What I'm Reading This Weekend (1/27-1/28)

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Jan 26, 2018
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Current Events, Purchase Decisions, Generosity, Behavioral Finance, Investing, Article, Index Funds, Research

Thanks to Beth for curating another great set of articles to make us smarter about personal finance. Enjoy!

Personal Finance/Financial Capability

NYT Your Money Advisor Anna Carrns filed this report summarizing the 2017 Financial Report Card from John Pelletier at Champlain College’s Center for Financial Literacy.  Are you from one of the five states that received an A: Alabama, Missouri, Tennessee, Utah and Virginia?  It was reassuring to see that NextGen Personal Finance was the top suggestion for free and unbiased resources for teaching this subject. [Editor's note: Breaking news! Kentucky moving closer to making personal finance a graduation requirement.]

Here are some other quick reads on the subject:

  • Michelle Singletary (WAPO) suggests trying 3 “fasts” to get a handle on your spending and jumpstart your savings.
  • If you are about to look for a new job, you might want to read these common sense guidelines on negotiating that job offer when you get it.
  • Many media outlets picked up the results of the Bank of America’s “Better Money Habits” survey of 2000 millennials that suggest they are doing a better job than other generations at saving money.  The percentage with savings of $100,000 (currently 16%) has been growing.
  • And if the millennials keep it up and get to $1 million in savings, here is how long that $1 million will keep them going in each state (great map!):  Hint: it is closely tied to the cost of living in each state, especially housing costs.  Maybe moving south is a rational thing for retirees to do.
  • Sometimes it doesn’t hurt to be reminded that automating your finances increases the likelihood your will achieve your financial goals.  Here is a refresher from Forbes  if you need it.  
  • And payday lenders get a break from regulators. All the more reason to promote financial literacy and try to keep people from needing the payday lenders

Technology

Here is some of the latest news on the future of shopping, washing clothes, virtual currencies (can’t skip a week without something on that), and automobile news – the ones you drive, the ones in which you are driven, and the ones that drive themselves.

  • Amazon opened it’s first Amazon Go convenience store in Seattle (of course!).  This isn’t just any convenience store.  You can find chips and soda, yes, and some Whole Foods products too.

But the technology that is also inside, mostly tucked away out of sight, enables a shopping experience like no other. There are no cashiers or registers anywhere. Shoppers leave the store through those same gates, without pausing to pull out a credit card. Their Amazon account automatically gets charged for what they take out the door.

I am guessing few will have a neutral reaction to this.  They will either think it is very cool, or way too big-brotherish.

  • Can’t get enough of Amazon? How about an historical perspective of the technical revolution behind hedge funds that ended up birthing Amazon as well?
  • We read a couple of weeks ago about college students using the institutions’ electricity to mine bitcoin in their dorm rooms.  Will the enormous amount of electricity required to create these virtual currencies be their downfall?

Mr. de Vries, who keeps track of the use on the site Digiconomist, estimated that each Bitcoin transaction currently required 80,000 times more electricity to process than each Visa credit card transaction, for example.

Higher Ed

Two thought-provoking pieces are included this week about the true cost of higher ed. As we prepare our students for the next step in education, we discuss the high cost with a focus on tuition.  But let’s give due attention to being able to support oneself once in school [NGPF recently launched the game, PAYBACK (created by McKinney) to help students navigate to and through college]

  • Food insecurity among college students is shockingly high. Sara Goldrick-Rab’s opinion piece It’s Hard to Study if You’re Hungry in the New York Times gives the highlights from her recent research paper and paints the picture for us. Referring back to the abstract for the paper:

The rising price of higher education and its implications for equity and accessibility have been extensively documented, but the material conditions of students’ lives are often overlooked. Data from more than 30,000 two- and 4-year college students indicate that approximately half are food insecure, and recent estimates suggest that at least 20% of 2-year college students have very low levels of food security.

Careers

  • Thinking about a career in medicine?  Did you know that women outnumbered men among medical school matriculants this year? Check out medical school statistics here.
  • Interested in a career in FinTech?  An MBA may not be the way to go.  The Financial Times examines why business schools are not doing a good job at teaching their students about Fin Tech.  Is it too difficult?  Is the field changing too fast? Where are the experts?
  • If you like numbers, you might want to consider a career in actuarial science.  What is it exactly? Knowledge@Wharton “sums” it up for you.  Actuaries’ employment prospects look very “positive”!

From Johannesburg to Philadelphia and beyond, actuarial science is in demand these days. The U.S. Bureau of Labor Statistics says that employment of actuaries is projected to grow 22% from 2016 to 2026, much faster than the average for all occupations. And actuaries often rank high on lists of top STEM careers, top-paying jobs and even best jobs for women.

Investing:

  • Stock prices continue to rise, making folks a little nervous wondering how long it can last.  Burton Malkiel (author of A Random Walk Down Wall Street) gives his advice for investing in these conditions.  He takes a look at cycle-adjusted price/earnings ratio (CAPE), a measure that tries to indicate just how risky things might be.  Bottom line, according to Malkiel:

Two strategies that work: broad diversification and rebalancing. Also, try to minimize your costs.

  • While on the subject of Investing – the ETF turns 25!!!  The SPDR S&P 500 ETF Trust, the first ETF created, turns 25 years old this week.  Read about how ETFs have come to dominate investing today.

The world economy: Davos--where the wealthiest mingle.

  • World Economic forum was held Davos Switzerland this week.  This a conference where the world’s most powerful meet.  As the conference got underway, new statistics about the ever-increasing concentration of wealth hit the news.  The top 1% in the world controls 82% of the world’s wealth.  

Microsoft founder and philanthropist Bill Gates, Amazon’s Jeff Bezos and legendary investor Warren Buffett are the three Americans whose combined wealth matches that of the poorest 160 million Americans — about $250 billion [Editor's Note: Gates and Buffett have committed to giving over 99% of their wealth to charitable causes]. 

That's bringing home the bacon in monumental proportions. 

Infographic: On the subject of bacon, check out how much bacon prices (along with 29 other grocery items) have grown over the past decade (from Visual Capitalist)

Look for Question of the Day upcoming on this subject!

About the Author

Beth Tallman

Beth Tallman entered the working world armed with an M.B.A. in finance and thoroughly enjoyed her first career working in manufacturing and telecommunications, including a stint overseas. She took advantage of an involuntary separation to try teaching high school math, something she had always dreamed of doing. When fate stepped in once again, Beth jumped on the opportunity to combine her passion for numbers, money, and education to develop curriculum and teach personal finance at Oberlin College. Beth now spends her time writing on personal finance and financial education, conducting student workshops, and developing finance curricula and educational content. She is also the Treasurer of Ohio Jump$tart Coalition for Personal Financial Literacy.