July 19, 2011

How to review your retirement plan in 10 minutes

On saturday I went to The Tasting Kitchen for dinner with a friend and his client. Dinner was tasty, but the name of the restaurant sure does fit the size of the dishes. We ordered a few dishes to share, one of which was tagliatelle with black truffles, but I only had “a taste” of it because the portion was so ridiculously small. Literally, we each had 2 bites of the pasta. At $40 for the dish, that’s $6.67 per bite.

retirement

I’d definitely recommend the restaurant; we had some delicious pork, a cheese plate, duck, and some dirty martinis, all of which made up for the pasta that was a total rip off. Then again, it’s not truffle season, so what do I know.

A few dirty martinis in, we started talking about how much we learned, or didn’t learn, in college. I said I don’t think I learned that much; I learned how to budget my time and get stuff done, but other than that, oh, and how to do a beer bong, I’m pretty sure nearly everything that has been of use to me I learned while working.

Wouldn’t it be awesome if in college if we learned something about money, and finance stuff, that we could use in our daily lives? I mean, It’s fantastic that my finance professor taught me how to calculate the value of a stock option by memorizing the black shoels option pricing model, because I use this formula soooo much…..

Are they for reals? You never ever need to know how to calculate this, that’s what a CALCULATOR is for! Really though, I wish our professors taught us how to review our retirement plan; I mean, considering this money could be worth millions of dollars in our future, I’d say it’s more important than memorizing formulas, and definitely as important as doing the beer bong thingy.

Anyway, I’m watching the bachelorette right now and can’t stop obsessing over how white her teeth are…..

….so I’m having a hard time focusing on writing this post. Plus, I just went down to my gym and was flirting with ths guy who I have a big crush on so I’m having a hard time doing anything tonight. But, I’m such a committed blogger, so here we are.

So let’s get down to business, time to focus, for a total of 10 minutes so I can get back to the bachelorette and then do some google searches on teeth whitening gel.

10 MINUTE RETIREMENT PLAN REVIEW

1. Check your expense ratios:

Remember expense ratio is the fee that you’re paying to the investment manager of the fund. The higher the fee, the less money you have in your pocket, so you want your fees to be as low as possible.

I have 3 funds in my retirement account. Here they are, and their expense ratios:

  • PIMCO Fundamental IdxPLUS TR Inst +0.97%

  • Vanguard Emerging Markets Stock Index Fund +0.35%

  • Global High Income I +0.74%

You’ll notice the Vanguard Fund is much cheaper than the others. It’s cheaper because it’s an index fund and index funds just replicate a stock market index. In other words, they don’t have a team of people managing it, so it costs less.

The problem with many retirement plans through your employer is that they don’t offer a lot of index funds, so, you get hosed on fees because you’re forced to invest in mutual funds, that aren’t index funds, and the fees are much higher. That’s why it’s important to invest any money you have outside of your retirement account in index funds and avoid mutual funds with high fees whenever possible.

You’re throwing away thousands and thousands of dollars by investing in mutual funds when you could buy index funds that do the same thing. Even if your financial advisor tells you it’s “extra special,” it’s probably not and they might be getting paid a fee to get you to invest in it.

2. Check your target allocations

When I set up my 401(k) I wanted 50% of my money to go in the PIMCO Fund, 30% of my money to go in the Vanguard Fund, and 20% of my money to go in the Artio Fund like this:

  • PIMCO Fundamental IdxPLUS TR Inst 50%

  • Vanguard Emerging Markets Stock Index Fund 30%

  • Artio Global High Income I 20%

So basically, every time I get paid (2x per month), my employer takes out about $690 from each pay check and 50% of that goes to the PIMCO Fund, 30% goes to Vanguard Fund, and 20% goes to Artio Fund.

But guess how much of my money I have invested in each fund now?

  • PIMCO Fundamental IdxPLUS TR Inst 55%

  • Vanguard Emerging Markets Stock Index Fund 25%

  • Artio Global High Income I 20%

OMG I have more money in the PIMCO fund and less money in the Vanguard fund than I thought? How did this happen?

Over time your initial allocations get out of wack and will naturally drift away from what you had set up, so you need to get them back in line to make sure you’re maximizing your portfolio returns. Asset allocation and fees are two very reliable predictors of how your investments will do, so it’s important to stay on top of these two things.

In my situation, the PIMCO fund outperformed the other two funds so while the amount of money that I contributed to that fund stayed the same, it grew at a faster rate. So naturally, if that money grows faster, it will take up a larger portion of my pie and now represents a 55% allocation, which I don’t want.

3. Rebalance if necessary

I called up the administrator to our 401(k) plan and told him to sell enough of my PIMCO exposure to get the weight down to 50%, and move that money to the Vanguard Fund since it’s now underweight by 5%. That’s “rebalancing” – that’s it. Not so scary. The phone number is on your statement.

4. Check performance of your funds

Year-to-date, here’s the performance of the funds I listed above:

  • PIMCO Fundamental IdxPLUS TR Inst +9.0%

  • Vanguard Emerging Markets Stock Index Fund +0.8%

  • Artio Global High Income I +5.0%

Check the performance of your funds to make sure they’re in line with index performance. You can post in the comments section below the funds you’re invested in in 401(k) or IRA, and their performance (which will be on your statement), and I can tell you if any of the funds are sucking wind or not for the year. But the most important thing to do first is check your fees and your asset allocation, first.

It will take you 10 minutes to do the above, do this every six months and you’ll be set.

Now on to find the teeth whitening gel……



July 15, 2011

What commitment phobes and investment phobes have in common

I had drinks with some friends the other night and I was telling them about a conversation I recently had with a date. Unlucky for the guy, I had read an article about ten minutes before he picked me up about why Gen X, people born between 1965 and 1980, is obsessed with having a perfect marriage.

Most girls sit and flip through Cosmopolitan before they’re going on a date; I read Wall Street Journal articles on why people botch their marriages. Don’t ask.

Anyway, the gist of our conversation was that my generation is obsessed with finding a “perfect relationship” since our parents had not-so-perfect relationships.

Notice the divorce rate peaked in 1980.

I was born in 1977 so I grew up watching a lot of marriages crumble to pieces, you may have too.

The weird thing though is that I’m not afraid of getting divorced, which theoretically I should be because my parents are divorced. I’m not afraid of messing up at my job, I’m not afraid of losing my money in the stock market, I’m not afraid of starting to write a blog even though most people think I’m losing it, and I’m not afraid to go on vacation to Africa or Brazil by myself.

I’m afraid of the uncertainty that surrounds marriage and maybe not having a “perfect” situation.

What if I change? What if he changes? What if he decides he doesn’t want to be with me? What if I decide that he’s the most boring person on the planet? What if I want to ignore him 24 hours? What if he thinks I’m ugly one day? What if I get tired of waking up to the same person every day?

I plan and plot my life like a FREAKING sherpa would plan his journey on the silk road …..and there are so many “what if” scenarios with marriage that the uncertainty drives me batty!

I’ve been bouncing these thoughts off of my friends lately, my married friends, because my single friends have no clue what they’re talking about, like me. One of my married friends said that when you’re looking at marriage you can’t ask yourself ”can I live without this person?” because realistically, yes, you can live without them; you won’t die if you don’t have them in your life.

Instead, she says, you have to ask yourself: “how would I feel if that person wasn’t around to share my life with? Would I want to go to dinner, go on a trip, go on a hike or whatever it is…without this person?”

Ummmmm, Yes, affirmative. I haven’t looked back on any of the guys I’ve dated and said I would feel better if this person was here with me, right now; in fact, I’d like to punch one of them in the face. So I trust that the decisions I’ve made so far have been good ones.

But, that doesn’t mean that I’m not paralyzed by uncertainty and perfection.

A lot of my friends have hoards of cash sitting in their checking account because of they’re unsure about how to invest. They all tell me there’s so much uncertainty surrounding investing so they just want to avoid it.

Waaaaait a minute, that sounds like how I feel about marriage. WTF.

Personal connections and feeling understood (which I think comes with marriage?) makes people happy, and over the long run investing your money will make you more money. But whether it’s money or marriage, the uncertainty, and search for perfection, is paralyzing us from having a better future life.

My married friend who told me to ask myself ”how would I feel if that person wasn’t around to share my life with”…. is on to something.

Ask yourself the same question about your money: how will you feel if you knew you were leaving a big slug of money on the table by sitting in cash for the next 10 years instead of investing it? How would you feel knowing that by not investing your money you’re actually losing money?

I won’t ever have certainty if I get married and it won’t ever be perfect, and you won’t ever have certainty with your investment decisions and your decisions won’t be perfect.

But “certainty” isn’t the point, the point is to be doing things on a daily basis that will help us create a better life.

If you have $100,000 in your checking account, start with investing $10,000. See how that feels, then try it again in a few months. Remember, it’s all about the small wins.

After my conversation with my friend I realized I need to clean the lens that I’m looking through because uncertainty and imperfection can lead to great things.

So here we go……But, that doesn’t mean that I’m not paralyzed by uncertainty and perfection.

A lot of my friends have hoards of cash sitting in their checking account because of they’re unsure about how to invest. They all tell me there’s so much uncertainty surrounding investing so they just want to avoid it.

Waaaaait a minute, that sounds like how I feel about marriage. WTF.

Personal connections and feeling understood (which I think comes with marriage?) makes people happy, and over the long run investing your money will make you more money. But whether it’s money or marriage, the uncertainty, and search for perfection, is paralyzing us from having a better future life.

My married friend who told me to ask myself ”how would I feel if that person wasn’t around to share my life with”…. is on to something.

Ask yourself the same question about your money: how will you feel if you knew you were leaving a big slug of money on the table by sitting in cash for the next 10 years instead of investing it? How would you feel knowing that by not investing your money you’re actually losing money?

I won’t ever have certainty if I get married and it won’t ever be perfect, and you won’t ever have certainty with your investment decisions and your decisions won’t be perfect.

But “certainty” isn’t the point, the point is to be doing things on a daily basis that will help us create a better life.

If you have $100,000 in your checking account, start with investing $10,000. See how that feels, then try it again in a few months. Remember, it’s all about the small wins.

After my conversation with my friend I realized I need to clean the lens that I’m looking through because uncertainty and imperfection can lead to great things.

So here we go……

July 11, 2011

The Tucker Max school of making money

At first glance, you’ll think Tucker Max is a jerk off. But if you’re smart enough to look past his ridiculous stories about girls giving him “fellatio in the pool at the Delano” and why he thinks “assholes finish first,” you’ll realize that he has deliberately positioned himself as the guy in the movie that you want to hate, but you just can’t.

Tucker started writing his blog in 2002 and wrote two books shortly after: the #1 New York Times Best Seller I Hope They Serve Beer in Hell, which later turned into a movie, and Assholes Finish First.

People like his stuff because he doesn’t write about stupid things that nobody cares about like going to the grocery store or how much he loves his new puppy; Tucker tells stories that other guys aren’t willing to tell. Stories about “emotionally uninvolved sex with morally suspicious girls” are much more interesting than stories about mindless everyday happenings, which people write about all too often as far as I’m concerned.

But Tucker isn’t just about debachary and blow jobs, the guy is also a life hacker, according to me.

I came across an article that Dr. Scott Barry Kaufman wrote after doing an interview with Tucker and the interview is oozing with life hacking and money making advice, if you read it the right way.

So as long as you promise to not get your panties in a wod about Tucker’s cussing, narcissisim, and repeated references to “going out and drinking and f**ing a bunch of chicks,” I’ll share the link with you.

Here it is.

Oh, and the interview isn’t about making money, it’s about Tucker’s life. But if you read between the lines, which I outlined for you below with 3 key points, you’ll see why the guy makes bank.

1. There are lots of ways to get to the same destination, learn how to reverse engineer situations if necessary

Look, I’m never excluded because of my looks. I just don’t stand out. How you look is one of the least important things for guys. I learned that a long, long time, ago, I guess kind of intuitively, and I sort of understood it and reversed engineered it. – Tucker Max

Most people are average looking, like Tucker, so how do the average joe’s of the world gain confidence and get girls?

They do what Tucker did: they reverse engineer the situation. Tucker had to figure out what girls like, aside from looks and money, because he’s an average looking guy and he use to be poor. So what do girls like?

Girls like guys who are funny.

Studies show that average looking guys who are funny get more chicks than average looking guys who aren’t funny because humor is a good indicator of intelligence and creativity, and women look for intelligence when they’re selecting a mate. So Tucker’s average looks, and poorness, didn’t really matter because he reverse engineered how to get girls by being hilarious.

And of course average looking girls can reverse engineer situations too…….. it’s so simple you’ll die.

Smile.

One study shows that when an average looking girl was sitting at a bar she had 5 times as many guys approach her when she was smiling compared to when she wasn’t smiling. How weird, if you look friendly and nice, people want to talk to you? Very strange, I’m glad they did a study on this to confirm this confusing dynamic. Who funds these studies anyways? Just wondering.

Seriously though, it amazes me when I go out with single girlfriends to a bar and they don’t smile, at all. You know, when they sit there with a look on their face like they can’t be bothered? I’m thinking to myself…why are you here? Are you pissed off to be here? If you can’t be bothered and just want to talk to the friend you came with go home and talk on your couch!

2) Run towards what other people are running away from

I don’t want to get too deep into it, but because of various aspects of the way media works it’s almost impossible for me to get positive attention from the current structure of media and who runs media and whatever. So, instead of running from negative attention, I embrace it. I took it and I ran with it, and it’s fine with me. I don’t care – Tucker Max

When everybody says that they don’t want to look to buy a house because they think real estate prices are going to continue to go down, buy a house if you’re gonna be in it for longer then 5 years or so.

When everybody is selling stock funds because they’ve already lost a lot of money, like 10 percent or more, people in their 20′s and 30′a should be buying stock funds; stocks rise over time and you’re buying more, for less.

When you’re on a conference call at work and everybody is talking over each other - because in some delusional way they think that talking first, and loud, makes them sound more convincing – don’t talk for a little bit, just listen. Run towards silence because you can check the pulse of the call, hear what other people are saying, process the information, and then provide a thoughtful solution.

3) Drop the “f**-the-world mindset”

I never had like a f**- the – world mindset. It was more like, I’m going to have to go get mine if I want it, like it’s never going to come to me. I’m going to have to go get it.

The question to me isn’t like why did I succeed. The question is, why don’t all of these other people, you know? Because I know what I can do, and I know so many other people who can do what I can do and more. The question to me is like this isn’t that hard, why aren’t more people doing it? – Tucker Max

Well that’s a damn good question Mr. Max! Seriously people, the whole victimization thing is played out.

If you’re finding yourself in the same stupid types relationships, it’s not “happening to you,” you’re choosing to be with the same lame people, over and over. The definition of insanity is doing the same thing over and over again and expecting different results. Are you insane?

If you don’t like your boss, go find a job where you like your boss or a place where you can become the boss. The fact that you don’t like your boss isn’t your boss’s problem, it’s your problem, and you can fix it.

If you don’t get paid what you think you’re worth, it’s your problem for not asking for a raise or looking for a new job. Whoever is responsible for your compensation isn’t your sherpa in life.

What do you think of Tucker?

Ok, so I recognize that Tucker’s personality isn’t for everyone, but I do appreciate the fact that he’s skinning the cat in a way that nobody else has. Would I date the guy? Heck no. But only because I’d be afraid he was gonna blog about me.

So what do you think of Tucker Max….I’m curious. And don’t be afraid to say what you really think, I’ve had all sorts of trolls on my blog tell me I’m ridiculous. It’s no big deal, in fact, it’s a great marketing opportunity, a la Tucker.

July 05, 2011

How to have a heart attack by August 2nd

  • Watch MSNBC and Fox News every single day for the next 30 days. Pay attention to every headline that says “The US is going bankrupt.”

  • Pay particular attention to television shows with journalists who have big hair and white teeth because they know exactly what they’re talking about.

    Listen closely when they tell you that the US is going to implode if congress doesn’t give that guy Timothy Geithner, the Treasury Secretary, the ability to borrow more money, or “raise the debt ceiling,” so he can pay the US’s bills that are due on August 2nd.

  • Anytime the media uses the word “implode,” turn the TV up, close your eyes, and picture what the US imploding would look like. I’ll help you out, it would look something like this: the stock and bond markets would crash, all your investments would tank, the value of your house would plunge, banks would go out of business, you wouldn’t be able to borrow any money from any banks, and the value of the dollar would free fall because nobody would want to own our currency because we suck. Worst of all, you wouldn’t be able to leave the country for vacation because it would cost you too much money. Boo hoo.

    Think about the US imploding as much as you can before going to bed, so then you’ll dream about it, and maybe have a heart attack in your sleep. That would be perfect.

  • If you prefer reading instead of watching Fox News or MSNBC, only read articles that tell you that the US needs to borrow more money because the President has been on a spender bender.

    Ignore all articles that don’t bash the President, those will only give you a balanced view of the situation and calm you down, which in turn, would reduce the probability of you having a heart attack, in your sleep. We need maximum anger at all times to insure a heart attack within the next 30 days. Revert back to watching Fox News or MSNBC if you start to feel like you’re calming down.

  • Don’t listen to any, I repeat, any person who tells you that over the last 10 years the US government has asked congress to borrow more money, or “raise the debt limit,” 10 times. And, congress has agreed to it every single time.

    You don’t want to know that congress has been raising the debt limit for decades and this particular time is not unique to our President, because then you’ll be less pissed off at the President. Calmness and logic don’t facilitate heart failure.

  • If you’re unsure about why the hell congress is taking so long to agree on raising the debt limit, if, after all we’ve been doing this since the 1960’s, ask your colleagues because they know everything since they watch Fox News or MSNBC every night too.

  • When your colleague, who watches MSNBC, tells you that the Republicans in congress want to cut spending on kids’ education to help reduce US debt, which would then allow us to raise the debt limit and borrow more money so Timothy G can pay the US’s bills, call up your friend who is a Republican and tell them how stupid they are.

  • Be sure to tell them that they are selfish and only care about making money and they must hate kids, because all Republicans love money and hate kids.

    Actually try to get in huge fights with your friends over politics, it’s totally worth it, especially when you’re drinking. Fights, and stress, will facilitate irregular heartbeats, so you’re much closer to having your heart attack as planned.

    Oh, and be sure to tell your Republican friend who does volunteer work once per week at their local church that it doesn’t mean they’re helping solve our debt crisis, they’re really just trying making themselves useful because they don’t have to work since they have money coming out of their rear. Tell them that when you’re both tanked. And don’t say sorry the next day, you need the stress to brew to help create heart palpitations.

  • If you’re still not sure why it’s taking congress so long to agree on how they’ll reduce the US’s debt, be sure to ask your other colleague, who watches Fox News, why the President has been hating on corporate jets and hedge fund managers.

    If they tell you that the amount of tax revenue the government would raise by changing the way they tax corporate jets would be peanuts, don’t listen. This will undoubtedly piss you off because then you’ll feel like the President hating on corporate jets is just a way to get you hating on Republicans as we’re entering election year, because all Republicans are rich, and have corporate jets, obviously.

    Being pissed off at the President’s marketing strategy is a great way to facilitate having a heart attack, and maybe even dying. Don’t you all want to die pissed off at your country? Who wouldn’t?

  • As August 2nd approaches, eat as much Chinese food as possible. Especially the stuff with all the MSG because those preservatives will surely push you over the edge to death when you think about how much money the US owes China, oh, that we won’t be able to pay back if congress doesn’t come to an agreement on how we’re going to reduce our debt….so then we can borrow more money.

    If congress doesn’t have an agreement by August 2nd on how we’re going to reduce debt by either 1) cutting spending by screwing our kids out of a good education or 2) increasing revenue by raising taxes on self absorbed corporate jet owners and hedge fund managers – because, really, those are the only two ways to reduce debt – we could eventually default on the money we owe China, the US economy would tank, and then you wouldn’t be able to afford eating Chinese food ever again. See point #3 above.

    So eats lots of MSG filled Chinese food then lay down and think of your grandma not getting her social security check because we won’t have any money to pay the bills if we don’t raise our debt ceiling. If you don’t have a heart attack after doing that, something is wrong with you.

  • Whatever you do, DO NOT acknowledge the fact that this is just a game of politics and congress will let Timothy G and the President raise the debt ceiling, once they all stop fighting. And, don’t think about the fact that it’s in the President’s best interest to reach an agreement with congress by August 2nd because last time I checked, the President would like to get re-elected in 2012.

    If an agreement isn’t reached, the US won’t be able to pay its bills, and the US economy would tank, and the President wouldn’t get re-elected.

    Hmmmm so do you think the President will reach an agreement with congress by August 2nd?

    Do 1 – 10 above for the next 30 days if you’d like to have a heart attack in July while congress battles it out then ultimately reaches an agreement by August 2nd.

Or, focus on something you can control.

July 27, 2011

Dear feminists, put a lid on it

Do you want to know the most annoying and overused statistic on the planet? I’ll tell you……

Women are paid about 77 cents for every dollar that men are paid for the same work.

You know how I know that statistic? Because every feminist quotes it and it drives me INSANE.

WHY WOMEN ARE PAID LESS THAN MEN

First off, of course women are discriminated against, and so are men. But discrimination isn’t the real reason why women are paid less than men.

Most women navigate their careers differently than men do: women choose their career path by taking their family, or future family, into consideration while most men don’t.

Studies show that the main reasons women are paid less than men is women choose careers and jobs that are less risky, less stressful, and less demanding, and those jobs pay less. And, women don’t ask to get paid more, so they don’t. Funny how that works.

There’s a trade off between risk and reward so if women are choosing careers and jobs that are less risky, less stressful, less demanding, and they’re not asking for more money, women are putting a self imposed cap on the amount of money they’ll make.

WHY MOST WOMEN AREN’T RISK TAKERS

Out of a sample set of MBA’s, 57 percent of the men worked in “higher risk” jobs, like investment banking or trading, compared to 36 percent of women. The women who took these risky and demanding jobs had higher testosterone levels than the rest of the women – their testosterone levels were actually closer to the guys’ testosterone levels (and I thought my arms are hairy because I’m Italian… Ah ha ha ha!)

Both women and men who are willing to take financial and career risk tend to have higher levels of testosterone.

So this link between testosterone and risk taking helps explain why men are more interested in taking the jobs that women don’t want, and it also helps to explain why men are more comfortable sticking their neck out and asking for a raise: testosterone increases risk taking and men have more testosterone than women.

I guess that’s where the term “grow a pair” comes from.

Men are naturally more comfortable taking risk, and risky, demanding, stressful jobs pay more. So why all the complaining about pay, ladies?

IF YOU WANT TO GET PAID MORE, START TAKING RISKS OR STOP COMPLAINING

Before all you feminists start egging my house, I want to tell you that I’m thankful for all the ground work you’ve laid for my generation. Women have equality in the work place now that was unimaginable even just 20 years ago.

But that was then and this is now.

Feminists who are still running around telling Gen Y women – which sadly I’m not a part of – that they’re paid 77 cents for every dollar that men are paid, need to explain why they’re paid less: women make different career choices than men, most women prefer low risk low stress jobs, and so women are paid less as a result.

Stop ranting about sexism and inequality. We need to move on, puuuuleeease ENOUGH WITH VICTIMIZATION. We need to encourage accountability for this next generation of women so they can use all the progress that’s been made to help them spring forward in their careers rather than fall back in a victim trap.

Sheryl Sandberg, the COO of facebook, explained it best at her alma mater, Barnard, during her commencement speech:

“Women almost never make one decision to leave the workforce. It doesn’t happen that way. They make small little decisions along the way that eventually lead them there. Maybe it’s the last year of med school when they say, I’ll take a slightly less interesting specialty because I’m going to want more balance one day. Maybe it’s the fifth year in a law firm when they say, I’m not even sure I should go for partner, because I know I’m going to want kids eventually. These women don’t even have relationships, and already they’re finding balance, balance for responsibilities they don’t yet have. And from that moment, they start quietly leaning back… So, my heartfelt message to all of you is, and start thinking about this now, do not leave before you leave. Do not lean back; lean in. Put your foot on that gas pedal and keep it there until the day you have to make a decision, and then make a decision. That’s the only way, when that day comes, you’ll even have a decision to make.”

Do you think Sheryl feels discriminated against? I’m gonna go with, No.

But she made a decision that most women aren’t willing to make; she deviated from the comfortable risk averse path.

If women want to get paid more, stop acting like victims, start taking more risk, and lean in!

PS Carnival of Wealth included me in their June 19th edition where I explain how to freeze your credit. You’re a moron if you don’t do this!