Retirement IQ

I was testing out Chris Hogan’s popular ‘Retire Inspired Quotient’ (R:IQ), which is essentially a retirement IQ calculator. You plug in what you consider your dream retirement (family, travel, hobbies, relaxation, etc.), your current gross annual income, how much you need right now monthly to retire, and then your current savings.

R:IQ

The retire inspired quotient tool runs a calculation based off all of your parameters to generate your “R:IQ” number, e.g. the amount of money you need in order to comfortably retire based off everything you just laid out previously. It also tells you how much you should be investing monthly in order to hit your desired retirement age and “R:IQ” nest egg number.

12% Market Returns…Really?

This is a pretty cool retirement calculator, however, it skews on the very high returns side. I think Chris Hogan, famed Dave Ramsey “retirement” personality”, leverages this retirement IQ tool to be more inspiring than factual. The only reason I say that, which is the same reason I am very critical of Dave Ramsey’s investment advice, is because they assume a 12% return, ALWAYS. They automatically assume you can and will get those returns. They essentially say you can beat the market every single year year, considering the stock market has historically returned approximately 10% for the last 80+ years.



With that said, the retire inspired quotient (R:IQ) tool is still very functional. I simply modify my number by accounting for a more modest return…not 12%. You too can play with that percentage return and use something more like 7%, 8% or ever 10%. But 12% is extremely optimistic.

Retire Inspired Quotient

Without further ado, below are my personal retire inspired quotient (R:IQ) results. Based off Chris Hogan’s tool my wife and I are in a pretty good spot. The R:IQ says I need $3.36 million dollars to retire by the age of 55. In order to hit that mark I must save $1,626/month for the next 18 years. All of that is great to hear…and this is based off a 10% return, not 12%.

Retire Inspired Quotient or Retirement IQ
Retire Inspired Quotient (Retirement IQ)

What is even more encouraging about all of this is the fact that my wife and I collectively save significantly more than $1,600 per month. We sock away a lot of money each month for retirement. We both max out Roth IRA’s and I have a 401k with company match and profit sharing. So even if we get returns more in the 7-8% return, our monthly savings should help make up that gap.

Millennials, what is your retire inspired quotient?



Last Week Stock Market (Feb 13-17, 2017)


Last week, Feb 13-17, 2017, the stock market once again closed at record highs on Friday, just as it did last Friday, Feb. 10th. U.S. stocks closed the week up 1.5% and the S&P 500 is up 5.0% year-to-date. Investors continue to be fascinated by possible changes to the U.S. corporate tax code and the regulatory environment. As hopes for policy changes continue to rise, interruptions of these policy changes could cause market instability.

  • The U.S. has dropped on the World Economic Freedom Index from 11 to 17, and is now behind countries like the Netherlands and Lithuania
    • Here are the top 5 countries on the World Economic Freedom Index…
      1. Hong Kong
      2. Singapore
      3. New Zealand
      4. Switzerland
      5. Australia
    • Note: a key component to this index is tax rates, e.g. the lower a counties tax rate the more economic freedom it has
  • A report shows 79% of American’s plan to save their tax refund or use it to pay off debt this year
  • 30-year fixed-rate mortgage drops slightly to 4.15% this week from 4.17% last week (one year ago a 30-year fixed-rate was at 3.65%)
  • All-time low for 30-year fixed-rate mortgage was 3.31% back in November 2012 (all-time high for 30-year fixed was 18.63% back in October 1981)
  • Monthly mortgage payments consume nearly 16% of median income
  • The S&P 500 is up 248% from its March 9, 2009 low
  • Oil is down 0.6% so far this year and down 0.9% this past week (oil is down 63.2% from record high in July 2008)

Last Week’s Stock and Bond Index Performance (Feb 13-17, 2017)

  • NASDAQ 1.8% (YTD 8.5%)
  • Dow Jones Industrial Average 1.7% (YTD 4.4%)
  • S&P 500 Index 1.5% (YTD 5.0%)
  • U.S. Aggregate Bond Index -0.1% (YTD 0.5%)

How did my retirement portfolio perform last week (Feb 13-17, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. All accounts are held with Vanguard.

  1. Vanguard S&P 500 Index Fund (VFIAX) 1.6%
  2. Vanguard Target Date 2040 Fund (VFORX) 1.1%
  3. Vanguard Extended Market Index Fund (VEXAX) 1.0%

Can I Beat the Stock Market?

I am actually not trying to “beat the market” with my retirement portfolio…I am trying to match it. I do have alternative indexes in my retirement portfolio to help possibly beat the market, e.g. Small Cap, REITs, International, and Emerging Markets. With that said, if I can beat the market I will absolutely take it (obviously)! In the last 90 days my portfolio is up 7.08%, whereas the S&P 500 is up 6.96%. So I am just slightly beating the market.

I am a liberal arts major and I am my own financial advisor. My goal with this personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-educating on money and finance, and by striving to become financially literate. That is what I have been doing for years now, focusing on becoming financially literate, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. Follow my blog as I highlight relevant personal finance topics pertaining to us Millennial’s.


Mutual Funds vs ETFs

Why I like mutual funds more than ETFs

I have been investing in mutual funds for over 10 years now. I’ve primarily invested in index funds and target date retirement funds. Last year I began investing in ETFs (exchange traded funds) for the first time. ETFs seem to be all the rage lately, especially with my Millennial generation, and they are very cost effective.

The cost is what intrigued me the most. Most mutual funds have two fund options; one for investors with $3,000 and another with $10,000. Obviously the latter is the one that charges the least in management expenses. Then there is the ETF, which typically has the same expense ratio as the mutual fund that requires $10,000 to open.

Fund cost comparison of S&P 500 index funds and ETF

  • Vanguard 500 Index Fund Investor Shares (VFINX) – Expense ratio = 0.16%
    • Requires $3,000 to open an account
  • Vanguard 500 Index Fund Admiral Shares (VFIAX) – Expense ratio = 0.05%
    • Requires $10,000 to open an account
  • Vanguard S&P 500 ETF (VOO) – Expense ratio = 0.05%
    • Requires the purchase of one share (like buying a stock), which is approximately $210 as of February 2017

Fund costs are what lured me in. But now that I am investing in an ETF, I have to admit I am not a big fan so far and here is why. I am huge on automating everything – from bill paying to savings. I do all on my investing via dollar-cost averaging and regular, bi-weekly investments. I love the “set it and forget it” mentality and so should all Millennials when it comes to investing.

Here is the catch…you can’t really invest in ETFs this way because it’s exactly like buying a stock and the share price changes constantly throughout the day. Instead I have to deposit money monthly into my money market account, then manually go into my brokerage account and purchase a set number of shares. Don’t get me wrong, that isn’t that challenging but its still much more inconvenient then the alternative.

I vote for mutual funds instead

You know how I invest in my mutual funds? I assign a specific amount I want to invest regularly, like weekly, bi-weekly, or monthly, and that exact amount is debited from my bank account and placed into my mutual fund. Once you connect your bank account to your brokerage account you’re essentially done. Then you just set up your automatic investment and you are done. No need to go back in and move the money from a money market to the stock market. You could in theory set this transaction up once and not look at it again for several months or a year. And that money still gets invested without any intervening from yourself.

Personally I am just not a big fan of ETFs. I prefer mutual funds as my investment vehicle of choice. I know many of my fellow Millennials strongly disagree with this premise so I would love to get your takes.

Public School vs Private School?


Recently I was getting together with some buddies of mine to catch up over a few beers. Funny how much our conversations have changed over the years, considering I am expecting my first child, my other friend is expecting his second daughter, and another already has two kids. So now family and kids dominant the conversation these days, which is great actually, because previously is was more trivial issues like sports, weekend events, golf, and boys’ trips. Boy has life changed for us over the last few years!

I previously wrote about saving for college and deciding between a 529 plan or a Coverdell Education Savings Account (ESA). Well, my friends and I spoke about this a bit as well and the 529 won out across the board, solely because of the contribution limits, which was my conclusion as well.

Public School or Private School?

The talk of saving for college brought up a more philosophical education question for your child; public school or private school? And now that conversation includes not just college but high school and even earlier “private” education. When I looked up the cost of private schooling the results just floored me.

To give you some background and my group of friends and me, we’re all obviously Millennials and we all grew up together in middle to slightly upper-middle class city. We all went to public high school and a state university. The one caveat is one of my really good friends did go out of state for college and went to an Ivy League school, which is a phenomenal feat and probably most parents’ dream. So good for him and his family on accomplishing that. He is the one outlier in the group though as we’re all “public school” educated and doing fairly well in life, both personally and professionally for now being out of college for 10+ years. All of our careers are moving in the right direction.

Now back to our philosophical question of public versus private schooling. My one friend said they are 100% planning on sending their two daughters to private school, and by private school I mean early childhood education. Not just private high school. The yearly tuition rates at the school he will send his two daughters to is astounding. See for yourself.

2016-2017 TUITION

Pre-Kindergarten (full day): $18,820
Kindergarten (full day)-grade 5: $23,510
Grades 6-12: $25,430

I fully understand tuition is different for every child because of grants, financial aid, etc. But either way, those numbers are jaw dropping in my eyes when you consider public schooling, kindergarten throughout high school is free (except for a few minimal annual schooling fees).

Is Private School Really Better Than Public?

I have three “sibling” in-laws, two sisters and one brother, all of which are public educators. My two sister in-laws teach young elementary aged children, while my brother in law teaches high school students. All of them are very passionate and one has a master degree in childhood education. I’ve talked to each of them multiple times about the difference in public versus private and a lot of the variance is purely on curriculum (and funding, obviously). A public school has a set teaching curriculum to follow, whereas a private school can change to emphasize some subjects over others (like science and math).

I think the main misnomer about private school is that the teachers aren’t exactly “more qualified” thank teachers at public schools. In reality, there are actually more requirements and standards for public schools then there are for private. I think people think most teachers at a private high school are equivalent to a professor at a university and their background in the field (formal education and research). That is simply not the case.

Public School is Just Fine

I will get off my soapbox now as being very anti-private schools, because it’s obviously ever families own personal decision to do this. If you have the funds to send your child to private school, by all means go for it. But don’t profess that your child is getting a substantially better education than those of us sending our kids to public school. Your child can still get into a great college when going to public high school (see my great friend who made it to an elite Ivy League school). And they can still be successfully when going to public school all the way through college. Me and my friends are all doing fine and I know tons of people who were “publicly” educated.

I just urge all Millennial parents to really research and think twice about private school. It feels way more of a status symbol than an educational play, in my opinion. At the end of the day, your child is as successful as you want them to be, regardless of public or private. If you are highly involved in your child’s schooling, homework, and lives in general, I think they will be just fine.

Being Involved As a Parent is What Matters Most

That is my humble advice from a soon-to-be parent. I will be sending my child to public school, but I will be as involved as humanly possible with their schooling. I want to push my child to work as hard as possible in their schooling and studying. I know that will guarantee more success in life than which particular school they attend.


Last Week Stock Market (Feb 6-10, 2017)


Last week, Feb 6-10, 2017, the Dow (20,269) and the S&P 500 (2,316) closed at record highs on Friday, with both gaining roughly 1% on the week. The increase was late in the week after President Donald Trump said he would announce “something big” on tax reform in the next few weeks. Investors are very optimistic that lower taxes could finally fuel faster economic growth.

  • Consumers spent an average of $88 per day in January, which is down $17 from December (albeit that is inflated due to holiday shopping)
  • 30-year fixed-rate mortgage drops slightly to 4.17% this week from 4.19% last week (one year ago a 30-year fixed-rate was at 3.65%)
  • S&P 500 up 242% from March 9, 2009 low

Last Week’s Stock and Bond Index Performance (Feb 6-10, 2017)

  • NASDAQ 1.2% (YTD 6.2%)
  • Dow Jones Industrial Average 1.0% (YTD 2.6%)
  • S&P 500 Index 0.8% (YTD 3.5%)
  • U.S. Aggregate Bond Index 0.4% (YTD 0.6%)

How did my retirement portfolio perform last week (Feb 6-10, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. All accounts are held with Vanguard.

  1. Vanguard FTSE Emerging Markets ETF (VWO) 1.6%
  2. Vanguard REIT Index Fund (VGSLX) 1.2%
  3. Vanguard Extended Market Index Fund (VEXAX) 0.9%

I am a liberal arts major and I am my own financial advisor. My goal with this personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-educating on money and finance and striving to become financially literate. That is what I have been doing for years now, focusing on becoming financially literate, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. Follow my blog as I highlight relevant personal finance topics pertaining to us Millennial’s.


The Success Principles of Jack Canfield


In late 2015 I began this very personal finance blog. It is my outlet for reading and researching on all things personal finance. One of my goals in 2016 was to read more. Read more books (non-fiction), scholarly pieces, magazine articles, and blog posts. My goal was to dramatically expand my knowledge in all things related to money, investing, business, self-improvement, and personal development.

I’ve always enjoyed reading business books to help me succeed professionally. Last year is when I really focused on succeeding financially. I’ve read a number of finance books, as well as biographies on successful investors like Warren Buffet and Jack Bogle. The one common theme from these successful people was their continued research and thirst for knowledge. They were always seeking self-improvement, which in turn brought greater wealth (personally, professionally, and financially).

Never Stop Learning

I always thought “self-help” books weren’t for me but they are unbelievably valuable. One of the latest books I just completed was The Success Principles by Jack Canfield (famed co-creator of Chicken Soup for the Soul).

The Fundamentals of Success

1. Take 100% Responsibility for Your Life
2. Be Clear Why You’re Here
3. Decide What You Want
4. Believe It’s Possible
5. Believe in Yourself
6. Use the Law of Attraction
7. Unleash the Power of Goal-Setting
8. Chunk It Down
9. Success Leaves Clues
10. Release the Brakes
11. See What You Want, Get What You See
12. Act As If
13. Take Action
14. Just Lean Into It
15. Experience Your Fear and Take Action Anyway
16. Be Willing to Pay the Price
17. Ask! Ask! Ask!
18. Reject Rejection
19. Use Feedback to Your Advantage
20. Commit to Constant and Never-Ending Improvement
21. Keep Score for Success
22. Practice Persistence
23. Practice the Rule of 5
24. Exceed Expectations

Transform Yourself for Success

25. Drop Out of the “Ain’t It Awful” Club…and Surround Yourself with Successful People
26. Acknowledge Your Positive Past
27. Keep Your Eye on the Prize
28. Clean Up Your Messes and Your Incompletes
29. Complete the Past to Embrace the Future
30. Face What Isn’t Working
31. Embrace Change
32. Transform Your Inner Critic into an Inner Coach
33. Transcend Your Limiting Beliefs
34. Develop Four New Success Habits a Year
35. 99% Is a Bitch; 100% Is a Breeze
36. Learn More to Earn More
37. Stay Motivated with the Masters
38. Fuel Your Success with Passion and Enthusiasm

Build Your Success Team

39. Stay Focused on Your Core Genius
40. Redefine Time
41. Build a Powerful Support Team and Delegate to Them
42. Just Say No!
43. Become a Leader Worth Following
44. Create a Network of Mentors and Others Who Will Up-Level You
45. Hire a Personal Coach
46. Mastermind Your Way to Success
47. Inquire Within

Create Successful Relationships

48. Be Hear Now
49. Have a Heart Talk
50. Tell the Truth Faster
51. Speak with Impeccability
52. When in Doubt, Check It Out
53. Practice Uncommon Appreciation
54. Keep Your Agreements
55. Be a Class Act

Success and Money

56. Develop a Positive Money Consciousness
57. You Get What You Focus On
58. Pay Yourself First
59. Master the Spending Game
60. To Spend More, First Make More
61. Give More to Get More
62. Find a Way to Serve

Success in the Digital Age

63. Master the Technology You Need
64. Brand Yourself with an Online Persona
65. Use Social Media in a Way That Enhances Your

Reputation

66. Use the Exponential Power of Crowdfunding
67. Connect with People Who Can Expand Your Vision

Final Thoughts on The Success Principles

I consider this book a must-read for all Millennials who want to succeed in life and business. It’s a great tool for helping you advance your life and career, emotionally and financially. The Success Principles gives you the basic strategies for success plus the advanced strategies that will help you become a success master. The principles are simple.


Average New Car Price

I recently read an article online the other day stating that the average cost of a new car is now just over $34,000. Believe it not, Edmunds expects that number to climb above $35,000 in 2017. Needless to say, cars are crazy expensive and these numbers are ludicrous.

The crazy thought is that the top four selling cars in 2016 were the Toyota Corolla, Toyota Camry, Honda Accord and the Honda Civic. All of those cars start at under $25,000. So why is the average so high at $34,000? My theory and probably a number of others is the very low cost of gas, which equates to larger SUV and truck sales.

The number one selling pick-up truck in 2016 was the Ford F-Series. A brand new 2016 F-150 Limited SuperCrew is about $60,000. So there you have it truck and SUV sales dramatically boost that average new car price.

If you purchase a $34,000 car at 2% APR over 60 months, you will pay $595 a month. That is a lot of money to throw at a car for 5 years. I’ve done a number of other related car post in regards to investing your car payment and the results are startling.

Millennials don’t fall victim to projecting your success via a nice, new, expensive car. It’s just not worth. Buy a used car for much cheaper and invest in an index fund instead so you can actually build wealth.

Last Week Stock Market (Jan 23-27, 2017)


Last week, Jan 23-27, 2017, was a good and historic week for the stock market. The Dow Jones Industrial Average (Dow) closed at 20,069 on Wednesday, January 25, making it the first time the Dow has closed above the 20,000 milestone. The S&P 500 and the NASDAQ closed at record highs on Wednesday as well. Looking ahead to next week, the monthly jobs report will be released on Friday. This will obviously be the first jobs report of 2017.

Last Week’s Stock and Bond Index Performance (Jan 23-27, 2017)

  • NASDAQ 1.9% (YTD 5.2%)
  • Dow Jones Industrial Average 1.3% (YTD 1.7%)
  • S&P 500 Index 1.0% (YTD 2.5%)
  • U.S. Aggregate Bond Index 0.0% (YTD 0.0%)

How did my retirement portfolio perform last week (Jan 23-27, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. All accounts are held with Vanguard.

  1. Vanguard FTSE Emerging Markets ETF (VWO) 2.7%
  2. Vanguard Extended Market Index Fund (VEXAX) 1.4%
  3. Vanguard Total International Stock Index Fund (VTIAX) 1.3%

I am a liberal arts major and I am my own financial advisor. My goal with this personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-educating on money and finance and striving to become financially literate. That is what I have been doing for years now, focusing on becoming financially literate, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. Follow my blog as I highlight relevant personal finance topics pertaining to us Millennial’s.