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After the stock market closed on Friday, my portfolio was at an all-time high. That was likely also the case for a lot of investors living in the United States who are similar to me: earning income, investing in the stock market with a buy-and-hold strategy for the future, and leaving money invested during the stickier economic times.

Continuing to invest in the stock market throughout the recent recession was an essential part of long-term success with investing. Not all investors had this luxury, as the recession hit hard. Many workers lost their job and their income at the same time investing in the stock market was crucial for eventually receiving those promised long-term average returns.

According to a new survey, more than half of Americans don’t own stocks or stock-based investments like mutual funds.

But should this be surprising? Should stock owners look at those who do not own stocks with judgment or from a perspective of superiority? Is the lack of ubiquitous investing a result of ineffective financial education?

CNN calls the data reflective of an “alarming trend for America’s financial future” and for some reason compares the number of stock market investors with the number of daily coffee drinkers. After all, if Americans simply invested in stocks with the money spent on daily coffee drinks, the country would supposedly be wealthier — and sleepier.

Despite the proliferation of the 401(k) retirement plan as a replacement for employer pensions and the increasing tendency for employers to automatically enroll new employees in 401(k) plans, stock market investing still hasn’t penetrated the psyche of a majority of those living and working in the United States.

Most auto-enrollment settings will default to a money market index, probably because the employer doesn’t want the liability of choosing a riskier investment without the required education and an opt-in confirmation for investing in the stock market. There is also a view that the 401(k) plan was flawed from the start, giving a huge cash cow to Wall Street when millions of employees throughout the United States could be enrolled in programs that generate high fees for the financial industry.

This is not the right time to have this discussion.

The overall conversation in society about finances changes with the tenor of the times. From 2008 to 2010 or so, the idea of frugality had something of a renaissance. Commentators and financial experts extolled the virtues of saving money, being prepared for emergencies, and living life frugally. Let’s cut unnecessary expenses like cable television and get used to accepting any job available. When unemployment is high, we can question the value of higher education, even though the data always show that more education leads to lower unemployment and higher lifetime income.

During that recession, those Americans who didn’t save money during the better times were judged as poor managers of their own finances. Money management was now cool, with Mint.com and mobile apps for couponing rising to prominence.

Since that time, the stock market has skyrocketed, with the S&P 500 increasing 186.2% since March 6, 2009. Now commentators are criticizing Americans for not being invested in stocks at that time to take advantage of the best buying opportunities we might see for decades — at the same time the country was reeling in unemployment.

March 6 represented the bottom of the market as measured by the vast stock market index. But you wouldn’t have known that the future for stocks was so bright if you looked at what the media was reporting. Here’s the New York Times on March 6, 2009:

As government data revealed that 651,000 more jobs disappeared in February, a sense took hold that growing joblessness may reflect a wrenching restructuring of the American economy.

The unemployment rate surged to 8.1 percent, from 7.6 percent in January, its highest level in a quarter-century. In key industries — manufacturing, financial services and retail — layoffs have accelerated so quickly in recent months as to suggest that many companies are abandoning whole areas of business.

“These jobs aren’t coming back,” said John E. Silvia, chief economist at Wachovia in Charlotte, N.C. “A lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations. Firms are making strategic decisions that they don’t want to be in their businesses.”

Most economists now assume American fortunes cannot improve before the last months of the year…

The monthly snapshot of the national employment picture revealed an even bleaker picture as the government revised upward the job losses in December and January. The economy has shed at least 650,000 jobs for three straight months, the worst decline in percentage terms over that length of time since 1975…

“The people who do what I do in the Detroit area are a dime a dozen,” said Kim Allgeyer, 46, a machine toolmaker in Westland, Mich., who was laid off in January from a company that makes assembly lines for the automakers. Unable to find another full-time job, he is subsisting on day labor and one-week stints for contractors. “Who’s going to put me to work?” he asked. “Where’s the work at? It’s just a great big black hole.”

Much the same can be said for financial services, which gave up 44,000 jobs in February…

Retailers are shuttering stores as the era of easy money fueled by rising house prices and abundant credit gives way to a period in which millions of households are forced to confine their spending to their paychecks…

This reflected the general feeling in the United States. The future looked grim, and the only people who were investing when the outlook seemed to be so bad were those who had the fortitude (and the money) to keep investing throughout the downturn.

And now, we’re in the opposite position. I wouldn’t be quick to call the stock market’s position today a historic high, but we have had the benefit of a good bull market in stocks since March 6, 2009. The conversation has changed.

We’re not asking, “Why weren’t you saving money and watching your wallet these past several years?” We are asking, “Why haven’t you been investing in the stock market these past several years?”

In fact, this is what the new survey asked respondents. Among the majority of Americans who are not invested in stocks right now, more than half say they don’t have the money. Maybe this is true. There are still many people in the United States without jobs, many living paycheck-to-paycheck, many focusing on affording the basic necessities of life without putting their existence in jeopardy.

But there are also many who just don’t prioritize investing in stocks because the recession taught them that they need to prioritize saving and paying down debt over risky investments. Perhaps they got burned in the recession and don’t want the same thing to happen — another temporary recession in my lifetime is inevitable.

Now that the stock market completed its bounce back to former highs, the media wants to encourage more investing in the stock market. Reporters and financial experts couldn’t take that approach in 2009 without alienating the vast majority of readers who were struggling financially during the recession. Today, the surveys are about who is investing in the stock market (and those who aren’t are missing out). A few years ago, the surveys were about who is saving a good percentage of their income (and those who weren’t were missing out).

I can’t tell the future, but I do know this: When the world is telling you to invest in stocks, be cautious; when the world is telling you to be cautious, look for opportunities.


Best Buy, the big box retailer that most shoppers have abandoned sometime in the last decade and a half in favor of Amazon.com, announced better-than-expected earnings for the last three months of 2014, which includes the all-important holiday season.

The announcement sent the financial media into a frenzy, as many had all but dismissed Best Buy, even after positive results from the third quarter of 2014. To exemplify Best Buy’s performance and overall sentiment at that time, the Motley Fool presented this five-year chart, comparing Best Buy’s stock price changes over that particular time to the performance of the S&P 500, a popular benchmark for stocks.

Here we have a stock that returned -10.9% while the rest of the stock market returned a cumulative 87.35%.

When it comes to the stock market and companies that have public stock available to trade, everyone in the industry including the journalists would prefer if you just look at the charts and make decisions based on the data they choose to show. It’s all in the charts.

And by “all” I mean lies and manipulation, hidden in the “truth” of absolute numbers.

The visual implication with this chart is that Best Buy is a company to keep out of your portfolio. Unless Well, there are some who believe an underperforming stock is a good bargain, if they feel there is some inherent value that the rest of the market is ignoring — a highly unlikely situation. That’s not the impression a reader would get from the article that accompanies the chart.

Compare the chart above with one released today by CNN Money on the occasion of Best Buy’s most recent announcement.

This chart from CNN Money, comparing Best Buy’s stock with an exchange-traded fund that represents the retail industry (XRT), begins tracking the comparison on some undefined date in 2012 and boldly announces a conclusion based on these cherry-picked data.

Maybe everyone was wrong about Best Buy after all, and not only does the retailer’s expectation-beating performance for the latter half of 2014 signal that the company is not focused on the past, and is not depending on what is becoming an antiquated model of shopping for technology, but it has also been a good investment all along!

Well, just for fun, I made my own chart with a comparison between BBY and XRT.

This chart, as accurate as the other charts above, clearly shows that Best Buy (blue line in the chart) has been a bad investment at the same time CNN Money tries to show it has been a good investment. Over this period of time, the stock has returned -8.16% while the retail sector (red line in the chart) returned a positive 16.26% overall.

You can as easily and inaccurately draw whatever conclusions you like from my set of data (aided by Google Finance’s charting facility) as you may draw from CNN Money’s chart. “Best Buy has been better buy than other retail stocks” — but not for customers who invest at times that would invalidate that conclusion!

In fact, if you bought Best Buy stock on the day The Street discussed Best Buy’s third quarter results from 2014 and held that stock until yesterday, the investment would have grown 8.68%, compared with 8.90% for the retail sector measured by XRT. Marginally worse than the industry — and a bad sign for a company whose outlook was more positive.

I’m not accusing anyone of lying. But it’s easy and simple for the media to design “accurate and truthful” stock market charts that show almost whatever they want in order to support the conclusion on which any particular writer has already decided. The visual charts have more power to convince people of an opinion than they probably should have, thanks to their ease of being manipulated and their immediate communication of a message.

Let’s go back a little farther in Best Buy’s performance history. When Best Buy announced its results for the second quarter of 2014, its performance was worse than expected. Here’s what Fortune Magazine had to say at that time:

Revenue dropped 4% to $8.9 billion for the quarter ended Aug. 2, worse than the $8.98 billion projected by analysts surveyed by Bloomberg. Domestic same-store sales dropped 2%, while they fell 6.7% in international markets. Both declines were worse than what Best Buy reported in the year-ago period.

Best Buy has faced a tough challenge from online retailers, which have reported higher sales growth than brick-and-mortar stores. Online purveyors like Amazon.com also provide customers greater clarity about where to get the best deals for the latest gadgets.

Here’s what you do when you run a public company. When you beat the analysts’ predictions, explain how your good management and leadership resulted in success. When your company doesn’t perform as well as expected, explain how forces beyond your control (systemic failure, market trends, government regulations, etc.) prevented success.

How do you reconcile performance in one good quarter with an analysis that explained bad performance in a previous quarter? In Best Buy’s case, did people start seeing Amazon.com’s dominance as just a phase? Is online shopping just a fad, good enough for day-to-day purchases, but when the importance of holiday shopping is clear, consumers start wandering around big box stores? Now that Best Buy has had two positive quarters, is it finally in a position where it can stop adapting to a changing consumer culture?

Imagine how things would sound if companies reversed their attribution theory, if they took credit for short-term failures and blamed others for short-term success?

  • “We performed worse than the market’s expectations this quarter because our CEO failed to lead the company through changing consumer trends.”
  • “We are excited about new tax incentives that have allowed us to show a profit in our financial records when we otherwise would have lost money.”

Who would invest in a company whose public relations department said these things?

There’s a kernel of truth to everything, but picking which truths apply to any particular time period’s stock price performance is pure guesswork. Investors continue to read the financial media’s commentary and make decisions based on the advice, explicit or implicit, therein.

Wall Street analysts do work hard, as do the journalists who make sense of an interpret those analyses. The system keeps a fair amount of individuals employed — but they are employed in the entertainment industry.

The best thing any consumer can do it keep the following in mind:

If you see a stock market chart, someone is trying to manipulate you and your opinions.

Just for fun, here’s another chart that compares Best Buy’s performance since roughly the beginning of XRT’s existence in 2006. Best Buy looks like a pretty big loser today.


Over the years, I haven’t been too kind to the best-selling author, Robert Kiyosaki. He’s certainly built a successful empire, and a large community people respect him for his business acumen, his willingness to try or to appear to try to help others, and his advice. However, I’ve always found his advice thin at best and dangerous at worst. I received his latest book, Second Chance: For Your Money, Your Life, and Our World, and before opening the book to the first page, I decided to give Kiyosaki his own second chance — and read the book with an open mind. His publisher probably didn’t read my previous commentary before offering to send me a copy for review.

I read the entire book on a flight from Phoenix to Philadelphia, and my second chance paid off — I thought this book was an improvement over Kiyosaki’s earlier works(I’ve only read a few), yet not without its frustrations.

Kiyosaki uses several devices in his latest book to tell his story. The first is an all-out admiration of Buckminster Fuller, starting with the book’s dedication and infiltrating every chapter. This makes some sense, as Kiyosaki has always used some of Fuller’s literary techniques, which I’ll get into a little further down this page. Fuller was a futurist, and more than any of Kiyosaki’s other books, Second Chance also takes a look at the future and the decisions one can make therein as a way of dealing with the economic struggles of today’s post-recession world.

It was Kiyosaki’s so-called “poor dad” who first admired Fuller, and this early glorification set the wheels in motion for an approach to life that would favor the lessons of the author’s “rich dad.” (I’m ignoring the debate about whether “poor dad” and “rich dad” exist or are part of an allegory. The use in the book of Fuller as a driver instead of “rich dad” eliminates the need for debate, so readers and critics can focus on the words.)

Fuller, or “Bucky,” appears throughout the book as an inspiration to Kiyosaki through words of advice in Fuller’s own published words and in private conversations with the author. This explains much of who Kiyosaki is today. Fuller made up words or changed their meanings to encourage people to see the world differently, or as he saw the world, and Kiyosaki takes the same approach. It works. People who aren’t accountants or have a financial education — most people — would first read Kiyosaki’s books without a solid understanding of the terms “asset” and “liability” in a financial context.

Kiyosaki, years ago, saw the opportunity to make those words mean something else. And those who accepted Kiyosaki’s version of an “asset” became life members of a secret club. They “get it.” And if you disagree, you don’t “get it,” and you’ll never succeed in the way Kiyosaki wants you to succeed. For Kiyosaki and his followers, a house is a liability, not an asset. And if you don’t want to accept this version of reality, the author’s books, lessons, and seminars won’t do you any good because you don’t believe.

These redefinitions and others appear throughout Second Chance, but it seems to be Fuller’s pamphlet Grunch of Giants that had the most profound effect on Kiyosaki’s life. The bankers control the world, the government is out to get us, and the military-industrial complex something something. Grunch of Giants is an interesting read, but it’s just a little paranoid.

The second trope is familiar to Kiyosaki readers: the angst for traditional education and the glory for real-estate seminars. This appears so frequently throughout the book that it’s impossible to ignore. Kiyosaki’s companies produce real-estate seminars, so it’s no surprise he’s writing about the idea of getting a real education through this method as often as possible. I don’t recall him specifically selling his own seminars throughout the book, but it certainly plants a strong idea in the readers’ mind. If a reader comes away from the book thinking college is useless and the money for college is better spent attending a real-estate seminar each month, the first place that reader would go is to Kiyosaki’s own educational products.

Again, just like invented language, this concept exists as a filter. If you don’t feel the same way as Kiyosaki about traditional education, you’re not going to read his books and attend his seminars. If you did, you’d probably think they were wastes of time. He doesn’t want you. He wants people who are frustrated or unable to succeed in a college setting. They will make good customers. People without a college education are more likely to fall prey to people taking advantage of them.

The third recurring theme of the book is an idolization of wealth. Readers who buy this book are more likely to have goals to be wealthy than to have goals that go a little deeper — for instance, to use wealth to do good things for others. It’s not the simple get-rich-quick crowd of the 1980s, but it’s a more complex, grown-up version of that audience. The way the author uses the idolization is through frequent “question-and-answer” sessions, where it is implied that the reader is asking simple questions which Kiyosaki “answers.” The questioner in these exchanges is characterized as envious, curious, and a little slow; the answerer is characterized as rich, sophisticated, and absolute.

The book describes an exchange between Kiyosaki and a few construction workers. Kiyosaki drives up in a Ferrari, and the workers are envious, thinking they could never afford such a fancy car. Kiyosaki, in this story, proceeds to tell them they can, and that it’s just a matter of owning properties that put off positive cash flow, and that can be done without the education that the construction workers obviously do not possess. And here in this story, we see Kiyosaki positioning himself as the wealthy but down-to-earth, friendly guy who’s happy to teach unfortunate souls about something they will probably never be able to do. It’s the whole premise of the book — and Kiyosaki’s career. The readers are the construction workers, and Kiyosaki’s got the Ferrari the readers want. Please tell us your secret!

In Second Chance, Kiyosaki goes on record again with a prediction: There will be a market crash by 2016, which is the same prognostication he offered in an earlier book. The author believes that the recession of 2008-09 was partial fulfillment of that earlier prophecy. Oh, but he later demurs, and says that if the 2016 crash doesn’t happen, it would be due to artificial propping-up by the powers that be; thus, Kiyosaki stands to consider himself correct whether a crash (to which the latest recession when compared would just be a minor event) occurs by 2016 or not.

The book contains a number of misleading charts. In some cases, the data being represented in these chats doesn’t really prove the point that they author is trying to make, and in other cases, the data is represented in such a way that it is misleading. There is one such chart that supposedly shows that unemployment is rising for workers with at least some college education. The chart makes it appear that unemployment is decreasing for workers with just a high school education or less, and that’s simple a misleading graphical representation of data. Kiyosaki is careful in the text not to make an inaccurate claim about what the data show, but the visual representation allows readers to walk away with the wrong idea.

What Kioysaki might be getting right.

These annoying tropes aside, and the fact that the book contains no index and makes writing this article very difficult, there are many interesting ideas within the book that are worth discussing. Here’s what I liked reading about.

Three types of wealth. Kiyosaki borrowed the concept from another author, but discusses it in detail. “Primary wealth is resource wealth.” If you own oil — actual oil, not oil funds or ETFs or shares in companies that are involved in the oil industry — you have a protection that those with only tertiary wealth do not have. It’s not just oil — it’s fertile land, trees, and other natural resources, and Kiyosaki includes gold and silver in this category.

“Secondary wealth is production wealth.” Those who work directly (and own businesses that) produce food or other products, dealing with the resources owned by those with primary wealth, you have secondary wealth.

“Tertiary wealth is paper wealth.” This identifies the majority of Consumerism Commentary readers and myself. Savers, those with money in the bank or invested in stock market, fall into this category. This is the “affluent investor class,” and those who will be hurt hardest by the next (or any) market crash.

It’s true that shareholders and savers have the most to lose, but that doesn’t mean that those with secondary or primary wealth are fully protected. Businesses can fail, resources can dry up, and there’s always going to be an entity that more powerful than you — and I don’t mean God. Companies getting rich with oil in North Dakota are now finding that their lives can be upended in a matter of weeks when OPEC decides the price of oil needs to be lower.

The Cashflow Quadrant. From Kiyosaki’s other books, the “Cashflow Quadrant” makes an appearance here. The quadrants describe the type of work one might do and how the income from that work can be classified. I’ve been in all four quadrants: employee, self-employed, business owner, and investor. The quadrants are determined by tax law. If you’re self-employed, you pay the highest taxes — but what’s different between being self-employed and being a business owner? Well, even when self-employed, your working to get paid; a business owner is looking more at the value of an asset — the business — she is creating.

Basic principles in psychology. The author addresses a number of aspects of psychology that should be familiar to any student who has taken an introductory-level course: Maslow’s Hierarchy of Needs and a variety of intelligences.

I’ve written at length about Maslow’s Hierarchy of Needs here at Consumerism Commentary.

The latter looks beyond classical measures of intelligence like IQ, and beyond the two types that he feels receive the most attention in traditional education, verbal-lingustic and logical-mathematical. Skilled dancers and athletes have strong body-kinesthetic intelligence; artists have strong visual-spatial intelligence; musicians have musical intelligence; strong communicators and socializers rate highly for interpersonal intelligence; and self-motivators have strong intrapersonal intelligence. Kiyosaki adds a spiritual intelligence to this list.

Generalists and specialists. Kiyosaki points out that specialists are not suited to being entrepreneurs. They may be fantastic at one particular skill, but operating a company requires a lot of knowledge of many different aspects of a business or industry.

I lean on the side of agreeing with Kiyosaki here. Career advice tends to sit on the opposite side, often explaining that being as good as possible in one specific area is enough to get a great job and build a good career. The versatility that comes with being a generalist has allowed people who are more adaptable to survive better through the recession, and these generalists have the capacity to to succeed in any situation.

Overall, em>Second Chance: For Your Money, Your Life, and Our World points out the value in owning real-estate property and resources, but like all books, doesn’t offer too many hard details and doesn’t address risk. To go deep, the author assumes that the reader will attend seminars, and the prediction of a 2016 crash creates some urgency for the reader.

Honestly, when I closed the book after reading it cover-to-cover on a flight from the West Coast to the East Coast, I did feel motivated. I’m in a position now where working doesn’t add much to my net worth, and I need to start focusing more on cash flow. I am aware of this and I’m actively looking into ways to make that work, from buying web-based businesses that all ready produce an income (Kiyosaki does promote this idea in the book) to multi-family or corporate real estate.

The work I do today is mainly for cash flow, but it’s been more of a trickle than a gush. I have no interest in earning Ferraris or living some kind of lifestyle Kiyosaki believes motivates his readers, and I’m technically free to do whatever I like with my life from a wealth perspective. I’d much rather live off cash flow than assets, and the book has encouraged me to think about this more.

For more on Robert Kiyosaki, see Rich Dad Academy and Is Your Home an Asset or Liability?


When I first began reading that President Obama was considering reducing the tax benefits for savers who make use of 529 plans and other education savings accounts to reduce the cost of education-related expenses, I was surprised. It has been my understanding that 529 plans, all though I do not have one, are intended to help the middle class by encouraging tax-efficient savings for education.

According to the statistics on 529 plans and Coverdell Education Savings Accounts, these college savings plans have not lived up to the expectations. The middle class has mostly ignored these options for preparing for their children’s and grandchildren’s education. Those taking advantage of the tax benefits might be families who may not need the incentive.

The tax benefit for 529 plans is simple. The growth in these accounts will accumulate tax free, unlike growth in regular investment accounts. When you sell investments and withdraw that proceeds from a regular investment or savings account, you owe income tax on gains and interest. You will also owe income tax if your regular investments offer any dividends. This is not the case with 529 plans. You can withdraw your investment or savings for education expenses tax-free, according to how the law is written today.

Most startling when reviewing the demographic statistics was the fact that families with 529 plans or Coverdell accounts have, on average, twenty-five times the median net worth of those families without education savings plans. Those with the accounts have three times the median income of the others, or $142,400 versus $40,300.

So while in theory, the 529 account could save the middle class money, it’s generally not working out that way. Despite the popularity of 529 plans among financial writers and advisers, it just hasn’t caught on among the middle class. That probably could have been expected; wealthier families generally are in a better position to take advantage of all that is presented to everyone. The same criticism can be made regarding 401(k) plans, which have been around much longer than 529 plans.

The middle class was so slow to adopt 401(k) plans that companies started automatically enrolling employees in the retirement plans to jump-start their savings. This, while beneficial to some employees, was a bigger win for 401(k) plan administrators and managers of the (usually expensive) funds included in 401(k) plans. In this “win-win” scenario, middle class investors receive a supposed benefit, while the financial industry feeds off a growing source of revenue.

There are a number of specific reasons that 529 plans have failed to take root in the middle class investment and savings portfolio, according to reports by and discussions with 529 plan officials.

The middle class has difficulty saving. Whether this is true from a financial perspective or just a matter of mindset, in general, the middle class sees saving for their children’s future needs for funding of higher education an unattainable goal. In many cases, families believe they need to choose between saving for retirement before saving for their children’s education, and saving for retirement is a necessity that can’t be fulfilled. Thus, the priority is always one’s own retirement.

The hierarchy of needs is real. Especially through the recession, the financial focus of the middle class has been on basic necessities, even more basic than one’s own retirement. It is impossible to make saving for the children’s future when there isn’t enough income to cover food and shelter. If you have to choose between paying the mortgage and investing for any other purpose, whether one’s own retirement or in a 529 plan for the children, the mortgage always comes first. Urgency trumps importance.

The industry hasn’t done a good job of marketing to the middle class. Half of all parents of future college students just don’t know what 529 plans are. Financial aid is complicated even without the inclusion of 529 plans, so there are two paths that one can arrive at the idea that middle class families don’t understand 529 plans. Either they are just not receiving the marketing message, or they are receiving the message, but it’s drowned out by the complex industry surrounding the financial requirements of a college education.

Parents underestimate the cost of a college education. It’s possible that many parents in the middle class don’t anticipate their children’s future expenses being so large that they would necessitate advance planning. They could be underestimating the cost (and annual increase in cost) of tuition or overestimating the amount of financial aid available in the form of loans and scholarships. Parents may be unaware of how the burden of student loans has grown significantly over the last generation.

If these numbers were illustrated better, even though some in the financial industry are continuing to attempt communication, perhaps the middle class might be motivated to think about the future needs of their children.

Is Obama’s proposal to limit the tax benefits of 529 plans and Coverdell Education Savings Accounts the right solution? At this point, we’d probably be better off working on how to encourage higher education through tax policy than discouraging it. Right now, wealthy families are more likely to take advantage of these tax benefits, so solutions should be focused on how to encourage middle and lower income families to save more.

Simplify the options. In its current form, each state can support its own 529 plan, plus there is a 529 plan that relates to private colleges specifically. States usually partner with one specific provider in the industry. For example, New Jersey partners with Franklin Mutual Advisors (a branch of Franklin Templeton Investments). Vanguard is a partner with several other states including New York and Nevada to provide qualifying 529 plans in those states.

On the one hand, choice is limited depending on the state in which you live (if you want to save money on state income taxes), but on the other hand, the information is often presented in a way that makes it difficult for investors to choose plans. If 529 plans were presented more like IRAs, some confusion might be eliminated. You can open an IRA with almost any investment company and receive the same tax benefits. 529 plans could theoretically work just as easily.

Another way to simplify would be to offer one 529 plan across the entire United States. All investors would invest in the same plan, and this would eliminate the problem of choice. Earnings could be tax-free at the federal level and in every state.

Offer more incentives. In order to encourage more middle class and low income families to save for their children’s education — an even more important goal among low income families because a college education is a necessary part of moving out of poverty — the government can change the way incentives are presented for saving. For example, the government could match, in the form of a credit into the account or in the form of a tax credit, contributions into 529 accounts made by families whose household income falls below a certain level.

Also, the government could consider a contribution into a 529 account a tax deduction, so a family that has an income of $40,000 and chooses to deposit $1,000 into a 529 would be taxed only on $39,000. That tax deduction could be limited only to households that fall below a certain income level.

Another potential incentive would be for the government to automatically create an account for every newborn child, with an initial deposit that can only be withdrawn after at least fifteen years and only for higher education expenses.

Increased communication. Regardless of how the government, the financial industry, or society at large decides to improve the feasibility of 529 accounts for moderate and low income families, the communication needs to improve before more people adopt these plans. Not only does communication need to be clear about the benefits of 529 accounts, but there needs to be a stronger effort to promote the necessity of a college education.

It’s difficult to see children from struggling families believe that college will never be an option for them, particularly when children find themselves needing to contribute as soon as possible to their families’ household income.

If education isn’t a priority, whether out of necessity or out of ignorance of its social and financial benefits, saving for education can never be a priority.

Do you invest in a 529 plan for your children or future children? If not, why not?


Is It Time to Invest in Oil? Here’s What I Did.

by Luke Landes
Standard Oil

At the beginning of the year, I joined another investing challenge. This was sponsored by Motif Investing, who provided me and several other financial writers and bloggers $500 to invest in strategies each of us would choose. Like last year’s Grow Your Dough competition, this is a relatively short time horizon for me. In 2014, ... Continue reading this article…

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Final Update: Grow Your Dough Throwdown

by Luke Landes
Grow Your Dough Throwdown

Throughout the last year, I’ve been participating in a friendly competition among friends. We each placed $1,000 in an investing account (or multiple investing accounts) at the beginning of the year, chose an investing strategy, and tracked progress throughout the year. I gave the initial details in the beginning of 2014. My strategy was to ... Continue reading this article…

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When Money Is Scarce: Forced Frugality and Bad Decisions

by Luke Landes
Empty Bucket

I’ll be honest. When the idea for this article struck me late last night, I had a definitive idea of how I was going to address the topic of conservation mode. But the clarity of day may have changed what I think about the idea. Throughout my life, I’ve been working with scarce resources. Now, ... Continue reading this article…

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Is Acorns the Next Best App for Investing?

by Luke Landes
Acorn App

Acorns allows investors to divert small amounts of money to the stock market, $5 at a time. And all you need is your mobile phone. Have you seen the fees?

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The One Action You Need to Take in Any Market Correction

by Luke Landes
Bear Market

As of today, the Dow Jones Industrial Average has erased all of its gains this year. We’re not quite in “market correction” territory, though. The S&P 500 is still up year-to-date, but it isn’t presenting as fantastic a return as was evident earlier in the year. We could be getting to the point where the ... Continue reading this article…

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If All Investments Are Expensive, Where Can You Invest?

by Luke Landes

Neil Irwin at the New York Times points out that all asset classes around the world are expensive compared to their historical prices. If that’s the case, is there any investment class available that has the potential to provide great returns over the long-term? Stocks and bonds; emerging markets and advanced economies; urban office towers ... Continue reading this article…

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Grow Your Dough Throwdown: Second Quarter Results

by Luke Landes
Grow Your Dough Throwdown

Here’s my latest Grow Your Dough Throwodwn update as well as some information about the companies I’m investing in.

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Growing My Dough: The Latest Look at My Portfolio

by Luke Landes
Grow Your Dough May

CNN is sounding the alarm bells. The “Fear and Greed Index,” which is a strange measure of market sentiment, has passed the threshold into the “extreme greed” level.CNN is sounding the alarm bells. The “Fear and Greed Index,” which is a strange measure of market sentiment, has passed the threshold into the “extreme greed” level. ... Continue reading this article…

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Should You Become an Angel Investor?

by Luke Landes
Angel Investing

Two years ago I wrote about how I was “winding down”, whatever that means, after selling Consumerism Commentary, in the sense that I was looking to involve myself in new projects. I was considering, among other things, investing a portion of my assets in start-up companies. In fact, I signed up for a service called ... Continue reading this article…

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Buying and Selling Stocks Is Often a Losing Strategy

by Luke Landes
Grow Your Dough Throwdown - March 2014

After three months, my $1,000 investment portfolio, nicknamed “Feemaggeddon,” is lagging. This portfolio is part of an investing challenge, the “Grow Your Dough Throwdown.” It’s a lighthearted competition featuring several top financial bloggers. I have two goals with this portfolio. The first is to test a specific popular investing philosophy. Among those who offer advice ... Continue reading this article…

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Grow Your Dough: My Investing Results as of February

by Luke Landes
Grow Your Dough February

As I mentioned at the beginning of the year, I’m participating in an investing competition — well more of just a game than a competition — with several other writers and bloggers this year. The premise of the game is to start the year with $1,000 invested in discount brokerages of our choice, and track ... Continue reading this article…

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Should You Open an IRA With Your Bank? Ally Bank Offering $250 Bonus

by Luke Landes

It’s easy for me to look back in time and analyze the faults of my twenty-two year-old self. If only I had started saving and investing sooner, I’d be in a better financial situation. My younger self would assume I had forgotten what it was like for me during that time period, when I had ... Continue reading this article…

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Grow Your Dough Throwdown

by Luke Landes

I’ve joined a number of other financial writers in the “Grow Your Dough Throwdown,” a stock market competition. At the beginning of 2014, each of us will invest $1,000 in the stock market through a discount brokerage. We can trade as often as we like, and publicly track our investments throughout the year. It’s similar ... Continue reading this article…

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401(k) Contribution Limits for 2014

by Luke Landes

Looking for the latest 401(k) contribution limits? Click here. After two years of increases, the IRS is not adjusting the retirement savings opportunities for American taxpayers this coming year. From 2009 through 2011, the maximum contribution to retirement accounts — 401(k) accounts, 403(b) accounts, most 457 plans, and Thrift Savings Plans, was $16,500. In 2012, ... Continue reading this article…

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The Myth of Early Retirement for the Middle Class

by Luke Landes
Is early retirement a myth?

Financial independence has become an important topic for me over the course of my adult life. It’s been a progression. First, I discovered the concept of spending less than I earn — simple mathematics but a behavioral change — and how that, in addition to making better choices, could eventually lead to financial independence through ... Continue reading this article…

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Should Millennials Trust the Stock Market?

by Luke Landes
Should millennials trust the stock market?

First impressions often form the basis of how a young person perceives an object for the remainder of that person’s life. The object in question could be another person, a business, an industry, a group of people, or even a part of society. Deeply-seated beliefs are entrenched during several stages of formative development. Psychologists point ... Continue reading this article…

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