Former Fed Chairman Paul Volcker has passed away at 92. Volcker is best known for his efforts to tame the runaway inflation of the 70s and 80s. Bloomberg's Binyamin Applebaum and Robert D. Hershey Jr. write of Volcker's career: Paul A. Volcker, who helped shape American economic policy for more than six decades, most notably by leading the Federal Reserve’s brute-force campaign to subdue inflation in the late 1970s and early ’80s, died on Sunday in New York. He was 92. The death was confirmed by Janice Zima, his daughter. Mr. Volcker, a towering, taciturn and somewhat rumpled figure, … [Read more...]
Archives for December 2019
A Tax-Free Savings Plan for Your Grandchild
Pay attention here. When you beat inertia and get on the track to retirement savings, a lot of opportunities tend to come your way. One of those opportunities is having time to focus on other members of your family. When it comes to investing, you and I know the most powerful tool to wealth is compound interest. But it requires time—a commodity in abundance when you're young—and money. That’s where you come in (sorry). You know the path to my rich grandchild, poor grandchild. You have the knowledge and the money (you don’t need a truck load) to teach them in real dollars about compound … [Read more...]
Your Retirement Life: “My life Has Always Been One of Very Good Fortune”
When Fred Cox retired from the NFL in 1977, the placekicker had scored 1,365 points. But his most famous score happened when he was approached by an entrepreneur named John Mattox in 1971, explains The Week. Entrepreneur Mattox wanted Cox to help create a backyard field goal kicking game. In response to Mattox’s prototype (a heavy football), Cox responded, “You’re gonna have a bunch of sore-legged kids.” “Cox asked a friend in the injection molding business to create a prototype,” explains The Week, “the resulting foam pigskin was light, aerodynamic, and a hit with neighborhood … [Read more...]
Preferred Stock vs. Common Stock: What You Need to Know
What is the difference between preferred stock and common stock? Does preferred mean that preferred stock is better than common stock? We explain some of the differences between preferred stock and common stock below. While most investors are familiar with common stock, many are not familiar with preferred stock and how preferred stock differs from common stock. Preferreds have been around for many years though. Preferred stock got its start with the railroads in the 1800s. Preferred stocks aren’t as popular or issued by as many firms as they once were, but the size of the preferred … [Read more...]
Vanguard GNMA Outlook 2020
What is the Outlook for the Vanguard GNMA Fund in 2020? GNMA bond prices like all bond prices are influenced by the level of interest rates and the outlook for interest rates. GNMA bonds are bonds that are backed by mortgages, so their prices tend to be influenced more by the level of long-term interest rates than by short-term interest rates, but both matter. The Federal Reserve has absolute control over short-term interest rates, but their policies heavily influence the level of long-term interest rates. What Does Interest Rate Policy Mean for Vanguard … [Read more...]
Banks Are Selling Your Private Info to Strangers
Most Americans have become accustomed to the idea that when they use Google or Facebook, information on their Internet habits is being sold to advertisers who want to target them with ads. But until now that phenomenon has been mostly confined to cyberspace, and there are ways to avoid them. That's all beginning to change though. Now industries that were around even before the Internet are attempting to make profits from your private information. The most dangerous of these is your bank. The Associated Press has reported that banks are selling information on customers' spending habits to … [Read more...]
Here’s Why You Should Treat Your Disaster Cash like Gold
In a true catastrophe, the value of your dollars may plummet to zero, and all you'll be left with is your gold, canned goods, and ammo for bartering. That would be a terrifying scenario for sure. That said, most disasters you'll face in life won't impact the value of your cash, but they could very well impact your access to your bank account. I've been writing to you recently about how the wealthy are moving their money out of bank accounts and into more traditional safety deposit boxes. For large amounts of cash you wouldn't want unattended at home, safety deposit boxes are a great idea. … [Read more...]
The Biggest Problem for Warren’s Wealth Tax: The Constitution
The biggest problem wealth taxes proposed by candidates like Elizabeth Warren and Bernie Sanders may face is the constitution itself. Direct taxes like wealth taxes are specifically banned by the constitution. So was the income tax until the 16th amendment allowed it in 1913. Now, progressives are looking for ways to slip a wealth tax by the Supreme Court. Laura Davison and Ben Steverman report for Bloomberg: Democratic presidential candidates Elizabeth Warren and Bernie Sanders want to enact a wealth tax to pay for their large government programs. The biggest barrier may not be Congress, but … [Read more...]
You Must Find Investments that Fit Your Needs
In the past, I've explained to investors that they need to find investments that fit their needs. You must measure your needs against what I referred to as a “complete understanding of where we are in terms of both the economic and monetary cycles.” I wrote: I am not looking for the investment markets to do anything for me. I long ago positioned myself to wade through any form of financial market dislocation. I always evaluate risk before potential returns. I invest with a complete understanding of where we are in terms of both the economic and monetary cycles. Where I would invest new money … [Read more...]
Save Yourself! 92% of Wealthy Danes Want to Pull Their Money from Banks
In Denmark, the central bank began setting negative rates in 2012, and for wealthy Danes, it's been a chore to avoid giving money to the banks ever since. There are 178,000 Danes with more than 750,000 crowns in the bank, and they have been moving money to separate accounts, or simply taking it out of the bank altogether ever since negative rates were instituted. Who wants to pay the bank to hold their money? No one, of course. Last week I detailed for you the growing trend of wealthy individuals using safety deposit boxes. A safety deposit box has many benefits besides moving your money … [Read more...]