April 19, 2015

How We Used Shares of Coca-Cola to Teach My Youngest Sister About Investing (and Why the Cycle of Consumption and Financial Stress Starts as a Teenager for Most Americans)

Coca-Cola Direct Stock Purchase Plan and Coca-Cola Dividend Reinvestment Plan or Coke DRIP Literature

When I was a senior in high school, I bought my youngest sister, who was first grader at the time, a single share of Coca-Cola common stock for her 6th birthday.  I had it framed with an engraving of the first part of Deuteronomy 8:18 placed under it, "You shall remember the Lord your God, for it is he who gives you power to get wealth". I registered the ownership as a uniform gift to minors, naming our father as the trustee.  He and my mom decided to have $50 each month taken out of their p … [Read more...]

It Was an Amazingly Productive Day

We are having an amazingly productive day.  Thus far, we have: Paid a ton of bills for one of the businesses. Submitted the final tax documents to the accounting firm that handles our business and personal filings. Had lunch / dinner at Panera Bread with Aaron. Went to Michael's and got a bunch of our Carl Barks rare lithographs framed for 50% off! Went on a book run to Borders to pick up a bunch of business, psychology, and biography books. Spent a few hours talking politics with … [Read more...]

Health Care Reform Taxes Will Hit Top 1% of Households

Rich Uncle Penny Bags, aka the Monopoly Man, now has to pay Medicare taxes on dividends, interest, and real estate rental income.

I don't think there is any reasonable chance health care will be overturned as unconstitutional because it is written in such a way that you aren't technically required to buy health insurance, you will just be subject to a special excise tax if you don't. A lot of very, very expensive lawyers made sure the language would stand up to a challenge.  That may seem like a small distinction but it has the effect of requiring everyone to do it through an incentive system and doesn't actually … [Read more...]

The Kennon Retirement Insurance Plan

Retirement Insurance Plan

One of the Things That Helped Me ... From time to time, you may come across reference to my "stupidity" insurance or my "reserve" fund.  I've had a bunch of readers write me over the years and ask about various comments I've made so I thought it might be useful to explain it.  My parents, siblings, and Aunt Donna have always known about my investing but virtually no one else did when I was a child (by the time I got into high school, though, it was all I talked about so hiding it was no l … [Read more...]

Misconceptions About Wealth

Pinot Grigio White Wine

How The Marketing Industry Continues to Convince Average Americans They Know What a Millionaire Looks Like A few days ago, I quoted something from one of Dr. Thomas J. Stanley's books: "In the United States, there are three times more millionaires living in homes that have a market value of under $300,000 than there are living in homes valued at $1 million or more." For the past few days, I've been studying more about average household income in the United States and, specifically, the … [Read more...]

How Investors Who Practiced Dollar Cost Averaging Were Richer Within Only 2 Years of the Credit Crisis Meltdown

Dollar Cost Averaging Your Retirement Account

Citing data provided by Vanguard, one of the premier mutual fund and 401(k) providers in the world, The New York Times recently reported that 60 percent of 401(k) accounts now have more money in them than they did before the stock market crash and worst recession since the Great Depression began two years ago. That may not seem possible given that the Dow Jones Industrial Average collapsed from 14,000+ to 6,000 and has only made its way back up to 10,000.  For those who know how dollar cost … [Read more...]

Asset Positioning Asset Allocation Strategy

Asset Positioning Asset Class

Did you know there is a unique tax strategy that can help improve your asset allocation investing by keeping more money in your pocket? It's called asset positioning and it can be practiced by virtually anyone with investments.  I once wrote about asset positioning over at Investing for Beginners at About.com, a division of The New York Times, even though it is more of an intermediate investing concept rather than one for total newbies. What Is Asset Positioning? Asset positioning, or asset … [Read more...]

Deflation Asset Allocation Model Portfolio

Deflation Asset Allocation Model Portfolio

Deflation, the falling of prices and asset values, can pose severe financial risk to those in debt because their income and assets shrink, while their fixed-rate debt remains constant. This presents investors with a potentially dangerous decision: Which assets can you hold without watching your wealth disappear into the ether?  The folks at The Wall Street Journal looked into the issue and presented a proposed deflation asset allocation model.  We're going to take a look at it, and propose one o … [Read more...]