Brain Candy
IT SEEMS QUAINT now, but a quarter century ago conversations would often degenerate into arguments over facts. How much do homes typically appreciate? How much does the average American have saved by retirement? What does a nursing home cost? Such questions would trigger tedious debates built on anecdotal evidence and half-remembered newspaper articles.
But as my father—who died in 2009—often remarked during the final decade of his life, there’s no point anymore in arguing over facts. Instead, we can just go on the internet and find the answer. Even with the risk that we’ll trip across “fake news,” the internet remains an astonishing repository of information and insights, including financial insights.
Want to enrich your understanding of both your own finances and the financial world more broadly? Here’s a host of tools and charts that I find especially fascinating:
How your net worth compares. Using the Federal Reserve’s Survey of Consumer Finances, DQYDJ.com will tell you how your net worth—either with or without home equity—ranks relative to your fellow Americans. (In case you’re curious, DQYDJ stands for “don’t quit your day job.”)
How your income ranks. DQYDJ can also tell you how your individual income compares to other Americans, how your household ranks and how your income stacks up against those who are the same age.
What the S&P 500 has returned. For years, basic market performance data was hard to come by. Not anymore. DQYDJ has calculators that will tell you the total return for a specified period for the S&P 500 and the Wilshire 5000. Want to see year-by-year returns for stocks, bonds and cash? Check out this page maintained by New York University finance professor Aswath Damodaran.
Where valuations stand. You can get a quick snapshot for the S&P 500 from Multpl.com, which also offers a host of other great charts. Interested in how valuations compare across different national markets? Head to StarCapital.de.
What the S&P 500 companies might earn. This one is a little tricky to find. Go to this page on S&P Global’s website and then scroll down until you see the “additional info” link. There, you’ll find a link to the “index earnings” spreadsheet, which includes S&P’s earnings information for the S&P 500. I like to look at 12-month reported earnings per share and compare the forecasts to the S&P 500’s current level.
How investments are correlated. This matrix from Portfolio Visualizer highlights the value of bonds in diversifying a stock portfolio. A correlation of close to one means two investments are highly correlated, while a negative number means they tend to move in opposite directions. Some of Portfolio Visualizer’s tools are freely available, including its back-testing tool for looking at different portfolio mixes.
How much house you can afford. That’s pretty much the name of a calculator offered by HSH.com. When you purchase a house, closing costs are often the nasty surprise. You can get a handle on those with a calculator from SmartAsset.com.
How long your retirement nest egg might last. Check out the easy-to-use tool from Vanguard Group. Keep in mind that the tool uses historical returns—which may prove too rosy. Also try Vanguard’s retirement income calculator.
What if you’re trying to squeeze more income out of your nest egg? You might consider an immediate fixed annuity. You can find links to some online calculators in HumbleDollar’s money guide. And, as a last resort, there’s always a reverse mortgage. Find out how much that might pay you.
When to claim Social Security. Mike Piper of ObliviousInvestor.com—my go-to source whenever I’m stumped by a question about Social Security—has built a great calculator for figuring out when to claim benefits. Use the “click here” checkbox near the top of the page to analyze more complicated situations.
You can always ask Fred. The Federal Reserve Bank of St. Louis allows you to look at all kinds of government and other data using its Federal Reserve Economic Data tool, otherwise known as FRED.
Among other things, you can see what’s happened to corporate profit margins, stock prices relative to the value of corporate assets, the expected inflation rate for the next 10 years and how home prices have fared. In addition, you can see total federal government debt as a percent of GDP—which is alarming. But you can also see how much the federal government owes if you exclude debt held by the government itself, such as the holdings of the 12 Federal Reserve Banks and the Social Security trust funds. As you’ll discover, that’s far less alarming.
Latest Articles
HERE ARE THE SIX other articles published by HumbleDollar this week:
What do you get when you buy a target-date retirement fund? Bill Ehart looks under the hood at Fidelity, Schwab and Vanguard—and discovers major differences.
A tortured tale in which Dick Quinn tries to get a refund for $3,100 of unused airline tickets—and, at least for the moment, finds himself $6,200 richer.
Looking to remodel your house? Dennis Friedman, who’s in the midst of an extensive home renovation, offers 11 tips.
If you own a jumble of stocks, bond funds, ETFs and more, you need to figure out whether this adds up to a sensible portfolio. Adam Grossman shows you how—using a seven-step process.
Kyle McIntosh just left the corporate world to become a university lecturer. Thinking of making your own career switch? Kyle offers five pointers.
What do record low Treasury yields mean for everyday Americans? Mike Zaccardi counts the ways.
Follow Jonathan on Twitter @ClementsMoney and on Facebook. His most recent articles include Think Like Eeyore, Getting Emotional and Risking My Life.
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