, hospitaliztions, etc.)


• *Military records

LIFE INSURANCE

• Life insurance policy(ies); a separate folder for each policy


• Employer life insurance policy


• Any other insurance you may have like mortgage life or credit life insurance


• Credit card insurance

to be continued...

Organizing Your Finances, Personal Finance, Life Insurance

Home Financial Files - Organizing Your Finances - Part IV

This is part four of my "Getting Organized" series. Most of the information in these posts is from a book entitled The Money Club - How We Taught Ourselves the Secret to a Secure Financial Future - and How You Can, Too, (ISBN 0-684-83719-6) written by Marilyn Crockett, Diane Terman Felenstein, and Dale Burg. The book is no longer being published but you might be able to find a used copy on eBay or Alibris.

The first three parts in this series can be found here:

Part I

Part II

Part III

PERSONAL AND REAL PROPERTY

Items marked with an asterisk (*) should be copied and the copies placed in your safe deposit box.

Documents

• *Copy of deeds, titles, title insurance for home (orininal may be at bank if you have a mortgage).


• *Copy of deeds, titles, title insurance for any other property you own.


• *Copy of deeds, title, title insurance for car.


• *Copy of videotape (or DVD) inventory of house. Go through every room and closet. The video could help you in filing an insurance claim for theft or damage.


• *Receipts for big-ticket purchases like furs or furnishings in case of insurance claims.

Tax Information Needed for Eventual Sale of Home or Rental Property

• Closing agreement regarding the purchase of your house.


• Form 2119 - proceeds from the sale of any prior residence.


• File of receipts for any itme or service you paid for that enhanced the value of your residence or kept it in good condition. Check with your CPA to find out what items can be used to deduct from any profit from the sale of your home.


• Expense records on rental properties to deduct from your profits at the time of sale.

Organizing Your Finances, Personal Finance, Personal and Real Property

Robert Shiller's Wall Street Journal Editorial

Robert Shiller has an interesting editorial in today's WSJ about the real estate bubble. According to the Case-Shiller home price index from Fiserv CSW, Inc., real home prices in the U.S. have had the following history since 1996:

1996    -0.50%
1997     2.10%
1998     5.40%
1999     5.40%
2000     5.80%
2001     5.80%
2002     8.10%
2003     8.50%
2004    11.20%

Based on those numbers, a home purchased in 1996 for $200,000, would now be worth $329,527, for an average annual increase of 5.71%.

Now compare that to the Los Angeles market:

1996    -2.70%
1997     4.10%
1998    10.30%
1999     4.50%
2000     7.70%
2001     7.90%
2002    16.90%
2003    19.20%
2004    23.20%

That same $200,000 house purchased in Los Angeles in 1996, would now be worth $465,826, for an average annual increase of a staggering 9.85%!

It is a very interesting editorial. (NOTE: I was going to put a link but at the moment the WSJ online is down, I'll add the link later today). One quote from the article that I thought was particularly good was:

"The biggest uncertainty, for many of us, is just that this pattern of home prices looks like a mass-phychological phenomenon called a bubble. The trend is creating the trend, as more and more herdlike investors notice the trend and pile into the market." Does this remind you of anything?

Tags: Real Estate Bubble, Robert Shiller

A Note to my Readers

First off, I want to thank everyone for checking out AllThingsFinancial. It is nice to know that people are tuning in to find out what's going on in my world.

I also want to remind everyone to be sure and read the comments to the posts. There are some very wise comments and lots of useful information. In case you don't know, the comments are listed below each post. If you click on the comments link it will open up a new window.

Feel free to leave your own comments. All I ask is that you make them useful comments. Useless or rude comments will be removed.

Thanks,

JLP

How NOT to be Poor - Some Advice

Tom McMahon posted a link to an article written by Walter Williams about how not to be poor. The advice is so simple. Who knows, maybe that is the problem for a lot of people: they try to make things harder than they really are!

It reminds me of when I tell my kids to clean their room. They would rather spend 30 minutes standing in the middle of the room crying about how hard it is to clean their room instead of just cleaning it. I mean, it's not hard. You start by picking up one thing and putting it away. Then you pick up another thing and put it away. Eventually you see a little progress and you start to feel better and that progress actually helps motivate you to get the job done.

It is much the same way with building wealth. You have to start somewhere. If you are so discouraged that you don't do anything, you will never get started. One year from now you will still be in the same shape. So, instead of complaining about your situation, do something about it!

NOW LET'S GO KICK SOME FINANCIAL BOOTY!!!!!

Tags: Walter Williams, Building Wealth, Motivation

Jonathan Clement's - Getting Going Column

Today's "Getting Going" column (free) by Jonathan Clements is about raising financially responsible kids. His theory is that if parents teach their kids about financial responsibility now, it will save them from bailing them out of a financial mess later. Makes sense to me!

I've written about what my wife and I do for our kids. They each get a weekly allowance. With that allowance they pay tithe (10%), put 25% away for long-term savings, 25% away for short-term savings and the remainder they can spend. Most of the time they put the remainder in their short-term savings so that they can meet a goal like a PlayStation game or something like that.

I have been reluctant to give them complete control of their spendable money. I know that for them to be able to grow and mature I have to "let go." Who would have thought that Dad would grow in this process too?

Tags: Jonathan Clements, Getting Going, Kids and Money, Teaching Kids About Money