by Nilus Mattive on February 4, 2010
in General
This great article by Fortune’s Allan Sloan points out that Social Security is technically bringing in less than it’s paying out right now.
According to Sloan,
”
No one has officially announced that Social Security will be cash-negative this year. But you can figure it out for yourself, as I did, by comparing two numbers in the recent federal budget update that the nonpartisan CBO issued last week.
The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).
This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.
Why disregard the interest? Because as people like me have said repeatedly over the years, the interest, which consists of Treasury IOUs that the Social Security trust fund gets on its holdings of government securities, doesn’t provide Social Security with any cash that it can use to pay its bills. The interest is merely an accounting entry with no economic significance.”
This is the first time since the 1980s that Social Security has run into such a problem, but as I’ve been pointing out over and over, just 7 years from now (and possibly sooner) this will become a permanent situation according to estimates.
As I’ll be telling my Money Show workshop this afternoon, you absolutely must start preparing for changes related to this worsening situation now.
by Nilus Mattive on February 2, 2010
in General
Just a quick note that I’ll be flying down to Orlando tomorrow for the Money Show. If you’ll be there, I hope to meet you in person on Thursday or Friday!
by Nilus Mattive on January 20, 2010
in General
Are investors setting themselves up for disappointment? Sure seems that way … http://finance.yahoo.com/retirement/article/108608/why-many-investors-keep-fooling-themselves?mod=retire-planning
Something I continually stress in Dividend Superstars and elsewhere is the idea that we should be glad with consistent returns via dividends, reinvestment, long-term capital gains, etc. … and that we should minimize the impact of taxes, commissions, and other frictional costs.
But obviously even many professional investors fail to understand that slow and steady really does win the race!
by Nilus Mattive on December 18, 2009
in General
It’s something we’ve been saying at Weiss consistently over the last year — stay away from longer-term Treasuries.
And now, as the year comes to a close, you’re seeing why … the “safe” investments are having their worst year in decades.
Interestingly enough, the story linked above says:
“Individuals are among the biggest recent buyers of Treasurys, alongside the usual suspects such as foreign investors and money market funds.”
This is just yet another example of how investors need to think for themselves, and anticipate rather than react.
I’ve said it before, but the time to buy inflation protection is when people are worried about deflation …
The time to scoop up junk bonds is when the world is supposedly collapsing …
The time to buy long-term Treasuries will be when yields are above long-term historical averages.
And that time could be coming sooner than you think. =^)
by Nilus Mattive on December 3, 2009
in General
by Nilus Mattive on November 25, 2009
in General
Look, I don’t want to come across as callous, but I’m tired of hearing stories about people who clearly got themselves into messes … are now suffering … and yet seem unwilling to change or recalibrate the lifestyles they’ve come to expect.
This recent Wall Street Journal piece is a good example. I mean, a $650,000 house for a police offer and a real estate agent? That’s bad enough. But then a refinance to pay for college costs and a wedding?
And then there’s that quick little line about the HORSES!
Really, folks. This is entitlement at its finest.
But at least I can applaud the Gindlesperger for trying to stick it out and for taking their lumps in what was clearly their bad decision.
It’s the other stories that get me even madder - including the tales about highly-paid workers who have gotten laid off and have been turning down jobs either because the title wasn’t good enough or the pay was — while still WAY abovve me most salaries — not high enough for them. All the while, they collect unemployment, complain, and continue sending their kids to expensive private schools.
I read one story about a bank executive who has been burning through his $200,00 severance package and turning down jobs because they paid only $150,000 not the $200,000 he was accustomed to!
Like I said, I feel bad for the real victims of this crisis. The people who worked hard at their regular jobs and got laid off because middle managers were saving their own hides. The responsible savers and investors who are getting paid bupkiss in interest. The taxpayers who are footing the bill for all the extensions and credits being doled out now.
But I certainly do not feel any pity for people who cannot step back and to their current situations.
by Nilus Mattive on November 9, 2009
in General
Wynn Resorts (WYNN) just said it will pay a special cash dividend of $4 a share AND begin a $0.20 quarterly dividend in 2010.
Now don’t get me wrong — I’m happy to see another company begin issuing shareholder payments. But I’m just a little surprised to see this announcement coming from a highly cyclical hotel company …
by Nilus Mattive on November 4, 2009
in General
The New York Times just put up a great story on the whole “free credit report” phenomena. I’ve emphasized the importance of obtaining your credit reports from the official government website before, but this story is an important reminder that:
A. Yes, you should monitor your info as you are now entitled to
But
B. You need not pay for that info, nor obsess over your score on a monthly basis.
I do personally receive monthly updates on my FICO score, but that’s provided as a free service from my credit union. If you have access to a similar service, by all means take advantage. But for most people, it isn’t worth paying for.
Nilus
P.S. And if you missed my criticism of the FICO system, see this Money & Markets column.
by Nilus Mattive on November 2, 2009
in General
In the latest issue of Dividend Superstars, I said I had some concerns about MSFT’s stock in the short run … including Windows 7 proving to be a dud and further market share loss to Apple.
Well, check this out and you’ll see that perhaps my fears were well founded!
by Nilus Mattive on October 20, 2009
in General
One of the topics I discussed in last month’s Dividend Superstars issue was higher costs for higher learning. And while it’s certainly not a cost most retirees face, it does add another example to my long list of soaring prices for many of life’s biggest expenses — regardless of what the CPI shows.
Today, the College Board’s latest survey came out, showing that tuition and fees at private 4-year schools rose 4.4% in the current school year to $26,273. Meanwhile, the price of a 4-year public university education spiked more than 6% for both in-state and out-of state students ($7,020 and $18,548).
Put bluntly, I question whether many of our country’s students are really getting value for their money anymore.
I am certainly saving and investing for my own daughter’s education. But given these trends — and the money to be made from plenty of out-of-the-box careers — I will be giving her the choice to pick her own path.
Heck, would you rather go into business for yourself with a headstart of $30K - $100K or come out with a 4-year degree in the hole? That question gets harder and harder to answer.
