Monthly Archives: July 2017

Make Your Kid a Millionaire


July 31, 2017

Becoming a millionaire isn’t something you learn in school, but it’s a little simpler than many realize when time is on your side. All it takes is investing $94/month from age 20 to age 65. That’s just $3 a day. To bring it to life a bit – put your Starbucks coffee money into the stock market each day and you’ll be a millionaire. Nix that blueberry scone and you might reach 2 million – all before lunchtime!

The most important component of this millionaire equation is starting to invest early, which is why I ask you to send this to your kids/grandkids (so they can pay for your 5-star nursing home one day). I’m careful to use the word investing rather than saving because simply saving $3 a day will not get you the big bucks. It must be put in the stock market and earn (an optimistic) 10% for this example. Saving is difficult for millenials, but I can tell you from experience that what motivates us stubborn youngsters to stay on track is seeing these $3 seeds growing zeroes over time.

The most common speed bump we find for young people is not a lack of interest in investing, but simply not knowing how and where to get started. They are put off by the idea of high minimum account balance requirements, prohibitive commissions to trade, and a huge selection of stocks that generally lead to making no decision. Luckily there are hundreds of apps to start investing at low to zero costs.

One app that has gained major popularity is Acorns, which taps your debit and credit cards, rounds up purchases to the nearest dollar and invests that “spare change” into a portfolio based on your investment goals. This eliminates a lot of the decision-making paralysis that millennials struggle with. Acorns’ CEO, Walter Cruttenden designed the app on the premise that “it’s easier to part with $1 fifty times than $50 once”. The app is free for college students and costs $1/month thereafter. Launching just 2 years ago, Acorns has already opened 750,000 accounts for users!

Stash is a similar app that focuses on ETFs and tries to mimic the human interaction you’d get with a real advisor; it spells everything out in simple terms anyone can understand. For example, instead of investing in “PIMCO Enhanced Short Maturity Active Exchange Traded Fund” you’ll invest in what Stash has called “Park My Cash”.

While these apps are great for getting started, it is important to contribute to a tax-advantaged retirement account once earning income. In the chart below, Michael saved $1,000 per month from the time he turned 25 until he turned 35. Then he stopped saving, but left his money in his investment account where it continued to accrue at a seven percent rate until he retired at age 65. Jennifer and Sam did the same, only they didn’t get started until they were 35 and 45, respectively.  It shows just how meaningful it is to begin investing at a young age.

Dan Hall



Surely This Leader Will Go

1354July 24, 2017

The political conflagration that burns brightly in Washington DC shows no sign of abating, but for real political uncertainty you should look across the Atlantic at the UK. Last summer, the shock outcome of the referendum on UK’s European Union membership catapulted Theresa May into her current role of Prime Minister. Since then, pretty much everything has gone badly for her, culminating in her decision to call a “snap” election in an effort to boost her power. The results did quite the opposite.

Her primary political opponent, Jeremy Corbyn, underwent a physical and political makeover (think Bernie Sanders taming his hair, wearing a nice suit and tie, and being charming), appealed to young people, and managed to improve significantly the position of his Labor Party in Parliament. Ms. May still hangs on, but it is a white knuckle grip.

In the US, any uncertainty in political leadership generates much media froth, but generally the real people, and the real economy, simply get on with business. Neither President Obama nor President Trump can credibly claim to be behind the latest rejuvenation of our economy. By comparison, the current political situation in the UK clearly bears down hard on people and business.

The economic data is not kind. After a reasonable period following the Brexit referendum, this year has been poor for UK growth, the pound continues to be cheap (which sacrilegiously has raised the price of that spreadable black gold known as Marmite), job and earnings growth has slowed, and inflation is picking up.

On a more anecdotal basis, media reports suggest many financial firms will leave London because of Brexit, the housing market is depressed, and it is hard to find anyone who believes that Ms. May is taking the country in the right direction. Those favoring leaving the European Union are unhappy with progress, while those wishing to stay have both grown in number and are somewhat irrationally hopeful that Brexit will be much watered down.

While I was in England over these past couple of weeks, I walked round a number of English towns, most of which were in affluent areas. The most striking observation on my perambulations was the incredibly high number of “charity thrift shops” (stores selling second hand stuff which had been donated, similar to our Goodwill). In one very attractive town, I counted no less than eight thrift stores within a 75 yard radius. Moreover, my English companions were delighted to spend what seemed like hours looking for a bargain. There may be a positive explanation for the growth of thrift stores, but it did feel like some town centers are now dependent  on them for survival.

Ms. May has attracted some stereotypical comparisons with Margaret Thatcher (they are both women – get it?), but in reality Ms. May does not have the resolve, vision, or intellectual conviction of the first female British Prime Minister. Those qualities are needed now. As the British sink deeper into uncertainty and pessimism, the demand for a fresh approach at the top of the political pile will only grow.

Richard Rushton