Step Five: The Difference Between Assets and Liabilities
Even as we enter 2010 with home prices below what they once were only a few short years ago, with the economy slowly recovering (in some cases without much in the way of job creation) and our retirement plans is disarray, there is still a great deal of difficulty determining which is an asset and what is not. This balance sheet balancing played a role in how well you felt about your retirement plan. Your home was worth X amount, your portfolio was valued at Y, and your potential for earning ever increasing salaries, with benefits was calculated as Z. This step will help you get X,Y,and Z on the right side of the balance sheet and keep them there.
The Architecture of Retirement (Book excerpt) Your retirement should be considered similarly. It is a construction project of great importance, one that provides shelter and at the same time, some satisfaction in a job well done. It is two brick put together well and then another and yet another. It does what architecture does in some many ways: it gives us hope and depresses us. It is both beautiful and painful. Preorder Target2025
An Asset (Book excerpt) When Mark Grinnblatt and Matti Keloharu researched their paper on why, in this particular instance, Finnish people chose to invest close to home rather than with companies that were led by CEOs who spoke a foreign tongue, it was considered cultural. They called it a home bias. Preorder Target2025
The Influence of Culture (Book excerpt)
Studies were done several decades ago in several California communities. The decision to purchase a house fell basically into two distinct categories: making a profit and protecting the equity. Lower middle and working class individuals tended to think of the homes they lived in as both while almost all of those who were surveyed agreed that a house is an investment. During inflationary periods, the “paper value” of a home will increase, giving the homeowner a sense of increased wealth. Preorder Target2025
The Influence of Society (Book excerpt) Bullfighters call this the querencia. This spot in the ring is where the bull returns when it feels threatened. As the fight continues, this spot, the querencia becomes the spot the matador can anticipate. Each bull has their own querencia. Once the matador is able to predict this comfort zone, and each bull has their own, the matador steps in and makes the kill. Preorder Target2025
The Influence of Politics (Book excerpt) For openers, we are now undeniably a global society. Political moves in how other countries address their retirements will have an effect on those living in the United States. There is still a great concern over the cost of aging in this country and much of it done without consideration that the world is likewise aging. Preorder Target2025
The Influence of Business, History and Family (Book excerpt) Let’s talk about those benefits for a moment. The relative demise of the pension and the rise of the 401k was done with incentives. Some of them were rather straightforward and appealed to those of us who felt as though taking control of our investments meant a better future. We’ll discuss that concept a little further along. The other incentive was the company match. This too was simple in principle. Preorder Target2025