Jeremy Grantham Calls S&P 500 Down 26%

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Jeremy Grantham Calls S&P 500 Down 26% 1

I don’t mean to pick on Jeremy Grantham, I was asked to write something once in my role as a professional financial writer and it got his name stuck in my head. So, whenever I see Mr. Grantham’s name scrolls by on my market news feed, I just have to take a look. I’ve written about Jeremy Grantham prediction history before. Some of Grantham’s calls were great, and everyone seems to remember, but also about the calls that were flat wrong, early, or just money losing. No one seems to remember those. So, let’s do the honorable thing. Let’s see how Jeremy Grantham’s predictions work out this time. Jeremy Grantham Stock Market Prediction Let’s get the details right. On September 8, 2022, Jeremy Grantham told the Reuters Global Markets Forum (GMF) that the S&P 500 could be trading at 3,000 in a year from now. On Wednesday, the S&P 500 index traded from around 3,900 in the morning, to around 3,997 in the afternoon, so we’ll call it 3900ish. If on September 8, 2023, the S&P 500 is trading around 3,000, we can say he is “right” this time. Of course, Grantham called a crash in 2019. He called an …

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Using Roth IRA to Lower Assets for Financial Aid

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college financial aid

You have probably heard, but college is very expensive. Make that very, very, expensive. College is so expensive that even if you do pretty well with earnings and income, it can be hard to afford. In fact, having a higher income might actually make college harder to afford. Financial Aid for Higher Income Parents I’m going to make some assumptions here so that you know whether this is the right article for you. I’m going to assume that your child does well in school, has good SAT scores or ACT scores, and is applying to some higher tier universities. I’m also going to assume that your family income is in the six figures. There are two main types of financial aid. The first type is merit based financial aid. Often called scholarships, this kind of aid is offered to students based upon some factor other than need. The second type of financial aid is need based financial aid. This is financial aid that is based upon how much money you and your parents have. More specifically, need based financial aid is based on how low your income and assets are. Need Based Financial Aid with Higher Incomes Here is where …

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Debit Card Fraud

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rewards credit card reviews

A debit card is a useful money management tool. It provides credit card-like access to purchases, but the money comes directly from your checking account, not from a line of credit. Many people prefer to use debit cards in order to avoid the pitfalls of credit cards. Some banks and credit unions even offer rewards programs similar to credit card rewards programs. For example, Target offers the Redcard Debit card that offers 5% off of each purchase, just like the Target credit card does. However, there are some very big differences between credit cards and debit cards when it comes to fraudulent charges. Debit Card Charges Fraud One of the major differences between a debit card and a credit card is that a debit card can be used both as a debit card, via a PIN number, and as a credit charge card, via a signature. If you use the PIN number method, you must enter your PIN into a little terminal. Never give your PIN or say your PIN to the person conducting the transaction. If you cannot enter your PIN secretly, then process the transaction as a charge transaction instead. The PIN number provides a little bit of …

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How 1% Tax on Stock Buybacks Affects You

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How 1% Tax on Stock Buybacks Affects You 2

The Inflation Reduction Act has a lot of new features. One of the one that I keep hearing about is the new 1 percent tax on share buybacks and how that will affect investors. The 1% Share Buyback Tax Means Nothing There is a lot of noise around companies buying back their own stock after many (most?) companies acted irresponsibly with the money they earned, or were granted, during the pandemic by buying back their shares and then laying off people because they didn’t have enough money. It is no secret that I disapprove of companies buying their own stock. The practice is supposedly a way to return money to shareholders, but it is a very poor way of doing that. To make matters worse, most companies just turn around and reissue those shares in the form of executive stock option bonuses. It doesn’t take a Nobel Prize winning economist to see that share buybacks benefit company executives far more than they do shareholders. Take a look at the companies that have spent the last few years or decade buying back stocks and see if they performed any better than their competitors over the same time period. A majority of …

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Power of Compound Interest – A Case Study

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compound interest

Over at MarketWatch recently, was an interesting article entitled Make Your Kid Rich for $1 a Day. I’ll let you go over there and read the particulars if you are interested. However, I think that the concept provides a great way to study the phenomenon of compound interest, and the elements that go into it. Compound Interest Only Works Over Long Periods People love to quote Albert Einstein saying that the most powerful force in the universe is compound interest. What most people forget is, that as a physicist, Mr. Einstein was used to working on a very large scale, with a very long timeframe. Let’s start at the beginning. Compound interest is not magical. It is merely the phenomenon of earning interest on your previously earned interest. So, if you invest $10,000 and earn 10 percent interest annually, then you would earn $1,000 in interest, and have $11,000 at the end of the year. (Sort of, depending on how interest is paid and compounded, but let’s not quibble.) The following year, you would also earn the same 10 percent interest. However, this time, you earn 10 percent on $11,000, not just the original $10,000. In other words, you are …

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Colorado PERA Good or Bad The Truth

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PERA logo

As a former financial planner in Colorado, I get a lot of questions about Colorado’s PERA program and is PERA a good retirement plan. For those of you who are not from Colorado, PERA stands for Public Employment Retirement Association. It is a public pension plan for employees of the State of Colorado and public-school teachers, similar to CalPERS, the public pension plan for California. Most Colorado PERA jobs are with state and local governments, as well as many teachers in Colorado. Recently, PERA has taken some lumps in the media. For whatever reason, Republicans hate PERA, even though it is a version of exactly what they want to do by reforming Social Security to be based on investing in the markets. Sometimes, these criticisms are valid, and sometimes they are not. What is true is that PERA is not just another ordinary pension plan, and to really understand it requires delving into those details. PERA and Social Security The most important thing to understand about PERA is that it replaces Social Security. You know how people are always saying that Social Security would be better off if it invested worker’s contributions in the stock market? That is exactly what …

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Should I Sell My House Now?

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sell my home now

As the housing market appears to be peaking, at least for now, a number of people are pondering whether or not to sell their home. But, answering should I sell my house is not a simple question. Is Now the Right Time to Sell My House? Let’s start from the beginning. Assuming you only own one home, the one you live in, the question about whether or not to sell your house now is mostly moot. You need your house to live in. You need it to be in a certain location so that you can go to work, your kids can go to good schools, or so that you are near all the things you love to see and do. Reading too much financial news and information is no different than spending all day consuming “news.” Either way, you develop a warped sense of the world around you. You start seeing your life as a series of financial transactions. I used to see this as a financial planner with people who were doing just fine but were giving themselves ulcers by constantly evaluating their lives through their bank accounts. Your life is not a spreadsheet. Selling the place you …

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House Child Tax Credit Bill

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congress tax laws

Recently, the Democrats passed a bill called the American Rescue Plan Act, that made some changes and updates to the child tax credit. This was quickly spun as either a middle-class tax cut or raising taxes on the poor. It’s weird to see how people can distort what is really happening in order to fit their own agenda. The Child Tax Credit is $3,000 per child between 6 and 17 years old. The Child Tax Credit is $3,600 for each child under 6 years old. Child Tax Credit Basics The child tax credit is a credit. This is different than a tax deduction. A deduction is something that reduces your taxable income. The actual amount you save on your taxes then is a fraction of the amount deducted. For example, if you made $80,000 and you get $20,000 in deductions, then you pay taxes only on $60,000 in income, which means you get only a percentage of that $20,000 in deductions. A credit, on the other hand, is a reduction not in your income, but in your actual tax. So, a $1,000 tax credit means you actually pay $1,000 less in taxes. A credit is much better than a deduction …

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How Much Social Security Will I Get?

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social security amount

How Much Will Your Social Security check be? Social Security is a program of the federal government that provides retirement income for Americans older than 62 years old. The program also offers benefits for those who are disabled. The amount of Social Security you get depends on several factors, but most importantly, your age when you choose to start taking Social Security, and your income while working. I want a better idea than that. I want to know how much Social Security will I get when I retire. Fortunately, there is an easy way to find out. Qualifying for Social Security As a government program, there are a million exceptions to every rule, but in general, in order to qualify for a Social Security benefit, you must have 40 work credits. You earn a credit for each quarter you have wages or self-employment income on which you pay Social Security taxes. So, if you have been working for a state government that opts out of Social Security like Colorado does with its PERA pension program, or California does with its CALPERS, then your income doesn’t earn you credits. You can earn up to four credits each year, and you need …

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Colorado Refund Checks Here Now

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colorado refund tabor line

Taxpayers in Colorado began receiving their 2022 Colorado refund checks in the mail this week. Several readers have reported getting theirs, and I got mine on Monday, so they are definitely coming. To qualify for a refund check from Colorado you had to be a full-time resident in 2021, and you had to be 18 by December 31, 2022. You also had to file your Colorado income taxes. Check out this in-depth look at Acorns investing. Colorado Tabor Refund Checks Politicians were fast to break their arms patting themselves on the backs for getting $750 to each Colorado taxpayer. It is a nice surprise, and the Democrats get credit for getting $750 to your mailbox in August 2022 instead of making you wait until early 2023 to get your refund when you file your Colorado income taxes. Republicans are quick to point out that Democrats have supported ending Tabor in the past, so they think they get credit. Check out Where Your Colorado Refund Check Comes From You like free money as much as the next guy, but you are an intelligent and curious srot, so you’d like to know exactly where this refund check money is coming from. That’s …

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