Friday, July 29, 2016

Here is the cost of current corporate tax regime

From TaxProf Blog.

Interestingly, those with the largest tax deferrals are well known for support of Democrats.

Thursday, July 28, 2016

MIT beats Harvard, nearly catches Yale

This linked story is a year old, but it includes 8 years of returns.  For 2015, MIT earned 13.2%.

I give them $50 every year, and for that I'm in the "1861 Club."  More than 44,000 alumni donated in the fiscal year that closed June 30.  Average donation was over $1,600, so I'm a little bit light on that score.

They just sent me a thank you note, which is what got me looking at their endowment.

Tuesday, July 26, 2016

Financial Literacy 101

Young Americans typically lack numeracy and come up short on financial literacy. Parental advice gets no respect. Could the answer be third-party guidance?

A math major we know recently took a new personal finance class offered by her college. She rated it Excellent and passed along slides outlining the course.

It covers about what you would expect, with added emphasis on on topics – education loans, subsidized health insurance – of special concern to new grads. Students are introduced to basic accounting (income statement, balance sheet, net worth), banking, retirement plans, credit cards (use as charge cards only), taxes, insurance and goal setting.

Because most new grads will start out poor and in debt, the course encourages inconspicuous consumption, as advocated by Mr. Money Moustache and – new to me – the Frugalwoods.

Investing receives substantial coverage. Students are encouraged to keep it cheap and simple:  Avoid brokers. Buy mutual funds, not stocks. Buy no-load funds, preferably index funds, from the fund company. Choose funds with an expense ratio of no more than .35%.

As investors, most new grads will have little to work with. The course encourages them to look on the bright side:

"If you were to take only one thing away from this class it would be to understand the time value of money.
"Compound interest is a very powerful concept. It is the single greatest advantage that young people have over old people."

Tuesday, July 12, 2016

SBBI coming back

For never explained reasons, Morningstar discontinued publishing the Ibbotson SBBI Yearbook this year.  When I called them to order my copy and learned this, I said, "I am certainly sorry that Morningstar bought the rights to this book, only to abandon it!"

I was not the only complainer. This email arrived today:

Dear SBBI Customer:When we discontinued the Ibbotson SBBI Classic Yearbook earlier this year, many of you contacted us to express your displeasure about losing this valuable resource. In response to your feedback, we have partnered with Duff & Phelps to continue to make the yearbook available in printed form. 
Duff & Phelps, which will compile the data and produce the book, will distribute the 2016 Stocks, Bonds, Bills, and Inflation (SBBI) Yearbook through Wiley, which publishes its other valuation titles. This book will release in August 2016, and future editions are expected.

I haven't yet decided whether to buy it, or wait for next year's edition.  It also will be distributed through Amazon and others.

Morningstar remains inscrutable.

Thursday, July 07, 2016

Charity Navigator Lists Fake Philanthropies

Directing money to worthy causes draws increasing attention in wealth planning. First step should be to separate the worthwhile charities from the worthless. Charity Navigator has compiled a list of more than 30 fake charities, annotated with suggestions of worthy alternatives.

Sunday, July 03, 2016

Can Robo Advisers Save Investors From Themselves?

Betterment and other online investment services make investing easy. Novice investors define their goals and time frame. The robo adviser puts their money in a mix of ETFs expertly calculated to best meet their needs. Couldn't be simpler: set and forget.

"Forget." That proves to be the hard part. Novices tend to assume investing requires market timing. When Betterment briefly suspended trading during the Brexit market scare, some of its investors were exhibiting distressingly short-term behavior.

"Sell low, buy high." Mutual fund investors lose around 4 percent per year trying to predict swings in stock prices. How can robo advisers help their customers avoid the same fate?