Where To Live in Madison [Quiz]
With water on both sides of the city, there’s always something to do.
The post Where To Live in Madison [Quiz] appeared first on The Rent.com Blog : A Renterâs Guide for Tips & Advice.
With water on both sides of the city, there’s always something to do.
The post Where To Live in Madison [Quiz] appeared first on The Rent.com Blog : A Renterâs Guide for Tips & Advice.
There is an old joke that some statisticians tell, that âa person with their head in an oven and their feet in the freezer is comfortable â on average.â Statisticians are not known for their sense of humor (clearly), but the joke is an effective warning about some of the shortcomings of relying on averages.
Statistically, a simple average camouflages extremes within its sample data. And, while the statisticianâs joke is somewhat extreme, it is no less extreme than the actual returns in the long-run average annual returns for stocks and bonds that set many investorsâ return expectations.
If quizzed, it is likely that many investors would estimate the average annualized returns for U.S. stocks and bonds to be about 10% and 5%, respectively. Those averages are composed of decades of returns and describe history perfectly. However, although they describe the average annualized returns, they are a far cry from the typical or “average” experience. Â In fact, in only two years from 1926 through 2020 did both the stock and bond market deliver returns within 2% (+/-) of their historical averages (see Figure 1).
Source: Liberty Wealth Advisors, using data from Morningstar Direct
In 2021, U.S. stocks  gained 25.7%, while U.S. bonds lost 1.5%.* While it is fair to say that it was a great year for stocks, is it fair to say that it was a bad year for bonds because they didnât return their 5.7%* average?  Probably not. The only thing rarer than a year with âaverageâ returns might be a year that investors appreciate their bond allocations amid a bull market for stocks.
For those of you thinking about abandoning bonds, here are some ideas that may help:
While investors prefer gains to losses, they also prefer small losses to big losses. While far from being predictive, Figure 1 demonstrates that negative returns in bonds have tended to be both infrequent and modest. In fact, the bond marketâs worst annual return was a loss of 5.1% in 1994. However, the stocks of the S&P 500 index have posted daily losses that bad or worse 25 times since 1926.
Often, itâs hard for investors to see the benefits that high-quality bonds can add to their portfolios, especially when the returns they are posting are modest â or even modestly negative. And today, concerns for higher interest rates due to higher-than-expected inflation are making it even more challenging for investors to ignore some punditsâ suggestions that holding bonds is a bad idea.
I was given a magnifying glass when I was young, and I started looking at everything through it. Eventually, I looked at the Sunday comics and realized that for all I saw, I wasnât seeing everything. The cartoons were nothing but a variety of colored dots! Magazine photos, too. It made me wonder how much else I was missing because I wasnât looking closely enough. Now, I realize that when I was close enough to see the dots, I missed the bigger picture â literally.
Similarly, the dots in Figure 1 paint a picture thatâs easy to overlook when youâre too narrowly focused: The principal benefit of investment-grade bonds isnât their frequency of positive returns but the infrequency of large, negative returns. And, yes, if the returns in Figure 1 were inflation-adjusted, the frequency of negative returns for both bonds and stocks would increase. However, that would not change what Figure 1 tells us: High-quality bonds in a portfolio can help moderate the volatility of stocks.
A well-diversified portfolio can benefit from bonds: More likely than not, a bad year for bonds will be much better than a bad day for stocks. While that certainly wonât insure your portfolio against losses, it can certainly help moderate the losses when the markets turn intemperate.
Having a well-diversified portfolio that includes an allocation to high-quality bonds can help keep a bad day in the stock market from turning into a bad year for your portfolio.
* Stock performance as measured by the CRSP U.S. Total Market Index. Bond performance as measured by the Bloomberg U.S. Aggregate Float Adjusted Index. Bond average is a geometric mean return for the Ibbotson® SBBI® U.S. Intermediate-term (5-Year) Government Bonds (Total return).
Tax season is a daunting task for nearly all of us, and while the 2022 tax season is already underway time is limited to ensure all the right documentation is included in your upcoming filing. There is, of course, the option to use a professional tax service to make the process easier and more efficient. […]
The post Your 2022 Tax Season Prep List appeared first on SoFi.
Who couldnât use some passive income? If you live in California, it couldnât be easier. A company called OhmConnect pays Californians to reduce energy usage and stabilize the grid.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Thinking about living in a studio apartment? Here are some things to consider.
The post The Pros and Cons of Living in a Studio Apartment appeared first on The Rent.com Blog : A Renterâs Guide for Tips & Advice.
If you live in New York, earning passive income couldnât be easier. OhmConnect pays New Yorkers to reduce energy usage and stabilize the grid.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Want to pay less in taxes — without going to jail? Read on to learn legit tax-saving strategies, like opening an IRA or taking advantage of tax credits.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Nowâs the time of year when high school seniors are getting those much-anticipated letters from colleges. It can be a thrilling time for kids who get a âyesâ from their dream schools. It can also be a scary time as students and parents contemplate how to pay for that dream.
If you started planning for your childâs education as soon as he or she was born â or even before â youâre not alone. Aside from their own retirement, itâs likely the biggest expense for which parents will ever save.
Divorce may alter how (and how much) you save for college, but it need not wreck your kidâs college dreams. Like so much involved in divorce, funding college in a fair and equitable way involves advance planning.
Parents who are splitting up have several options to consider, whether their children are in diapers or closer to getting a diploma. Of course, the closer a child is to the pomp and circumstance, the more urgent it is that couples splitting up agree on how to handle paying for college. Here are some scenarios for divorced or divorcing parents to consider.
The amount could be a percentage of current income, or it could be a set amount ($250 per month per child, for instance) that both parents agree to set aside for college in an account type of their choosing. You can stipulate that the monthly amount may increase over the years or keep it at the agreed-upon amount for the duration. Itâs all about forethought and writing it into your agreement at the time you split.
In this scenario, both parents each agree to pay for a third of a childâs college tuition, room and board with the last third being paid by the child â likely with student loans or scholarships. The child may be too young to understand the arrangement at the time of the parentsâ divorce â and doesnât need to know it until the time comes to talk about the expense of college and the ways families go about paying for it.
Thatâs how family lawyers in North Carolina, where I practice, informally refer to this option, which entails parents agreeing to split the cost â at the tuition and room and board rates at the time â of four years at the in-state university systemâs flagship campus. But it works the same no matter what state youâre in. The child doesnât have to attend UNC Chapel Hill (or the University of Tennessee or University of Nevada-Reno, etc.) but the idea is that parents plan and save for tuition at a public, in-state university. If, when the time comes, the child decides to forgo college or attend a less expensive community college or trade school â they have a financial leg up because their parents planned ahead.
If the child wants to go to a more expensive, private college, the family will have to decide how to handle that based on what has been saved. It could be that the difference is made up in student loans, or perhaps one or both parents are willing and able to pitch in more. The point is to have a reasonable goal in mind and to have both parents committed to and working toward that goal.Â
The money in a 529 college savings account can be used for a host of educational expenses. In addition to college tuition, it might cover K-12 tuition, apprenticeship costs and student loan repayments. If you have a 529 plan set up for your child already, you need to know that it canât be jointly owned by both spouses. It must be set up in one spouseâs name only.
But if parents divorce, each parent can open their own 529. If uncoupling parents choose this route, both Parent A and Parent B open 529s and agree to the amount each will contribute. There should be some type of accountability mechanism written into the divorce agreement to keep everyone honest and on track. In some cases, each parent sends the other a statement each quarter showing contributions made and the current balance. Â
Letâs say youâve done everything right and saved â one way or another â for your childâs college and are able to fund all or a portion of it, but Junior decides not to go. Or â and all parents can dream of this â Junior gets a full scholarship. It should be written into your agreement how that money gets dispersed and to whom. In the case of a 529 plan, there are rules to follow. But if youâve saved outside of a 529, you may want to make some rules of your own. Could any leftover money roll from an older child to a younger child? Do you want to many any stipulations on how that money can be used? (For instance, itâs only for schooling; it canât be used to fund a gap year.) Again, it pays to think through even unlikely scenarios and address them when youâre divorcing, rather than having to negotiate years down the road.
In addition, you want to make sure that your divorce agreement has recourse built in if one parent fails to live up to their end of the agreement. You may have to go to court to enforce it, just as you would if child support payments were to suddenly stop coming. College tuition and expenses are financial obligations and should be agreed to at the time of the divorce.
No matter which route you go, itâs important to talk to your kids, at the appropriate age, about the expense of college and expectations you have of the child if youâre funding or helping to fund their schooling. One of the expectations my parents set for me, well before I started applying to college, was that they agreed to be on the hook financially for four years maximum. If it took me longer to graduate, I knew Iâd be funding those extra semesters. It was terrific incentive to ensure I finished in four years.
Having money banked for college gives your child options, and itâs always nice to have those. Your child may choose a community college, and that can be a smart place to start. Or your child may choose trade school â and that can be a great route as there will never be a shortage of need for skilled trades. But itâs definitely more liberating to be able have a financial plan to help fund your childâs choice, whatever it may be. Advance planning allows a better shot that you get to call the shots when the time comes.