Jonathan Clements's Blog, page 371

Mixing It Up

LOOKING TO BUILD an investment portfolio���or rethink the mix you already own? Check out HumbleDollar’s new portfolio-building guide.

The guide takes the most important advice from the site’s chapters on investing, markets and taxes, and turns it into nine simple steps that should help you build a sensible, low-cost portfolio of index funds. I’ve included step No. 1 below. If you like what you read, I encourage you to peruse the other eight steps.

Step No. 1: Ask Why.��Want to buy the right investments? First, you need to decide why you���re investing. Are you looking to make a house down payment next year, put your toddler through college or fund a retirement that won���t start for 30 years?

That brings into focus the crucial issue of time horizon and hence the maximum amount of risk it���s prudent to take. While those who will spend their savings soon probably shouldn���t own anything riskier than a short-term bond fund, truly long-term investors could potentially stash 100% in stocks.

That doesn���t, however, mean you should take the maximum risk your time horizon allows. Other issues also come into play: You might opt to be more conservative if, say, you���re comfortably��on track��to meet your financial goals, you���re��unnerved��by the stock market���s price swings or there���s a chance you���ll need to dip into your portfolio earlier than expected, because your��job situation��is iffy.

While this portfolio-building guide offers nine steps, you might venture no further than the first four. Much hinges on how much complexity you���re willing to endure and what investment philosophy you favor.

That said, the sections that follow aren’t intended to be some freewheeling investment smorgasbord. In this guide, we aren���t wasting time���and risking lousy returns���by trying to pick��individual stocks��or hotshot mutual��fund managers. Instead, in true HumbleDollar fashion, the goal here is capture as much of the market���s return as possible���by purchasing��index funds��with rock-bottom annual expenses.

Step 2: Pick Your Provider
Step 3: Cover Cash Needs
Step 4: Off the Shelf
Step 5: Build Your Own
Step 6: Fend Off Inflation
Step 7: Tilt Your Portfolio
Step 8: Add Alternatives
Step 9: Keep Your Balance

Latest Articles

Think your little sports star will get a college scholarship? “Only 3% of high schoolers get to play NCAA Division 1 and 2 college sports���and not all will receive scholarships, let alone a full ride,” writes John Yeigh.
Marketers constantly get us to make economic choices that aren’t in our best interest. How do they do it? Jim Wasserman details five key tricks used to influence our behavior.
Just 27% of 401(k) participants know what they’re paying. Are you in the dark? Adam Grossman��offers five pointers.
“Carl���who is human���hasn’t been selecting my investments,” notes Dennis Friedman.��“Instead, it’s been a computer. I call the computer Little Jack, after the late Jack Bogle, because it picks nothing but index funds.”
Living paycheck to paycheck? Ross Menke has three recommendations: Keep housing costs to 25% of income, buy a car you can afford to purchase with cash, and trim cable, cell phone and other recurring expenses.
“Real wealth is not income or net worth,” writes��Richard Quinn.��“It���s family, friends and grandchildren. It���s enjoying good health. It���s being able���when necessary���to help others.”
Don’t want hackers to empty your financial accounts? David Powell’s advice: Use strong, unique passwords for each site, be leery of public wi-fi networks and adopt two-factor authentication.
“Want to make life easier for your heirs?” asks John Yeigh. “Yes, you want to get your financial affairs in order. But do them another favor: Deal with your excess stuff.”
Looking to invest in a private equity, venture capital or hedge fund? It’s a treacherous business���but you can improve your odds by asking 10 questions, says Adam Grossman.
“If you look at total career earnings minus college costs, college students will, on average, catch up with non-college workers by age 30,” writes Dennis Quillen. “But the averages can be deceiving.”
What’s more important than money? Time and people. For proof, ask yourself these eight questions.
“I wish I���d encouraged my parents to get a dog,” Dennis Friedman says.��“It would have helped my mother deal with the loss of my father. My mother says nighttime is the most difficult; having a dog would make it easier.”
Got a business idea? Ross Menke suggests taking your cue from the��$5 challenge tackled by Stanford University students���and think creatively about how to get started.

Looking for something to listen to in the car or at the gym? Check out my inaugural podcast with Creative Planning’s Peter Mallouk.

Follow Jonathan on Twitter��@ClementsMoney��and on Facebook.��His most recent articles include Out of the Swamp, Working Late and House Rules. Jonathan’s��latest book:��From Here to��Financial��Happiness.

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No Free Ride

WE ARE A NATION obsessed with youth sports. Time��magazine says it’s a $15 billion-a-year industry. As many as 60 million kids participate.

Sports are good for kids for all kinds of reasons: promoting exercise and a healthy lifestyle, enhancing team work and relationships, providing structure, instilling confidence to overcome challenges and delivering the joy of playing.

During our children���s sports journeys, we parents are often led to believe that our little sports stars are on the path to the holy grail���a full athletic college scholarship. The sports-industry complex of coaches, trainers, camp and tournament directors, and recruiting advisors often promote this fantasy. And we parents bite hard. After all, who doesn���t want their kid to receive a $200,000 free ride?

But will they? Make no mistake: Youth sports aren���t free. College athletes typically require five to 10 years of dedicated travel sport participation, with the associated fees, equipment, travel and hotel costs, coaching fees, supplemental training, camps, showcase tournaments and tryouts, and perhaps a video or recruiting advisor. The commonly used and derided term ���pay to play��� highlights the financial underpinnings of youth sports.

It’s common for families to spend $2,000 to 5,000 a year for travel team participants, and $20,000 a year or more isn���t unheard of. I am intimately familiar with youth soccer and estimate the typical college soccer player incurred total costs of around $50,000 to get there. Even a barest-of-bones elite youth soccer journey would likely cost $25,000. On a strictly financial basis, 529 savings plans and Coverdell education savings accounts are far more reliable sources of college funding.

In addition to high costs, youth players must grapple with all the other aspects of becoming an elite athlete���maintaining interest and discipline, remaining injury-free, continuous training and constant competition at the highest levels.

Elite athletes then face the final challenge in capturing an athletic scholarship: selection by a college coach. Only 3% of high schoolers get to play NCAA Division 1 and 2 college sports, according to ScholarshipStats.com���and not all will receive scholarships, let alone a full ride. They may also end up at colleges that aren���t the best fit for them. The bottom line: The odds of landing on a D1 or D2 team roster are about the same as landing on a single roulette number.

D3 colleges, which comprise the largest NCAA division, do not provide athletic scholarships. NAIA and junior colleges do offer athletic scholarships and may provide a good alternative, assuming the academic and campus programs fit the athlete.

Selection numbers are particularly daunting in widely played sports like basketball and soccer, where less than 1% of U.S. high school boys are chosen for D1 teams. Some D1 obsessed parents even steer their kids to sports with fewer youth players, and larger college rosters, such as ice hockey, lacrosse or men���s baseball. With these sports, selection chances are roughly triple that of basketball and soccer, but still a miserly 2% to 6%.

Another tactic, utilized mostly to gain acceptance���rather than money���at stretch academic colleges, is to have kids excel in niche sports. Talent at equestrian, crew, fencing, rifle and javelin throwing may increase the odds of being noticed. One father helped his two kids get into Ivy League colleges by undertaking a multi-year program to assist them in becoming among the best high school javelin throwers.

Even for those few players selected to play college sports, most don���t receive a full ride. Only football, men���s and women���s basketball, and a few additional women���s sports���volleyball, tennis, gymnastics���are NCAA D1 full-ride sports.

In men���s soccer, for example, D1 and D2 colleges can grant 9.9 and nine scholarships, respectively, for a roster of around 29 players���in other words, just a one-third scholarship per player. Some colleges, including members of the Ivy League, don���t offer athletic scholarships. Others don���t fully fund all athletic scholarships, such as some Patriot League colleges.

Women���s scholarship opportunities in some sports are higher than men���s. That���s largely the result of Title IX equivalency requirements, which means colleges essentially need to offset the 65 to 85 football scholarships granted to men. Women���s D1 soccer can give 14 scholarships, versus 9.9 for men, plus women���s soccer has 129 more D1 teams than men���s soccer. Still, like high school boys, girls face the same dismal overall 3% selection rate to NCAA D1 and D2 sports.

Children should participate in youth sports for the many positive benefits. Meanwhile, parents should relax and enjoy their kid���s sports journey. Too many families hang onto the false hope that youth sports will lead directly to a college scholarship. But unfortunately, this ride isn���t free���and there���s likely no scholarship at the end of the journey.

John Yeigh is the author of a book outlining the highs, lows and challenges of youth sports, with publication slated for 2020. His two children overcame their Dad���s genetic deficits and became college athletes. John���s previous articles include Other People’s Stuff,��All Stocks��and��Off the Payroll.

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First Words

WHAT’S WORRYING investors. Stock market valuations. International investing. Jack Bogle’s legacy. Plus two tips for the month ahead. Check out the inaugural podcast featuring Peter Mallouk and me, where we discuss all those topics and more.

Peter’s the president of Creative Planning in Overland Park, Kansas, where I sit on the advisory board and investment committee. The first podcast runs just 20 minutes, so it’s a quick listen. We’ll be back with another podcast next month.

While you’re listening to the podcast, check out my latest piece on MarketWatch. This is a repost of the HumbleDollar newsletter I sent out a few weeks ago.

Follow Jonathan on Twitter��@ClementsMoney��and on Facebook.��His most recent articles include Eight Questions,��Working Late and House Rules. Jonathan’s��latest book:��From Here to��Financial��Happiness.

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Playing Defense

THE LETTER was in a mountain of mail delivered the day after my wife and I returned from holiday. ���Dear David Powell, Thank you for your recent application for a Bed Bath & Beyond Mastercard account. Your request��� was carefully considered, and we did not approve your application���.���

I���ve never been happier to receive a rejection.

We use exactly one credit card, pay it off each month and have never applied for another. This fraudulent application, a result of identity theft, was denied because I froze our credit files at all the credit reporting agencies years ago, when our personal information was stolen from a nonprofit we once supported as volunteers. With a credit freeze, this kind of identity theft is easy to prevent���or, failing that, you at least make yourself a harder target.

But there���s another kind of identity theft to consider. Back in 2004, the Federal Deposit Insurance Corp. and the Federal Trade Commission noted a rising��financial risk. This one is as old as the internet. It���s also harder to prevent, because it involves changing our habits and adopting better security solutions. The risk: internet account hijacking.

This happens when malicious hackers gain access to your online account at, say, a bank, brokerage firm, mutual fund company or payments company, with an eye to diverting funds by linking your account to accounts they control. Here���s how many of us make account hijacking all too easy:

We use weak passwords. An analysis of��passwords stolen from cyberattacks found 35% of passwords in use can be easily cracked with a simple “dictionary attack.”
We reuse passwords on multiple sites. This exposes you to hijacking when a nonfinancial site you access is hit with a cyberattack���and you use the same password for your financial accounts.
We skip two-factor authentication (2FA). Now available on most financial sites, 2FA avoids hijacking when passwords are stolen in bulk from organizations you���re connected with, or when your passwords are lost in phishing��attacks or to keyloggers.
We access financial sites over public wi-fi networks.

There are now good solutions to each of these problems���ones which are convenient and either free or inexpensive. A password manager takes much of the hassle out of creating and using hard-to-crack unique, strong passwords. It can also tell you when a password you���re using on a particular site has been compromised, so you can change it. Good password managers are available for use in mobile apps on iOS and Android, and in most popular browsers, whether you���re using a PC or Mac.

Two-factor authentication has become ubiquitous on financial sites because it prevents remote attackers from accessing your account, should they manage to get your password. Each time you log in, you supply your username and password, and then you supply a second key or factor. The most basic form of 2FA involves a unique, time-limited code sent via text message to your mobile phone.

While there are already known ways of exploiting��vulnerabilities in cellular carrier messaging systems, it still beats using no 2FA. Better 2FA systems use an authenticator app to generate a code. Authenticator apps are available from Microsoft, Google, Symantec (VIP Access) and elsewhere. The best 2FA solutions use a hardware key, like the ones sold by Yubico.

Meanwhile, the risks of using public wi-fi networks can be mitigated simply by avoiding them when accessing financial accounts, or by using a reputable virtual private network (VPN) solution.

Why bother spending precious time and money on mitigating these risks? Won���t your bank or brokerage firm cover any losses if your account is hijacked? I���m not an attorney. But in reading the policies of a few companies, the answer may depend on whether the firm believes you���ve taken basic, prudent steps to stay secure.

Vanguard Group���s online fraud policy��promises to reimburse amounts taken in an unauthorized online transaction if you���ve followed steps to protect your device, protect your account credentials and monitor account activity, and if you notify the firm immediately, should you discover any unauthorized activity. Fidelity Investments��� customer��protection guarantee has similar language. To be covered, you must adopt Fidelity���s recommended��security practices.

Computer security, like investing, requires some humility. It���s impossible to be perfectly secure. But it isn’t hard to improve your odds���and make yourself a far tougher target.

David Powell has written software or led engineering teams for 35 years. He enjoys work, vegan fine dining, cycling and travel with his spouse.

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No Money Down

AS SHARK TANK star Lori Greiner once said, ���Entrepreneurs are the only people who will work 80 hours a week to avoid working 40 hours a week.���

Got the entrepreneurial itch? When I hear people say they have a great business idea, but don���t have the money to launch their business or quit their day job, my heart sinks. They���re missing the point: In today���s world, there are countless opportunities to start a business without any initial investment. My favorite book on the topic, Side Hustle��by Chris Guillebeau, shows you step by step how to create your own business with little to no money and while still keeping your day job.

Consider a great example: Students at Stanford University were asked, ���What would you do to earn money if all you had were $5 and two hours?��� The students were allowed to spend as much time as they wanted planning their business idea. But once they opened the envelope containing the $5, they only had two hours to make as much money as they could. At their next class, students were expected to give a three-minute, one-slide presentation describing what they���d done.

Think about how you would approach this situation. Would you take the $5 and buy a lottery ticket? Would you use the money to buy materials to start a lemonade stand? Could you start a real business with so little money and time?

The most successful teams quickly realized that the $5 was simply a distraction from the bigger task at hand. They used their planning time to think of a problem in their community and used their talents to provide a service.

One of the teams set up a stand at their student union offering to measure bike tire pressure for free. If the tires needed to be filled up, they would do so for $1. They provided a solution to a problem at an affordable price and in a convenient location. The team ended up making a few hundred dollars in just two hours.

What about the winning team? They brought home a whopping $650. How did they do it? They took the project one step further, not paying attention to either the $5 available or the two-hour time frame. They realized their most valuable asset was the one-slide presentation they were to give to a class of Stanford students. The team sold the one-page slide, as well as their three minutes of presentation time, as an advertisement to a local business looking to recruit Stanford students.

Have you always dreamed of starting your own business or side hustle? The lesson from the Stanford students: Forget the financial obstacles���and think creatively about how to get started.

Ross Menke is a certified financial planner and the founder of Lyndale Financial, a fee-only financial planning firm in Nashville, Tennessee. He strives to provide clear and concise advice, so his clients can achieve their life goals. Ross���s previous blogs include Cut It Out, Too Familiar��and Hole-in-One. Follow Ross on Twitter @RossVMenke.

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Rescue Dog

I’VE LATELY BEEN talking to Rachel about getting a dog. Not now, but sometime in the future. When Rachel retires, we���d like to do a lot of traveling and taking care of a dog would be difficult.�� But when we slow down, I believe having a dog would improve our lives in our declining years.

How so? A few years ago, my neighbor, who is retired, told me she lost her husband. She said his passing was extremely painful. But when she lost her dog a few years later, it almost killed her. When she first told me her story, I thought she might have missed her dog more than her husband. But what she was really saying was the dog made it easier to deal with the loss of her husband. The dog helped her with the grieving process. The dog provided her with companionship and comfort at a time when she needed it the most. When her dog died, she was alone, with no familiar face to help her get through the day. That’s when it became more painful for her.

I wish I���d encouraged my parents to get a dog in their later years. It would have helped my mother deal with the loss of my father. My mother says nighttime is the most difficult time; having a dog by her side would make it easier. Unfortunately, at this point, she feels it���s too late to get acclimated to a new dog.

A dog would be good for health reasons, too. My mother’s neighbor, who was retired, had a dog. She walked the dog all the time. When the dog died, she stopped walking. Her health started to decline rapidly. My mother talked about how that dog helped keep Fern alive.

Rachel and I are like a couple of goats. We walk all the time. When one of us is gone, the dog would be a good companion and a reason to continue walking. It would help us get through the difficult times that lie ahead.

I still think about the dog my parents had when I was in college. I loved that dog. I used to hit ground balls to her in their backyard, using a baseball bat and tennis balls. Those are among my fondest memories. I still have dreams about that dog.

I believe a dog would fit in our budget. According to the America Kennel Club���s website, the average first-year cost to raise a dog across all sizes is $3,085. This includes all its shots, spaying and neutering, initial medical exams, supplies and food. The average lifetime cost of raising a dog is $23,410. This doesn’t include training classes and private lessons.

Before we get a dog, there���s one major concern that we need to address. What would happen to the dog if it outlives us? We need to make sure the dog will always have a home and be cared for.

The�� Humane Society has drawn up a process for ���pet estate planning.��� It involves setting up a separate fund to cover your pet���s expenses and making it part of your will. It also suggests creating a trust fund for your pet, with a trustee who would oversee the trust and check on the pet���s well-being. I���d recommend consulting an attorney to get the proper documents drawn up.

Dog are always there when you need them the most, providing love and loyalty. That’s why I’m determined that we should eventually get a dog. I’ve thought a lot about what our future dog would be like. The dog would be a female, medium size, and from a shelter and hence in need of a home. Oh, and the most important thing: Her name would be Dottie.

Dennis Friedman retired at age 58 from Boeing Aerospace Company. He enjoys reading and writing about personal finance. His previous articles include Little Jack,��Cancel the Movers, Let’s Take a Ride and I Can’t Do That . Follow Dennis on Twitter��@dmfrie.

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Don’t Call Me That

YOU KNOW HOW certain things people say stick in your mind. Often, it���s a hurtful insult. But for me, the words I can���t forget are, ���You���re wealthy.���

I live in a 90-year-old house on a small lot, my wife���s car is 12 years old, our television is 10 years old and the last time I bought a new suit was a dozen years ago. Okay, it���s true, I don���t wear suits very often these days.

Still, until someone uttered those two words to me, I���d never thought of myself as wealthy. But the data shows I am. Who knew?

I guess it���s easy to lose perspective. Sometimes, I hear my wife say to a friend, ���Why don���t you just buy it?��� or ���Why not come with us on a cruise?��� I cringe, because I know many of her friends aren���t wealthy.

But what counts as wealthy? That depends. Are you measuring income or net worth? Do you live in New York, New York, or Anniston, Alabama? It takes $150,000 to get into the top 5% of individual��income earners and $300,000 to get into the top 1%. The thresholds for household income are roughly 50% higher.

Make no mistake: I���m not in the top 1%, but I���m well above average. I have not only Social Security, but also a pension. In the eyes of many people, that alone makes me wealthy.

Then there���s my net worth. After working, saving and investing for 70 years, I���m above average there, too. To check on your wealth relative to others, try this calculator.

If you looked at me in my jeans, flannel shirt and braces in New Jersey, I doubt you���d tag me as wealthy. On the other hand, if you saw me in Florida in shorts and my Trump National golf shirt���no, I���m not a member���your impression might be different. I once walked into a designer shop in a high-end mall looking to buy my wife a new handbag for Christmas. The clerk came up to me and asked if I thought I could afford the item I was considering. In those days, it was questionable. I guess I could have afforded it. But would I spend that kind of money on a handbag? Not a chance. Perhaps that���s how I came to be ���wealthy.���

I had a discussion once with a young person about money, wealth and having stuff. I don���t recall the specifics. But in essence, he thought I was lucky because I ���had it made.��� His seemed to think I���d rolled out of bed the day after graduating high school and there it all was for me to enjoy. I resented that but said nothing. It was almost as hurtful as being called wealthy.

I started with nothing and my wife started with less than nothing. Over the past 50 years, we accumulated what we have by being prudent, by running a few small part-time ventures, by my working at the same company for nearly 50 years and by never, ever living above our means. I literally saved for 20 years to buy my newest car. Okay, I admit it, it���s a Mercedes.

I started work after high school as a mail boy earning the lowest wage out of 15,000 employees. I retired 49 years later earning the company���s 20th highest salary. A lot happened along the way, including two years in the army and nine years of night school.

There are things I can���t take any credit for. I had a few good mentors who helped me immensely. I���ve been very fortunate to avoid the kinds of tragedies that many people face in their lives. But I will take credit for not doing irresponsible, stupid stuff that would risk our financial security.

Should those of us now deemed wealthy feel guilty? I think not. Should we be thankful for the good fortune, the opportunities and the people who helped us? Certainly. Should we be proud of what we accomplished? Why not?

In the end, though, real wealth is not income or net worth. It���s family, friends and grandchildren. It���s enjoying good health. It���s being able���when necessary���to help others, especially those you love.

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Happily Ever After,��The Office,��Still Learning��and��Healthy Change.��Follow Dick on Twitter��@QuinnsComments.

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No Free Lunch

SUPPOSE YOU walked into a restaurant and they handed you a menu without prices. Would you conclude that: (a) everything is free; or (b) something funny is going on?

I doubt anyone would choose the first option. It defies logic. Yet this is how the 401(k) industry routinely operates���and large numbers of people are falling for it. According to a 2018 survey by��TD Ameritrade, 37% of 401(k) participants mistakenly believe that their 401(k) retirement plan is a free employee benefit���that it carries no fees. Another 22% aren’t sure whether or not their plan costs anything. And among the minority who understand they���re paying something, one third don’t know where to find the information. Just 27% of all participants actually know what they’re paying. By contrast, the survey found that 96% of consumers know exactly what they pay for inexpensive services like Netflix.

This study came to mind recently as I read the investment menu provided by a 401(k) plan. At the top of the page, in bold type, it carried this helpful warning: ���Before investing in any mutual fund, consider the investment objectives, risks, charges, and expenses.��� That made sense���but the rest of the page looked like that hypothetical restaurant menu with no prices. It listed dozens of investment options, but said nothing about their associated costs, investment objectives or risks. No wonder so many 401(k) participants believe these plans are free.

Of course, fees are always disclosed��somewhere, but the��disclosure rules don’t require that this information be easy to find. In the case of the 401(k) menu I saw recently, an employee would have had to reference a separate document full of fine print. And even after finding that document, it still wouldn’t be easy. The fees associated with each investment option were mixed into the middle of an 18-column-wide table in nine-point type at the back of the document.

What to do? If you’re a participant in a 401(k) or 403(b), here are five tips for navigating this opaque corner of the financial world:

1. Find the fees.��As the TD survey discovered, even when people know that they���re paying something for their 401(k), often they’re not sure where to find this information. My recommendation: Start by asking your human resources department or logging on to your benefits website, and perhaps both.

Keep in mind that retirement plans often carry multiple layers of fees. Depending upon the plan, there might be administrative fees, investment fund fees, investment advisory fees, trustee fees, commissions and sales charges. But usually the most significant cost���and the one over which you have the most control���is the fee charged by the funds you select. The term you���re looking for is expense ratio. Ideally, you’ll find funds that charge 0.1% or less. Even 0.5% is acceptable. If it’s much more than that, skip to No. 4 below.

2. When in doubt, opt for simplicity. As you select investments, a good rule of thumb is to look for the simplest option. In general, more complexity simply results in higher costs, without any corresponding benefit. This is especially true if your employer’s plan offers annuities. In my experience, determining the fees on an annuity is like trying to read the newspaper blindfolded. You’re better off��avoiding them��altogether and buying other investments in your retirement plan���assuming that���s possible.

3. Don’t let the tail wag the dog.��Research has shown that asset allocation���the mix of stocks, bonds and other investments you hold���is the single most important factor driving results. For that reason, don’t choose based on price alone. Yes, fees are important. But if you have no other choice, it’s usually better to overpay for an appropriate investment than get a bargain on one that isn���t right for you.

4. Make your voice heard.��Ironically, but maybe not so surprising, a number of mutual fund companies have been sued by��their own employees. Their objection: high fees��in their own funds. If the fees in your plan seem egregiously high, you shouldn’t hesitate to let your employer know, and it shouldn’t require a lawsuit. Your employer has the ability to switch providers���and there are plenty of fine options out there.

5. Take your money with you when you leave.��While some 401(k) plans offer outstanding investment options, they���re in the minority. You’ll usually be better off taking your 401(k) money with you when you leave an employer. Specifically, you’ll want to do a rollover to an IRA, where you’ll have far more investment choice, including investments that likely have much lower costs. Both rollovers and investment changes within an IRA are tax-free. Alternatively, if your new employer offers a solid plan, you can skip the IRA and do a rollover to your new employer���s plan. This has the benefit of leaving you with fewer accounts to manage.

Adam M. Grossman���s previous articles��include Private Matters,��Don’t Overthink��and��B Is for Bias . Adam is the founder of�� Mayport Wealth Management , a fixed-fee financial planning firm in Boston. He���s an advocate of evidence-based investing and is on a mission to lower the cost of investment advice for consumers. Follow Adam on Twitter�� @AdamMGrossman .

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Eight Questions

MONEY MAY SEEM important���and it is. But it isn���t nearly as important as we imagine. Want a little perspective on your money? First, think about your net worth or how much you earn. Then ask yourself these eight questions. How much would you give:

To have your current life, but be 10 years younger?
To have a deceased friend or family member back in your life?
To avoid the parts of your job you dislike?
To spare your spouse, partner or children from an incurable disease?
To have your most embarrassing or hurtful behavior excised from everybody���s memory?
To have your children, grandchildren or friends live closer?
To halve the time you spend each day feeling worried or angry?
To relive the weeks when you first met your spouse or partner?

When you ponder these questions, you realize that there are two things that are far more important than money: time and people. This is���when you say it out loud���pretty obvious.

And yet we regularly waste time on nonsense and lose our focus on the people we care about. Looking to make a belated New Year���s resolution? Perhaps making the most of your time���and making time for the people you love���should be on the list.

Follow Jonathan on Twitter��@ClementsMoney��and on Facebook.��His most recent articles include Out of the Swamp, Working Late and House Rules. Jonathan’s��latest book:��From Here to��Financial��Happiness.

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College or Not?

SEVERAL MILLION households every year deal with a crucial decision involving their teenage children. Will their kids head to college, enter the labor force, join the military or perhaps do something different entirely? Often, this involves weighing the costs and benefits of a college education vs. the immediate income from getting a job.

About two-thirds of high school graduates end up being college freshmen. The remaining third defer or never go to college, but they can still end up earning above-average incomes. My focus today is on this second group.

Going directly into the labor force means getting immediate real income, perhaps for the first time. Teens may gain both financial and social independence, jumpstarting their entry into adulthood. Getting that early start can provide more years of on-the-job experience, as well as early opportunities for promotions and pay raises. The downside: A bad career decision may condemn these young adults to a lifetime of below-average wages and job dissatisfaction.

Indeed, numerous studies show that, for most individuals, non-college jobs aren���t a winning proposition. College graduates typically enjoy lifetime earnings well above those of non-college individuals. If you look at total career earnings minus college costs, college students with a bachelor’s degree will, on average, catch up with non-college workers by age 30���and thereafter will pull ahead.

But the averages can be deceiving. Trying to decide whether to enter the workforce after high school? Here are five questions to ask yourself:

Would a college degree really help you, given your desired career? Truth is, many college-educated individuals earn less than non-college individuals. There are quite a few blue-collar jobs that pay more��than those requiring a degree. Check out the Occupational Outlook Handbook��and Occupational Employment Statistics��put out by the Bureau of Labor Statistics.

Do an informal breakeven analysis to see how your proposed non-college career might compare with a post-college career. There are a number of blue-collar job categories that currently provide above-average incomes, including industries such as railroads, urban transit, water commerce, mining (especially oil and gas) and heavy construction.

Do you really know what you���re getting into? Spend time doing a thorough online search on your chosen career path. Learn all you can about your specific area of interest, and its current and future economic prospects.

Talk with individuals already working in your proposed job area. If possible, try to spend an entire shift observing first-hand what electricians, plumbers or heavy-equipment operators actually do. Ask them what they like the best and least about their jobs. Inquire about the biggest surprises and disappointments.

What are the hidden expenses associated with the job? Consider tools and equipment purchases, union dues, uniform requirements, use of your own vehicle and commuting costs. But also ask about job ���perks��� that may supplement basic earnings.
What does the job pay? Get accurate data on wages and salaries in your area. National averages may be far different from local conditions, especially in low-wage regions. Are you willing to relocate to get the job you���re interested in���or an income that���s more to your liking?
Could you lead the life you want on your likely earnings? Many teenagers have been spoiled by living subsidized at home and are unprepared for the adult economic world. Estimate your living expenses, including all your wants and needs, and compare that number with your likely after-tax earnings. Have the paramedics on standby���because it���s almost certain your net income will fall miserably short of your total expenses.

It���s decision time. Will the job work for you? What about that spiffy apartment and pool? How about the car you want? How about dozens of other perceived ���requirements���? Start cutting budget items left and right. Now ask yourself: Do you still want that job���or any non-college job? Or do you want to reconsider going to college?

Even if you decide to head into the workforce after high school, keep open the possibility of college enrollment at a later date. A few years in the real world may make college seem far more appealing. I had a high IQ classmate who took a blue-collar union job right out of high school. Years later, I learned that he made a career change and ended up with a PhD in engineering.

Dennis E. Quillen is a retired economic geographer and university professor. He loves blackjack and long-term investing. His previous articles include Saving Time,��Food for Thought��and��Cutting the Bonds.

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