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Joshua Kennon

Joshua's Beginner's Investing Blog

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Here's a Quick Explanation of How To Rollover Your 401(k) Into an IRA

Sunday March 30, 2014

Those of you changing jobs are most likely going to need to take your 401(k) assets and roll them over into a Rollover IRA at some point in your career.  If you've never done it before, here's an explanation of the process ...

To Get a Jump Start on Retirement Planning, Answer These Two Questions

Sunday March 30, 2014

If you are serious about starting your retirement planning process, the best place to begin is answer two simple, straight-forward questions that should take you less than fifteen minutes.  Learn what they are and how to perform some of the necessary math calculations ...

Want to Retire Rich?

Sunday March 30, 2014

There are a few big things you can do in life to retire rich, and one of them is coming up with the April 15th deadline that requires certain retirement plans to be funded or else you lose your annual contribution limit.  They aren't as difficult as you might think, and most of you can get started today.

It's 10K Season - Why All New Investors Should Care

Sunday March 30, 2014

Publicly traded companies in the United States are required to file a detailed financial document with the Securities and Exchange Commission called the 10K.  Find out how to get your hands on a copy and why it is the most important resource a new investor has for investigating a potential stock ...

Want to Find the Best Dividend Stocks?

Sunday March 30, 2014

The absolute best dividend stocks in the world tend to have three traits that make them stand out from other companies.  While not an exhaustive list, they are enough to help you narrow down your potential list of holdings whenever you are ready to invest more money into shares of companies to live off the passive dividend income.  Do yourself a favor and take a look at the list ...

When It Comes to Retirement Withdrawal Rates, Which Is Better: 3% or 4%?

Saturday March 29, 2014

There has been a lot of chatter lately in money management circles about lowering the long-established 4% withdrawal rate that is considered "safe" in retirement planning to 3%.  Yet, all is not as it seems.  Here are some of the reasons you might find 4% still works for you, or you may want to give in and switch to the new, lower suggestion ...

The 3 Things A Permanent Portfolio Needs To Have

Saturday March 29, 2014

While a true permanent portfolio can never really exist because of the inevitability of change in the world, some assets can come close to "buy and forget" or "buy and hold".  For those of you who want to put together a collection of stocks, bonds, real estate, and other assets that meet the tests, here are at least three traits they should have if you want to consider them having made the cut ...

How To Calculate the Rule of 72 To Estimate Investment Return Requirements

Friday February 28, 2014

In finance, there is an interesting mathematical quirk that arises which investors can take advantage of in their calculations.  It's called the Rule of 72.  By using it, you can estimate how long it will take to double your money, or the rate of return you need to earn to reach a target savings goal, all in a few seconds without any difficult math.  It's definitely one of those things you should have in your back pocket at all times, so be sure to read an explanation of how to do the calculation ...

How Much Of Your Household Income Comes from Investments?

Thursday February 27, 2014

The composition of family income, which is the dry powder that makes funding an investment portfolio possible, differs significant from the middle class to the upper class.  In 2010, the most recent year data was available from the nation's central bank, it showed some interesting characteristics.

A family in the 50th-74.9th percentile distribution of household income generated money as follows:

  • 76.3% wages
  • 0.4% interest or dividends
  • 4.8% Business, farm, self-employment income
  • 0.1% capital gains
  • 15.9% Social Security or retirement plans
  • 2.5% transfers of societal benefits

Meanwhile, a family in the 90th-100th percentile distribution of household income generated its money as follows:

  • 55.8%% wages
  • 8.7% interest or dividends
  • 23.9% Business, farm, self-employment income
  • 2.3% capital gains
  • 7.8% Social Security or retirement plans
  • 1.5% transfers of societal benefits

That means the richer families - those making a median income of $238,000 per year - are generating vastly higher proportions of annual household income from combination of dividends, interest income, capital gains, and small business profits.  The rich are much less likely to sell their time for a paycheck and, instead, own equity in a firm of some sort.

Education Remains the Best Financial Investment a Person Can Make

Thursday February 27, 2014

Still plowing through economic data as part of my day-to-day work at the office, I am now examining the household income of various demographic groups.  Median household income in 2010 (the latest data available) based on educational attainment was as follows:

  • No high school diploma = $23,000 per annum
  • High school diploma = $36,600 per annum
  • Some college = $42,900 per annum
  • College degree=  $73,800 per annum

That amount is where half of the people in your category make more than you and half make less.  Over a lifetime, the cumulative dividend from a college degree is in the millions of dollars.  Value investing works in this area, too, because the key is not to overpay for the degree by taking on too much student loan debt or picking a discipline that doesn't monetize well unless you can afford such a luxury.

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