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Ponderings For the Week of March 12 to 18, 2018

Jitters on Wall Street Cool Off Stocks

Stocks couldn’t gain any traction last week due primarily to almost daily pronouncements out of Washington that discomfited the investment community. These included the leave taking of Secretary of State Tillerson, reports of more tariffs proposed for China, and indications that Robert Mueller’s investigation has issued a subpoena to the Trump Organization. As if that isn’t enough, February retail sales declined for the third consecutive month, calling into question the robustness of the economy.

For the week, U.S. stocks declined 1% give or take. Foreign shares managed to eke out a small gain. Despite the concerns over the economy, stock analysts are still optimistic about the prospects for the rest of the year, citing a strong job market, low inflation expectations, and increasing activity among U.S. manufacturers.


Car Buying Suggestions You Don’t Want to Read

Here’s a frequently asked question: What’s the best way to buy a new car?  My response: Pay cash. The inevitable follow up remark: I can’t afford to pay cash. Before the Great Recession, owning a late model car was considered an entitlement, particularly among the younger set. But today, too many things in our financial lives can go wrong to risk being saddled with endless payments on an unaffordable new car. Here are some things for would-be car purchasers to consider:

  • Don’t buy a new car unless you can either pay cash or finance it over a period of at most three years. If you can’t, you can’t afford a new car.
  • Never lease a car. This is the worst way to own a personal vehicle. It will just consign you to an endless cycle of lease payments when your goal should be to get out from under car payments so that you can eventually pay cash for your cars. Once you pay cash for a car, you’ll always pay cash for cars.
  • If you buy new, plan to keep the car for at least 10 years. Years ago, I did a study of car ownership habits that didn’t ingratiate me with the auto manufacturers, but has had a lasting impact on many people. I compared someone who bought new and traded a car every three years with someone who bought new and traded every 10 years. Here’s the difference: Over the course of a 40-year work life, the one who trades every 10 years saves enough money to be able to retire five years earlier than the frequent trader. Also, the 10-year owner accumulates a lot more money along the way that could come in handy if financial adversity strikes, which happens a lot.
  • Buying used is a very smart move.  Here’s the best way to minimize car costs without driving clunkers, as I do. (I once had a handwritten sign put on my windshield that said: “Your car violates this neighborhood’s standards of good taste.”)  Buy a four-year old car and keep it for four years. Most of the depreciation in a car’s value accrues in the first four years, but cars remain very reliable for many years thereafter. Compared with the person described above who buys new and keeps the car for a decade, trading a used car every four years results in even lower ownership costs.

Please forward this to any “deserving” family members. The blame resides with me.  



Smart Money Tips

  • Can’t find your annual Social Security Statement? Periodically checking your estimated Social Security benefits helps you plan for retirement and allows you to correct any errors in your past earnings. But you may not have any recent statements in hand. As part of cost cutting, statements are sent out by Social Security only every five years – ages 25, 30, 35, 40, 45, 50, 55, 60 and each year thereafter for those who are not yet receiving Social Security benefits. Rather than waiting every five years, open up an account to view your latest statement at any time. Enrollment is fairly easy. Go to www.ssa.gov/myaccount.

  • Take care to name the right executor in your will. Settling an estate is usually a complicated matter requiring a lot of attention to details and deadlines. Make sure the executor you choose is up to the task. It’s common to name family members as executors, and this may be a fine choice – or it may not. One solution if you have any doubt is to instruct the designated family member to seek as much legal help as necessary to discharge the responsibilities of an executor.

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February 26- March 4

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March 12 - 18


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