Budget Buster

The market closure afforded the chance to get a few things done including the always budget-busting new tire purchase. They were originally going to be $950 but thankfully I thought to ask how long the old ones should have lasted. It turned out they should have lasted a lot longer than they did so the tire place took about $400 off the price. There are two recurring themes I can tie in here. The first is that I believe the tires I get are quite ordinary. The need for tires doesn’t come up often but there is never a good time for a $1000 one-off expense and tires isn’t the only one that can reasonably come along. We’ve looked at this before  and readers have offered input along the lines of padding their budget by an extra $1000-$2000 per month, to having a separate bucket of money for one-offs that would be replenished so often and there have been other ideas too. Someone with $800,000 who is disciplined enough to live on 4% is going to have a tough time paying for tires this month, a roof repair next month and an unexpected veterinary bill the month after. The other tie in is living beyond ones means. While I was squaring up on my tires I glanced over to a display for a tire that cost $2000 for a set of four. These were some serious off-road tires and I know someone with a set of these on each of his two vehicles. The out the door cost for these babies would be much more than $2000. My $950...

Budget Buster

The market closure afforded the chance to get a few things done including the always budget-busting new tire purchase. They were originally going to be $950 but thankfully I thought to ask how long the old ones should have lasted. It turned out they should have lasted a lot longer than they did so the tire place took about $400 off the price. There are two recurring themes I can tie in here. The first is that I believe the tires I get are quite ordinary. The need for tires doesn’t come up often but there is never a good time for a $1000 one-off expense and tires isn’t the only one that can reasonably come along. We’ve looked at this before  and readers have offered input along the lines of padding their budget by an extra $1000-$2000 per month, to having a separate bucket of money for one-offs that would be replenished so often and there have been other ideas too. Someone with $800,000 who is disciplined enough to live on 4% is going to have a tough time paying for tires this month, a roof repair next month and an unexpected veterinary bill the month after. The other tie in is living beyond ones means. While I was squaring up on my tires I glanced over to a display for a tire that cost $2000 for a set of four. These were some serious off-road tires and I know someone with a set of these on each of his two vehicles. The out the door cost for these babies would be much more than $2000. My $950...

A Useful Set of Financial Rules

Barry Ritholtz posted a list of investment rules by Morgan Housel from Motley Fool that I think is a pretty good list. As posted below with some of my thoughts; 1) Nine out of ten people in finance don’t have your best interest at heart; We all know that this is true in some magnitude, maybe it is eight out of ten or maybe 9.9 out of ten, but this has always puzzled me. Speaking for our little firm, the financial well being of everyone at our firm relies on how we treat our client base. It is in our personal interests to try to provide the best service we can and meet the expectations we set. New clients are not easy to come by and treating clients poorly would seem to be self-destructive but again Housel is mostly correct. 2) Don’t try to predict the future; There is a Yogi Berra quote in here somewhere. I believe this is an area where I have been influenced by John Hussman. He speaks in terms of weighing current positives and current negatives to make a forward looking analysis. I don’t necessarily draw the same conclusions he does but there are things that occur in markets that indicate increased risks for a large decline. Any such indicator may be right this time or wrong this time but there are times where there is more front burner risk than at other times. 3) Saving can be more important than investing; We’ve addressed the importance of having an adequate savings rate many times before along with the concept of living below your means; I believe...

A Useful Set of Financial Rules

Barry Ritholtz posted a list of investment rules by Morgan Housel from Motley Fool that I think is a pretty good list. As posted below with some of my thoughts; 1) Nine out of ten people in finance don’t have your best interest at heart; We all know that this is true in some magnitude, maybe it is eight out of ten or maybe 9.9 out of ten, but this has always puzzled me. Speaking for our little firm, the financial well being of everyone at our firm relies on how we treat our client base. It is in our personal interests to try to provide the best service we can and meet the expectations we set. New clients are not easy to come by and treating clients poorly would seem to be self-destructive but again Housel is mostly correct. 2) Don’t try to predict the future; There is a Yogi Berra quote in here somewhere. I believe this is an area where I have been influenced by John Hussman. He speaks in terms of weighing current positives and current negatives to make a forward looking analysis. I don’t necessarily draw the same conclusions he does but there are things that occur in markets that indicate increased risks for a large decline. Any such indicator may be right this time or wrong this time but there are times where there is more front burner risk than at other times. 3) Saving can be more important than investing; We’ve addressed the importance of having an adequate savings rate many times before along with the concept of living below your means; I believe...

The Big Picture for the Week of October 28, 2012

iShares strategist Russ Koesterich posted a video that was generally a support piece for iShares’ suite of country funds. The topic for the video was seeking to replace income not earned from fixed  income due to low rates with higher dividends from equity exposure. I did not take the video to say that people should meaningfully change their mix of stocks and bonds so much as look for more yield from equities. Over the course of the past week we’ve spent a lot of time talking about stock picking and risk tolerances and the video is a good follow on to this week’s theme. Long time readers will know I am not a fan of broad based funds (except for economic reasons due to portfolio size) but I am a huge believer in the importance of international investing. There are quite a few ETF providers that offer country funds, iShares simply happens to have the most funds. Koesterich doesn’t really offer any analysis in the video, he merely points out countries where yield can be had and he notes that many countries are generally higher yielding than the US. The yield for some countries is quite high and this is worth investigating if you have not already done so. The reason I think this video ties in with this week’s theme is that the country funds offer access to most markets around the world without forcing individual stocks on someone who would rather not pick stocks. Using country funds over broad based funds allows someone to select some markets they believe are promising while avoid some they believe are...