The Power of an Increasing Savings Rate

The basic math behind financial independence is actually not that difficult to understand.  The more you save, the quicker you get there regardless of what the stock market does.  In other words, controlling what you can control in the form of your savings rate will also be the most impactful that you can do.  While not difficult to understand, following this advice year in and year out is incredibly difficult!

Make Hay While the Sun Shines

Many people tend to think that the Top 1% of income earners in America is a fairly ubiquitous group that tends to stay consistent through time.  In fact, nothing is further from the truth.  The odds of getting into the top 1% of income earners are higher than most think, while the odds of staying there are far, far lower than most think.  A 2016 study by Tom Hirschl of Cornell University and Mark Rank of Washington University in St. Louis highlights some of these important facts.  Note that this is just income – the top 1% based on wealth tends to be much stickier.

Your Personal Inflation vs. CPI

The Consumer Price Index (CPI, or CPI-U as the Consumer Price Index for All Urban Consumers is the primary CPI measure used) is something of an enigma to most people.  There’s sizable confusion about what it is and what it isn’t, which may be due to the sheer enormity of it (the CPI-U has 393 line items – the Bureau of Labor Statistics, or BLS, is nothing if not thorough).  The goal of the CPI-U is not to help consumers understand their own annual inflation rate.  No broad-based statistic, government or otherwise, could do that.  Instead, the CPI-U is meant to give a much broader, economy-wide measure of inflation.

Motivating Children in a Wealthy Family

Many children from wealthy families suffer from unhappiness, depression, and a general lack of motivation.  If you’ve always been given everything you want, what’s the point of trying to provide for yourself?  Yet many children of wealthy parents not only thrive in life, but even outperform those same wealthy parents.  Why do some fail so miserably while others succeed?

Stop Playing Small Ball – Focus on the Big Stuff

Years ago, David Bach hit it big with his concept of the “Latte Factor.”  According to his website, the Latte Factor concept is based on focusing on small expenses in order to save money for retirement and other goals.  In theory, by eliminating those $5 and $10 recurring expenses, you can have the money available to save for your long-term goals.  He was able to turn this concept into a nice little empire, writing books and even showing up on Oprah a few times.  The best example he used was spending $5 on a daily latte at the coffee shop in the morning – hence the name.

What’s Your Number?

For those of you not in the investment profession, let me share a little secret: Most of us are not very happy at our jobs.  Many people outright hate them, yet the pay is so good that they can’t fathom leaving for something else.  To many who sit on trading desks or as an investment manager, F-You Money is a well-known concept.  Big egos, a-hole bosses, and dealing with Compliance and Legal are just a few of the constant headaches.  Due to the larger than average compensation, the stress and pressure to perform day in and day out and the need to always up your game is tremendous.  A question common among these groups is “What’s your number?”