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 Wealth Management Fees


A number of Millennial’s may be thinking that they don’t have nearly enough money to consider a financial advisor. I’m here to tell you that most financial advisors are actively seeking new Millennial clients. We Millennial’s are the up-and-coming generation and the future of their industry.

While Baby Boomers and Generation X’ers obviously have more wealth accumulated than us currently, obviously because of time and compound interest, we are the future of wealth management advisory services. I have read countless articles recently about how financial advisory firms and certified financial planners are looking for younger clients. They want successful Millennial’s who may not have the assets as of right now but appear to be well on their way in the next decade or two plus. If a financial advisor can get you in under their management in your late 20’s or early 30’s, they know long-term you are a great client for them as your portfolio and investable assets continue to grow (as well as your personal income).

I personally think a Millennial is better off managing their money. I have no formal financial education but I read, listen and research investing, personal finance and money topics virtually every day. I want to successfully manage my money on my own and there are a number of mediums out there to do just that. I would encourage all Millennial’s to do their own wealth management and forego any financial advisory fees. It’s all very possible. I manage my own portfolio and I am beating the market.

With that said, there are some people who just like to be hands-off when it comes to their money. They would prefer to have someone else managing their money for them so they don’t have to. Behaviorally speaking from a financial standpoint, a financial advisor makes sense in that respect because they prevent you from during something drastic during a downturn. They help you stay the course (at least they should!).

Below are average fees a Millennial can expect to pay for the services of a financial advisor and/or wealth management firm. Using a “fee only” firm would be your best option.

Less than $500,000 in investable assets

Most of us Millennial’s will fall into this group as a starting point, in terms of overall investable assets. If you have less than $500k in investable assets, you should expect to pay approximately 1.25% in annual fees. For example, if you have a portfolio worth $400,000 and pay 1.25% in management fees, that would equate to $5,000 annually. Decent chuck, huh?

Less than $1,000,000 in investable assets

If you are closer to one million dollars in your portfolio then you can expect your fees to drop slightly – to the tune of 1.0% flat. So about 25 basis points less than if you have under $500k. For example, if you have a portfolio worth $800,000 and pay 1.0% in management fees, that would equate to $8,000 annually.

Between $1-5 million in investable assets

Once you hit the one million dollar plus mark is when you start to see a sizable savings in your wealth management fees. At this stage is when I personally would begin entertaining such a service from a financial advisor, because the fees are low enough that it may make sense for a Millennial. The average management fees for a portfolio ranging in value from $1-5 million is 0.75%. For example, if you have a portfolio worth $2 million and pay 0.75% in management fees, that would equate to $15,000 annually. $4 million would obviously equate to $30,000.

Over $5 million in investable assets

Now is when you really start to see the savings with a lesser management fee average of approximately 0.50% when your investable assets is above $5 million dollar. At this stage you should strongly consider having your assets under management if your porfolio is this large. For most of us Millennial’s this won’t be until we’re really closer to retirement, like in our 50’s or 60’s, if ever. It would without a doubt be a good problem to have…possessing a portfolio of more than $5 million dollars. Your management fees of 0.50% would equate to $25,000 annually.

Vanguard charges a flat 0.30% on all portfolio sizes

I have all of my investable assets saved with Vanguard and I love them. Great website, amazingly low-cost funds, and terrific customer support. On top of all of that, Vanguard only charges 0.30% for your assets under management. For example, with a $250,000 investment, the low cost of Vanguard’s advice service is only $750 annually compared with the industry average of $2,550 (1.02%). That means you’d keep $1,800 more annually invested toward reaching your goals. And there’s no fee for leaving the service.

Robo-advisor fees

Robo-advisors are all the rage now. And they are especially going after the entry-level, tech-savvy, Millennial investor. Its actually a very smart plan on their part. But what does a robo-advisor cost? They come in very low actually, ranging from 0.15-0.35%. The obvious drawback to a robo-advisor is the lack of human intervention, from yourself or a financial advisor. The benefit to using a robo-adviosor? The fact there is no human intervention. You take emotional decisions off the table completely, which is very important when investing (and staying the course) for the long-term.

10 Business Commandments from Guy Kawasaki

One of the first true business/money/finance books I ever read was Guy Kawasaki’s Rich Dad Poor Dad: What The Rich Teach Their Kids About Money – That The Poor And Middle Class Do Not! The book was first published by Guy Kawasaki in 1997 and became an instant hit. It took me nearly 10 years later to finally read the book.

Guy Kawasaki has a great life story to tell and his book is a great read. I would definitely recommend it to all Millennial’s. I really respect his views on business, entrepreneurship, and money. I’m not the biggest fan of his retirement and investment advice (as he is anti 401(k)’s which I think is ludicrous). He is more of a proponent of cash and real estate investing. With all that said, he is a very intelligent guy that is always worth reading and following.

I was recently listening to one of my favorite podcast, The Motley Fool Real Breaker Investing, and Guy Kawasaki was a guest on the show. Kawasaki was on the show to discuss his 10 “Business” Commandments. I actually had never heard these before so I wanted to share on my blog for all my Millennial readers.

1. Make meaning, not money. “As venture capitalists,” Kawasaki said, “we deal with many companies, and often they come in [saying what] they think we want to hear: that they want to make money. It’s been my observation that most companies founded on this concept of making money pretty much fail.

2. Make a mantra, not a mission statement. Bland, generic company mission statements — about “delivering superior-quality products and services for our customers and communities through leadership innovation and partnerships” — serve no one but the consultant brought in to develop them, Kawasaki said. Instead, keep it short and define yourself by what you want to mean to consumers. Nike stands for “authentic athletic performance.” FedEx is about “peace of mind.”

3. Jump curves. Innovating is harder than just staying a little bit ahead of competitors on the same curve.

4. In product design, “roll the DICEE.” That’s an acronym. “D” is for deep, which to Kawasaki means thinking about features that go beyond the norm. “I” is for intelligence, as seen in the design of Panasonic’s BF-104 flashlight, which uses batteries of three different sizes to accommodate the random mix of extra batteries many people have around the house. “C” is for complete — or being not just a product, but including support and service. The first “E” is for elegance: Beauty matters, according to Kawasaki. The second “E” is for emotive. “Great products generate strong emotions: Think Harley Davidson, Macintosh.”

5. Don’t worry, be “crappy.” This doesn’t mean ship a bad product, but “your innovation can have elements of crappiness to it,” Kawasaki said.

6. Polarize people. Try to be all things to all people and you often ship mediocrity, Kawasaki said.

7. Let 100 flowers blossom. Borrowing from Chairman Mao, Kawasaki said you never know where the flowers will emerge, so let them grow.

8. Churn, baby, churn. Always improve. Listen to customers for ideas.

9. Niche yourself. Find your place, Kawasaki urged.

10. Follow the 10-20-30 rule when pitching to venture capitalists. That means no more than 10 PowerPoint slides, a limit of 20 minutes for the pitch, and using a 30-point font size in the presentation (to keep it simple).

Guy Kawasaki is a terrific entrepreneur and has a great business acumen. All his points are worth noting and evaluating as us Millennial’s advance our professional careers.


Emerging markets funds zig when other funds zag

Emerging markets stock index funds are a fantastic addition to any Millennials retirement portfolio. If you’ve been following my blog you know that I have been a bit skeptical on internal funds in the past. I probably wrongly felt that domestic U.S. mutual funds were sufficient, considering just how much internal sales and business companies like Apple, GM, Coca Cola, etc. do.

Being Diversified…Globally-Speaking

I fully understand just how much “global” diversification helps a retirement portfolio. That is why I recently bought into Vanguard Total International Stock Index Fund Admiral Shares (VTIAX). My employer sponsored 401(k) retirement plan only has two international mutual fund options and both have high expense ratios (0.50% or higher). The aforementioned Vanguard fund (VTIAX) I bought into only has an expense ratio of 0.12% (89% lower than the industry average).

My wife and I both have a Roth IRA with Vanguard. Her account has been open for several years and therefore has a much bigger balance than mine because I just opened it in early 2016 to supplement my work 401(k). This allowed me to sell some other funds in my wife’s Roth IRA to buy into the Vanguard Total International Stock Index Fund Admiral Shares (VTIAX). She is also invested in Small-Cap Value and REIT index funds.

Emerging Markets Stock Index Funds

My next plan is to buy the Vanguard Emerging Markets Stock Index Fund (VEIEX) in my Roth IRA. I am currently invested in the Vanguard Target Retirement 2040 Fund (VFORX). As I said earlier, being diversified globally is proper diversification and will benefit your retirement portfolio greatly. I read a number of books, articles and I’ve listened to hundreds of podcasts on the subject. When paired with a portfolio heavily allocated in the S&P 500, international index funds, especially emerging markets, can help your retirement portfolio in a volatile, up-and-down market.

Come to find out, emerging market funds zig when other funds zag. Meaning emerging market funds don’t move in lockstep with blue-chip US companies. So obviously that helps with proper diversification by adding more variety to your portfolio holdings.

What Makes an “Emerging Markets” Fund?

Most emerging market index funds invests in stocks of companies located in emerging markets around the world, such as Brazil, Russia, India, Taiwan, and China. Roughly 80% of the fund would invest in actual emerging markets, while the remaining 20% would invest in developed countries. Approximately 70% would be invested in Asia, 15% in Europe/Africa, and 15% in Latin America.

Emerging market mutual funds tend to have an opposite correlation to the S&P 500 over the past several years. This is why I strongly advise all Millennials add an emerging markets index fund to their retirement portfolio. Approximately 15% in emerging markets would suffice.



How long to become a millionaire?

I believe everyone has wondered to themselves, “How long would it take me to become a millionaire?” I mean, that seems to be everyone’s financial dream. Everyone always says, “If I only had a million dollars…” Well, I’m here to tell you just how to go about doing that.

Accumulating one million dollars isn’t quite as hard and daunting as most people think. Does it take a lot of time and discipline? It absolutely does, but it’s feasible if you simply save money and invest diligently. Warning, you may need to forgo some weekly coffees, nights out on the town and luxury cars. But trust me in the long run your future self will be very happy.

See for yourself what the power of compounding interest can do for you in your quest to become a millionaire.

$300/month

It will take you 38 years to become a millionaire if you invest $300/month and earn 9% interest annually ($1,017,493).

Less than $500/month

If you increase your monthly savings to $458, it would take you 34 years to become a millionaire ($1,035,432). I know what you’re thinking…$458 is an odd number. Yes, on the surface it is. I used $458/month because that equates to maxing out a Roth IRA, which I encourage all Millennials to do. The maximum you may contribute to a Roth IRA is $5,500. In order to hit that via dollar cost averaging, you would need to contribute $458/month.

$458/month may sound like a lot of money to some people but it’s really not. If you earn $55,000/year and save 10% of your income for retirement, that would equate to $5,500/year (the max for a Roth IRA), or $458/month. At a minimum, all Millennials should be saving 10% of their earned income towards retirement. And I mean, at a minimum. Most financial experts advise you save between 15-20% of your income in order to retirement comfortably. And by “comfortably” most financial experts mean your retired by age 65. I’m shooting for 60, if not sooner. How about you?

Millionaire in 30 years or less

What if you lived well below your means, drove a car payment-free, and lived a bit more frugal of a lifestyle versus buying more extravagant, name brand items? If you could save $700/month it would take you 29 years to become a millionaire ($1,042,749).

Looking to become a millionaire in 25 years or less? You would need to invest $1,000/month with a 9% annual return ($1,016,419). $1,635/month would get you one million dollars in 20 years ($1,000,697).

How to be a millionaire in 10-15 years?

Okay, let’s pretend you’re really, really impatient and want to save one million dollars ASAP. If you have the resources you would need to save $2,850/month to have one million dollars in 15 years ($1,004,146). If you invested $5,500/month you could end up with one million dollars in 10 years ($1,002,735).

Challenge yourself to save as much as possible. Start off small and save $200/month. Then slowly increase that amount as often as you can. When you get a raise, apply it directly to your monthly savings. No Millennial starts off saving $800/month initially. You have to ease your way into it. It’s not going to be easy, but it’s doable. Just learn to live below your means.


Last Week Stock Market (Nov 7-11, 2016)

Last week, Nov 7-11, 2016, the stock market finally saw some positive energy after a few tough weeks. What sparked the change? Oh, this little event called the presidential election. Much to America’s surprise, Republican candidate Donald Trump was elected our 45th president over Hillary Clinton.

What did that mean for the stock market? Well the S&P 500 saw its biggest one week gain in nearly two years. The Dow Jones Industrial Average had its largest one week gain since December 2011, closing at a record high on Friday. Initially that was not the case Tuesday night during the election. As everything was unfolding, Dow futures were down nearly 800 points Tuesday night. That changed rather quickly first thing Wednesday as the Dow rebounded.

Since 1944 stocks have risen by an average of 12.2% over the two years following the election. Trends like this are meant to be broken, but I am optimistic stocks gain near this clip. Given our recent bull market run over the years, I would expect the 12.2% average to be more in the 9-10% range, which is still fantastic.

Last Week’s Stock and Bond Index Performance (Nov 7-11, 2016)

  • NASDAQ 3.8% (YTD 4.6%)
  • Dow Jones Industrial Average 5.4% (YTD 8.2%)
  • S&P 500 Index 3.8% (YTD 5.9%)
  • U.S. Aggregate Bond Index -1.8% (YTD 3.1%)

How did my retirement portfolio perform last week (Nov 7-11, 2016)?

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 Small Cap Value Index Fund (VSIAX) 7.7%
  2. Vanguard Extended Market Index Fund (VEXAX) 6.7%
  3. Vanguard S&P 500 Index Fund (VFIAX) 3.9%

Year-to-date my retirement portfolio is up 8.1% (the S&P 500 is up 5.9% YTD). I am my own portfolio manager. I don’t have help from a Certified Financial Planner or Advisor. I was a liberal arts major and I do all my own research on investing by reading regularly. My philosophy is to use low-cost index funds and its been working for a decade.



Millennials Need to Save 22% for Retirement

Below is a list of some of my favorite money/personal finance articles from this past week. I’ve sifted through boat loads of articles on money, retirement, personal fiance, budgeting, paying off debt, and buying a home.

All of the below articles are highly relevant to the Millennial generation (Gen Y) and their money. Knowledge is power, and you are your single greatest investment, so continue to educate yourself on money and personal finances right here on this very blog so you can one day become financially independent.

This week’s best articles on money and personal finances, specifically for Millennials



Millennials May Have to Save 22% of Income for Retirement

A number of analysts predict that the slower growth of the U.S. economy after the Great Recession could cause stock market returns to fall from 7%, the current annual average, to a possible 5% in the decades to come. And that could hurt investors (especially Millennials). (NerdWallet)

Worried about the election’s impact on your portfolio? Markets are nonpartisan long term

“It’s understandable that investors might have concerns because of the different policy positions of the candidates and the strongly held views of voters of all political persuasions,” said Jonathan Lemco, Ph.D., a senior strategist in Vanguard Investment Strategy Group and former professor of political science at Johns Hopkins University. “But investors should invest for the long term and not subject themselves to the political whims of the moment.” (Vanguard)

A Wealth Building Strategy You Never Hear About

For many Americans, the lion’s share of their personal wealth is the equity they build up in their homes. Thus, the 15-year mortgage is one of the most powerful wealth building tools available to boost that wealth. It has the obvious advantage of enabling homeowners to be free of mortgage payments and retire sooner than a 30-year loan would have allowed for. (Investopedia)

How to Double Your Nest Egg for Retirement

The Employee Benefit Research Institute examined 24.9 million 401(k) plan accounts at the end of 2014. Of those accounts, 8.8 million had a balance for four consecutive years and 3.5 million had a continuous balance seven years running. These consistent accounts held vastly higher balances than the typical account. (Money)

What to Do If Your 401(k) Plan Has High Fees

The fees you pay within your retirement account reduce your investment returns and could cost you tens of thousands of dollars over the course of your career. While you can’t always avoid 401(k) fees, there are some ways to minimize fees and limit the impact on your nest egg. First, make sure you get your company match before considering alternatives to your 401(k). (US News Money)

The John Bogle Expected Return Formula

He says this formula currently gives him an estimate of stock market returns in the 4-6% range, well below the long-term average that falls in the 8-10% range. You could quibble with some of the details here but I like the fact that this is such a simple model.
(A Wealth of Common Sense)

Got a Raise? Here’s How to Avoid Lifestyle Creep

Life looks different for millennials. Rather than rushing out to get married and buy a home as previous generations seemingly did, today’s crop of young adults are taking their time. The median age for a first marriage has been steadily increasing since the 1970s and currently sits at 27 for women and 29 for men, according to the Census Bureau. (Investopedia)

Happy reading, my fellow Millennials.