James Altucher is Right, Retirees Shouldn’t Own A Home

Actually, I don’t know if he is right but he may have a point. If you are unfamiliar with James he is an investor turned investment writer turned lifestyle guru turned social media star. James and I overlapped and if I am remembering right, had a little bit of interaction at The Street.com (both alumni of the site). James was also kind enough to mention my blog in one of his earlier books. Our paths cross every so often on social media, he seems to like a lot of my pictures on Instagram as an example. The tone of James’ writing is to take positions on issues that are very contrarian like not going to college, quitting your job today and not buying a house. He also doesn’t believe in renting, he stays in some combination of Airbnbs, hotels and maybe with friends too. He explains his reasoning very articulately. The things he writes about in the outlandish idea category are not for me but I believe there is tremendous value in reading someone with very different ideas from your own, you either learn to think about your beliefs differently or they can solidify your beliefs. Last week we went on a road trip to New Mexico (we live in Northern Arizona) and as is often the case when we travel we stayed at Airbnbs.  We spent one night in a tiny town near Gallup that cost $99 plus a $25 cleaning fee and three nights in Santa Fe for $108 per night plus a $50 cleaning fee. While sitting in the husband zone of some store my wife...

“You’ll Be Stone Dead In A Moment”

This week’s Market Update is posted and includes the following; The title of this week’s update is a play on Monty Python and the Holy Grail describing the retail group which had been given up for dead. But when measured by one of the large industry ETFs,  it has actually done quite while over the last month gaining 450 basis points more than the S&P 500. Last week the space got something of nudge when it was announced that one of the large, high end retailers was considering going private. We’ve gone over the creative destruction underway in the space and while the digital e-tailers appear to have the upper hand, it makes sense to think there will be at least a few “old line” retailers that figure out the internet to the point of being very competitive. Please click through to read the entire update. We took a quick road trip over to New Mexico to visit Santa Fe, Taos and a few other things including a couple of great national monuments. The Taos Pueblo Los Alamos County Fire Department Station 3 in Wind Rock. For fire truck nerds, this is actually a type 4 despite looking like just about every type 3 I have ever seen. Stunning rig. We bought a highway sign from North Dakota that lends itself to doing some very neat things. The white and black in the upper left is the original...

Rock You Like A Hurricane

Markets were lower across the board last week with the Dow Jones Industrial Average falling 0.84%, the S&P 500 giving up 0.59%, the NASDAQ slid 1.13% and the Russell 2000 dipped 0.97%.   Congress managed to get together to kick the can down the road on the debt ceiling buying three more months by lifting the limit. Oddly, President Trump appeared to side with the democrats on this issue to the frustration of quite a few in the GOP. Trump campaigned on politics not as usual and while his success in this regard is debatable, the debt ceiling would seem to fit the bill of not at usual. This news was not enough to lift equity prices perhaps for the simple reason that every politician with a microphone told us there was no way there would be a shut down and they were right. With the back to back hurricanes and we might as well throw in the wildfires out west and the 8.2 magnitude earthquake in Mexico, the $90 billion catastrophe-bond market has drawn a lot of attention. The simplified explanation is that in the face of a catastrophe, these bonds which are issued by insurance companies have the principal forgiven, meaning investors are wiped out, in the face of a catastrophe like a hurricane. Here’s a story of a hedge fund that specializes in cat bonds. We are not aware of any ETFs that own catastrophe bonds but this provides a great example of the importance for advisors and individual investors to look through to fund holdings to know what they own and while you may not...

Barron’s On Health Savings Accounts

Barron’s had a nice primer on HSA accounts although I am not sure why the title referred to them as “hidden.” The first post I can find in my archive on HSAs was from January 2005. Side note; I’ve been blogging for an awfully long time. I’ve been a huge fan HSAs from the first time I ever heard of them. One useful nugget from Barron’s; there is a $1000 catch up contribution starting at 55. With so many people being undersaved, the idea of starting an HSA at 55 and being able to accumulate $77,000 by 65 years old in addition to any other savings vehicles is a great thing. Assuming another $6500 per year into each partner’s IRA then a couple with nothing at 55 is looking at $210,000 at 65 plus whatever growth rate you want to assume. We hear repeated how people have nothing accumulated to retirement. I find it very encouraging that it really isn’t too late to start. Not everyone in this circumstance would be able to start socking away $21,000 per year but those who find they can will go a long way to improve their situation. The average Social Security check is $1404, making a potential $2808 for a couple where each partner takes own benefit. That seems like a decent amount but would be tough to handle one-off, unbudgetable events that seem to come every month (last month we had a large vet bill, this month we have a bat issue to deal with). That $210,000 saved (plus whatever growth rate you want to assume) between 55 and 65 could...

Tom Petty’s Retirement Plan

You never slow down, you never grow old A bunch of different snippets today. First up, my brother sent me this link from the USA Today that as Congress starts to try to figure out tax reform they might change the tax deferred status of 401k contributions. If they were to change it such that all 401ks essentially now become Roth 401ks (going forward) that wouldn’t be the worst thing in the world. Of course, some (many) would come out behind especially if their tax rate ends up being lower in retirement but it wouldn’t by itself be catastrophic (not to be taken as my supporting the idea, I don’t). The potential catastrophe would be if would be savers are turned off by not being able to deduct their contribution and so don’t set anything aside. The article cites research from the Economic Policy Institute that the median working age family had only saved $5000 as of 2013. I actually don’t think Congress will mess with this in anyway shape or form such that the path to savings is impeded, if anything they should make it even more attractive to save money but if they are so stupid to hurt middle class savers, that is from the top down. From the bottom up, many of us still have the opportunity to set money aside to solve, or prevent, our own problem. Over the last few years I have been very intrigued with tiny houses. One aspect that doesn’t seem to get talked about much is the extent to which they are vehicles (often having to be licensed through the...