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Smart Investors May Be Killing Capitalism
Picking stocks is for insiders and suckers. That has become the new wisdom on Wall Street when it comes to the best interest of average investors. For most of us, the wisest strategy is to avoid the “this company or that company” game and bet on every company —by putting money in low-cost index funds.But what if this prudent approach is also dangerous? Good for your portfolio, but bad for our collective economic future.

How to Avoid Family Financial Sabotage
Did you ever lend or give money to a family member? If so, you're like many who have responded financially to at least one request. Giving to others can be rewarding, but becoming the family bank or money tree can be stressful, particularly when the amount or frequency of the requests is high. Stress comes from deciding if you can afford the outlay and wondering if the money will be used responsibly. The request can also be packaged in what psychotherapist Dr. Susan Forward called FOG — fear, obligation and guilt. FOG can keep you from saying no when no would be the best response.

Tackling the 'Nastiest, Hardest Problem in Finance' 
Consider some of the most challenging problems in finance: the equity-premium puzzle; binomial-option pricing models; do zero interest rates spur inflation or damp it; are stocks cheap or overpriced Challenging as those may appear, none compare to what Nobel laureate William Sharpe, 82, calls "decumulation," or the use of savings in retirement. It is, he says, “the nastiest, hardest problem in finance.”  

The First Steps to Repaying Your Student Debt
For this year's crop of new college grads, few things are more exhilarating than being handed your diploma. Too bad it's so closely followed by something else: that first student loan bill. Seven in 10 seniors graduate with debt, owing about $30,100 per borrower, according to the most recent data from the Institute for College Access & Success.

Study: You Literally Can't Even Pay People to Read Opinions They Disagree With
People are so conditioned to avoid contrary viewpoints that they will actually forego an opportunity to win more money if it requires them to read something with which they disagree. That's according to a fascinating—and deeply depressing—study in the Journal of Experimental Social Psychology.

In This Noisy World, Kids Really Need Critical Thinking
More than 1 in 6 students in the United States are unable to solve complex thinking problems, according to the 2012 PISA (Programme for International Student Assessment) test done on 15 year old children in 44 different countries1. Though American students did well overall, they consistently lagged behind their Asian counterparts. Unfortunately, kids who lack critical thinking problem solving skills face a higher risk of behavior and economical problems as adults.

Get Ready for Dramatically Lower Stock Market Returns Over the Next Decade
Vanguard Group says expect a typical 60 percent stocks/40 percent bonds portfolio to deliver two- to- three percentage points less in nominal annual returns than its long-term norm.

Your Client's Financial Well-Being is More Than Their Finances
A person’s financial well-being is about more than just finances, according to a new research paper from Morningstar behavioral economist Sarah Newcomb. The paper – When More Is Less: Rethinking Financial Health – draws on results of a 2016 survey of U.S. adults to create a model of financial health using demographic, psychographic, emotional and behavioral variables.

Millenials: It Pays to Rethink the Boomer Approach to Retirement
To paraphrase one of the great musings of the American businessman and investor Charlie Munger, you don't have to touch an electric fence to learn not to do it. In other words, it's better to learn through observation and the mistakes of others than through making the mistakes yourself. For this reason, millennials should take note of the situation many baby boomers find themselves in today as they near retirement age.

In Unprecedented Move, Pension Plan Cuts Benefits Promised to Retirees
A pension fund in Cleveland became the first plan to approve benefit cuts for current retirees — even though it is still years away from running out of cash. The move, some critics say, could open the door for other troubled pension plans to follow suit. The financially strapped Iron Workers Local 17 Pension fund proposed a plan for extending its lifespan by reducing benefits for workers and retirees. Now that the plan has received final approval, roughly half of the 2,000 participants will see their pension benefits shrink on Feb. 1. Benefits will be cut by 20 percent on average, but some retirees are expecting their monthly payments to be slashed by as much as 60 percent.

Get Used to It: Economists See 'New Normal' of Slow Growth
Americans should get used to a "new normal" of slow economic growth, business economists say. The median estimate from economists surveyed by the National Association for Business Economics calls for the American economy to grow 2.2 percent in 2017, up from a forecast 1.6 percent this year and unchanged from the previous survey in September.

Gradually Converting a Traditional IRA to a Roth Can Boost Nest Egg
The first wave of baby boomers who turned 70 ½ this year must start tapping their traditional retirement accounts soon and pay taxes on those required minimum distributions. For those first boomers who turn 70 ½ this year, who were born from January through June 1946, their first distribution is due by the end of 2016. But a special first-year rule allows them to postpone their initial distribution until April 1 of the following year. However, if they opt to delay they would have to take their second distribution by Dec. 31, 2017, resulting in a double payout next year and an even higher tax bill.

Public Pensions are being Overly Optimistic 
The proximate cause of this column is an article in the New York Times, detailing the travails of a tiny government office that decided to withdraw from Calpers, the California state pension system, in order to switch to a 401(k) system. Officials at the office thought this would be a simple matter, since their members were fully paid in. Only it turned out it cost them more than $500,000 to make the switch, because when they went to leave, Calpers said “We meant fully funded if you stay, not fully funded if you leave.”

Student Debt: Lives on Hold
Almost every American knows an adult burdened by a student loan. Fewer know that growing alongside 42 million indebted students is a formidable private industry that has been enriched by those very loans. Step by step, one law after another has been enacted by Congress to make student debt the worst kind of debt for Americans—and the best kind for banks and debt collectors.

Boomers, It's Time to Spend - and Pay Taxes on - Your 401(k)
At age 70½, the bill comes due on all those tax-deferred savings accounts we’ve been building, and this week the oldest baby boomers will begin to reach that finish line—with many millions more to follow. Those waves of retirees will be required to start pulling money from their IRAs and 401(k)s. Following an Internal Revenue Service formula, these annual withdrawals can push you into a higher tax bracket, so financial planners put a lot of energy into building strategies to minimize the tax bite.

Financial Illiteracy May have Cost Investors $200B
Back in the day, I used to believe individual investors could manage their own money and even sometimes beat the pros at their own game. But after years of watching them make every mistake in the book, I don’t think many investors know what they’re doing. Now it turns out there’s a reason for that: Many investors are financially illiterate.

1 in 4 Americans have PTSD-Like Symptoms from Financial Stress
If you’ve ever felt like financial stress was bringing you down—in a big way—you might be interested in the findings of a new study from Payoff, a financial wellness company. In an analysis of data from 2,011 survey respondents, researchers at Payoff discovered that 23% of respondents were experiencing symptoms commonly associated with post-traumatic stress disorder (PTSD) related to their finances. Among Millennials, the number is 36%.

The Secret Shame of Middle Class Americans
Since 2013, the federal reserve board has conducted a survey to “monitor the financial and economic status of American consumers.” Most of the data in the latest survey, frankly, are less than earth-shattering, but the answer to one question was astonishing. The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?

Dalio: We're not Ready to Handle the Next Downturn
Ray Dalio is founder and CEO of Bridgewater Associates, the largest hedge fund in the world. Dalio bases his investment decisions less on abstract financial data, and more on his reading of the macro economy. He’s very focused on how central bank interest rates are running close to zero these days. Dalio joined Marketplace Morning Report host David Brancaccio to talk about the future of the economy when central banks run out of firepower.

The Fed in a Bind
Pity the Federal Reserve. As it demonstrated again Wednesday, the central bank remains hostage to changing financial markets and global economic conditions. This is making it very hard for Fed officials to communicate a clear and consistent policy path that will be pursued for any significant period of time.

Would you let a Mystic Manage your Investment Portfolio?
It’s that time of year again when the mystics peer deep into their tea leaves, entrails and crystal balls to divine what’s ahead. Which means it’s also time for my annual reminder: These folks cannot tell the future. Ignore them.

Short Term Memory can Threaten Success
When it comes to the market's peaks and troughs, investors often don't react as rationally as they might think. In fact, in times of extreme volatility or poor performance, emotions threaten to commandeer our common sense and warp our memory.

7 Deadly Sins for Distribution Portfolios
Those who specialize in retirement planning have an additional, special burden: They must distinguish between the math of accumulation and the math of decumulation.

Ron Lieber NHPR Interview
Of all the difficult conversations between parents and children, talking about money may be the one parents are the least prepared for.

Paying for Financial Advice Makes Sense
If you are lucky to earn more money than you need each month, there was probably a time when you could have used some advice about how best to spend, save and protect it.

My Biggest Financial Lesson
Most of us have one, or sometimes more than one: a turning point or a moment when our feelings about money crystallize. When that happens, we know it and resolve to think about our finances in a different way while saving, spending or giving away money much more carefully.

Beliefs that Contribute to Investors' Failure
After a nearly two-year study that aimed to answer the question, What does true investment success look like?, Suzanne Duncan, global head of research at State Street’s Center for Applied Research, and her team found that the way individual and professional investors made investment decisions was so skewed that achieving both high returns and long-term objectives was nearly impossible.

The Most Important Question to Ask an Asset Manager
After a recent talk to a small investment club in eastern Massachusetts, I was asked what one question I would ask a fund manager—if only allowed one question—before deciding whether to buy the fund.

Investors Should Know More About Their Advisors
When Elaine and Merlin Toffel, a retired couple in their 70s, needed help with their investments, they went to their local U.S. Bank branch. The tellers knew them by their first names. They were comfortable there.

The Hidden Costs of Retiring Early
Retiring early may sound really tempting. But leaving the workforce just a few years early can saddle you with tens of thousands of dollars in additional medical costs.

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