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Money USA - May 2018

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Boost Your Odds of Being a 401(k) Millionaire
P. 31
1 %= 3 ť 1 3 2 ) = ' 3 1
VICKI ROBIN
wrote the book
on retiring
happy. Now
a whole new
generation
is taking her
advice.
The
Millennial
Money
Whisperer
RETIRE BY 40!
These people are joining
the movement. P. 38
FIX
IT UP!
High-Va
lue
Home R
ep
for Ever airs
y
Budget
5
Ways to
Invest If
You’re
Worried
About a
Crash
8
Costco
Products
Obsessives
Swear By
3 Bedrooms
2 Bathrooms
1
Spacious living room where your daughter can soar like an eagle.
An eagle that wears footed pajamas and snorts when tickled.
Everything you need to buy, sell or rent, with ease. | Find your way home.®
1 %= 3 : 3 0 9 1 ) 2 9 1 & ) 6 F E AT U R E S
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High-value home renovations
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$1,000 to $20,000 and up.
BY S H A I N A M I S H K I N
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Vicki Robin wrote the book on retiring
happy. Now a whole new generation is
taking her advice. B Y E L I Z A B E T H O ’ B R I E N
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Salary isn’t everything.
See how local costs can boost
(or cut) your family’s income.
BY K AITLIN MULHERE
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M AY 2 0 1 8
M O N E Y. C O M
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“6 Smart Strategies for a
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© 2018 PERSONAL CAPITAL CORPORATION. ALL RIGHTS RESERVED.
IN THIS ISSUE
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Editor’s Note
Letters & Comments
The MONEY 50/50
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Add them to your own list.
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These five investments can
act like shock absorbers in
a diversified portfolio.
There’s plenty of opportunity
out there, entrepreneurs say—
if you put in the hustle.
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The mega-retailer just hit an
online speed bump.
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A study of 5,000 people reveals
the way happiness and job
satisfaction are connected.
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A seven-figure stash is within
your grasp—if you invest like
a cheapskate.
Want to get ahead at work?
Recent research suggests this
characteristic is key.
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Dining with colleagues doesn’t
need to be a drag.
Cover photograph by
IAN ALLEN
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THE INTELLIGENT INVESTOR
THE MONEY TALK WITH...
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It has predicted every recession
since 1960. And it’s flashing a
warning. BY PAU L J . L I M
The Olympic skater’s
investment strategy? Wine
from Target and a big bet
on his own career.
BY W I L L L I N E N D O L L
This one resource could be the
key to lifetime income.
*MRHXLI6MKLX
7SGMEP7IGYVMX]%HZMGI
Steer clear of mistakes in
claiming, which could cost you
tens of thousands of dollars.
MONEY (ISSN 0149-4953) is published monthly (except combined issues in January/February and June/July) by Time Inc., a wholly owned subsidiary of Meredith Corporation. PRINCIPAL OFFICE: 225 Liberty Street, New York, N.Y. 10281-1008.
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PHOTOGRAPH BY ALEXANDRA SCIMECCA
M AY 2 0 1 8
M O N E Y. C O M
)(-836Ş7
238)
EDITOR-IN-CHIEF
Adam Auriemma
DEPUTY EDITORS Rachel F. Elson, Paul J. Lim MANAGING EDITOR Tari Ayala
SENIOR EDITORS Mike Ayers, Ian Salisbury
AUDIENCE ENGAGEMENT EDITOR Matt Bemer SENIOR WRITERS Elizabeth O’Brien,
Brad Tuttle WRITERS Kristen Bahler, Jennifer Calfas, Julia Glum, Alix Langone,
Megan Leonhardt, Shaina Mishkin, Kaitlin Mulhere, Kerri Anne Renzulli
8LMW-WWYI-W
SR*-6)
UNTIL A COUPLE of months ago,
I had never heard of Vicki Robin.
But I certainly knew her work.
The movement that sprang, in
part, from her 1992 bestseller, Your
Money or Your Life, is hard to avoid
if you’re a money journalist. Its
followers tend to overshare. They
thrive in online communities such
as Reddit, where they share tips
and tricks on how to live rich lives while spending as little
as possible. Adherents call the movement FIRE, which
stands for “financial independence, retire early.” And
they’re not afraid to give detailed accounts of their income,
expenses, and investments.
Take Grant Sabatier, a 32-year-old self-made millionaire featured on page 14. He says Robin’s book changed his
life. “The mindset shift was immediate,” he tells writer
Paul Schrodt.
He’s not the only one. As Elizabeth O’Brien writes in this
month’s cover story (page 38), Robin’s decades-old book has
taken on a new life, inspiring a generation of people to get
smarter about their money—to make a life rather than a
living. Even if you don’t go to the extreme lengths that some
FIRE walkers do—like Lily He, who scrimps on food and
takes the bus so she and her husband can pour $150,000 a
year into savings—there are lessons to take away.
Also in this issue, you’ll find “Fix It Up!” (page 50), our
guide to high-value and luxurious home improvements.
Personally, I dream of the indoor pool, but the projector
suits my budget a bit better.
Thanks for reading. Keep in touch!
DIGITAL PRODUCER Allana Akhtar AUDIENCE ENGAGEMENT PRODUCER Masiel Torres
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COMMUNICATIONS
EDITOR-IN-CHIEF
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M O N E Y. C O M
Write the Editor: editor@moneymail.com
M AY 2 0 1 8
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PRESIDENT); Keith Strohmeier (VICE
PRESIDENT); Arbena Bal (DIRECTOR);
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A U R I E M M A : TAY L O R J E W E L L
CONSUMER INSIGHT
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Joel Kaji (EXECUTIVE DIRECTOR); Brian
Koenig (SENIOR RESEARCH MANAGER)
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1
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for the past 16 years, I thought “These
Women Have the Hottest Job in America” [April] was misleading. Nowadays,
most software developers do not work
from 5 a.m. to midnight, and I have
rarely worked over 40 hours a week.
The industry has been moving toward
saner hours and a better work/life
balance, not away from it.
N I C H O L A S Z A K A S , Mountain View, Calif.
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THE POSITIVES OF
PREPACKAGED TOURS
Though I agree with Anthony
Bourdain’s point that prepackaged tours sometimes
pack too many destinations
into too short a time, I see
their overall value [“Anthony
Bourdain’s Guide to Great
Travel,” April]. Traveling with
a company sometimes lets
you skip the general admission line, and its guides often
know which restaurants
serve quality food at the
best price.
ALEXANDRIA’S ROLE
IN U.S. HISTORY
bragging rights, 2018 is clearly the
Year of the Software Developer.
Quick question: What’s a
software developer?
“It’s really just an amazing
opportunity to build something,”
says Pooja Gada, 30, the tech lead
at hospital operations platform
Qventus, based in Los Altos, Calif.
“You turn ideas into something you
can practice and play around with.”
Developers (sometimes called
programmers or coders) are
behind all the applications that
make our digitized world run.
They create the mobile apps we
interact with every day: “Frontend developers” make the buttons
on our screens, “back-end
developers” sort through the data
we punch into them, and “fullstack developers” do both. They’re
responsible for the interactivity of
every “smart” device, from the
Amazon Echo to those crazy
Internet-connected refrigerators
that keep stock of ingredients,
create shopping lists, and feed you
news. Developers help companies
across industries bring their sales,
shipping, and inventory solutions
into the 21st century. And they do
a million other things too.
It’s an increasingly popular and
important role in the tech space
and will most likely continue to be
for years to come. In 2016 the
Bureau of Labor Statistics
projected employment for the role
would grow 24% by 2026—which is
P H OT O G R A P H B Y H E L E N A P R I C E
M O N E Y. C O M
ELLEN PICKMAN
I enjoyed your piece [“Best
in Travel: U.S. Destinations,”
April], but I’d like to point out
some other historic sites:
the Stabler-Leadbeater
Apothecary, which Martha
Washington used to go to,
and the Carlyle House’s
grand dining room, where
British General Braddock
first discussed taxation without representation.
PATTY SHEETZ
APRIL 2018
Alexandria, Va.
OUR
FAVORITE
COMMENT
As someone aiming to retire early, “Second Acts! How to Land a Dream Job … in
Retirement” [April] was an inspiration to me. It was wonderful to read stories from
retirees pursuing their passions. Thank you!
DA R A S C H L EG E , Coopersburg, Pa.
M O N E Y. C O M
M AY 2 0 1 8
COMMENTS
ABOUT
RECENT
STORIES ON
MONEY.COM
Fort Collins, Colo.
RICHARD HILBERT
BY K R I ST E N BA H L E R
I wish there were more discussion of flight-crew training and experience [“Best in
Travel,” April], as these are
more important to me than
which amenities are provided in the cabin.
Westfield, Mass.
Long hours, constant
learning—and big pay.
Inside the life of a
software developer.
SOFTWARE DEVELOPERS got a
hearty slap on the back at
the beginning of the year when
U.S. News & World Report named
the tech role the “best job” of 2018.
Not that they needed the ego
boost. Last year, PayScale and
CNNMoney put software developers at the top of their own “best
jobs in America” list. LinkedIn’s
“skills companies need most in
2018” is stufed with tools that any
budding developer would desire,
and the job site’s recent spread on
the “most popular entry-level jobs”
gave software engineers, an
in-demand role that crosses into
the software development world,
the No. 1 spot.
In the battle for workplace
BEST CABIN CREW?
Re: “All the Things
You’re Doing Wrong
When You Travel,
According to
Anthony Bourdain”
“Good article. I like
doing both: seeing
the hotspots as well
as experiencing local
culture.”
Re: “What’s your
No. 1 tip for anyone
planning a trip?”
“Bring a map as a
backup. Don’t only
rely on technology.”
Re: “This CEO
Makes 900 Times
More Than His
Typical Employee”
“Yes, and the 900
below him don’t
have the skill it
takes to do that job.
Same reason LeBron
James makes
$30 million a year,
and I don’t.”
Corrections
& Clarifications
[APRIL] Our “Best in Travel”
guide misstated the overall
rankings of international airline
winners Qantas and Copa; they
are 14 and 26, respectively, not
15 and 28. Our list of top U.S.
destinations featured an out-ofdate photo of Oklahoma City.
Write to MONEY: letters@moneymail.com
Guidance starts with hearing you out.
TD Ameritrade’s Financial Consultants take the time to understand what matters to you and why, before
discussing investment strategies. To help you find the plan that works for you, we want to get to
know you first.
Schedule a complimentary goal planning session today and get up to $600 when you open and fund
an account.
Call (800) 870-9668 or
visit tdameritrade.com/goalplanning to learn more.
solicitation in any jurisdiction where we are not authorized to do business. TD Ameritrade, Inc., member FINRA/SIPC. © 2017 TD Ameritrade.
0MZI
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Cult favorites, from syrup to sockeye.
BY PAU L S C H R O DT
loyalists love the
discount store for its convenience and
remarkable savings. A membership enables
you to buy pantry staples in bulk for a fraction
of the cost by volume that you’d spend in a
normal grocery. Costco has also developed a
following for its own Kirkland Signature brand,
particularly for food and drink. Costco works
with manufacturers to develop its Kirkland
products, which are sometimes reviewed just
as highly as premium name-brand rivals. These
are the oferings most worth their price tag,
based on Amazon customer reviews and
research by consumer experts. (Note: Prices
may difer depending on the store.)
COSTCO WHOLESALE
M O N E Y. C O M
M AY 2 0 1 8
36+%2-'1%40)
7=694
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$18.59 for two liters
$12.99 for 33.8-ounce jug
$3.89 per six-ounce can
A UC–Davis study found
that many imported
“extra virgin” olive oils
failed to meet the
standard for that
designation. Costco’s
own Kirkland olive oil,
however, passed—and
at a price well below
that of competitors.
Maple syrup is a commodity. No wonder Consumer Reports recently
found that more expensive brands don’t necessarily outperform. Kirkland, the cheapest dark
syrup the organization
tested, did better than
the priciest option.
Kirkland’s canned wild
salmon gets high marks
from customers, including those who shop for
it on Amazon. The fish
comes already cooked
and doesn’t require refrigeration until opening, so it’s easy to store
until you crave it.
P R O D U C TS : C O U R T E S Y O F C O S TC O
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MAY 2 0 1 8
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B A C O N : P E R C H I M A G E S /G E T T Y I M A G E S
$15 for 64 ounces
Consumer Reports
testers found Kirkland
bacon ranked above
every other national
brand, crisping up nicely
and delivering a balance
of meaty and fatty, as
well as sweet and smoky.
Sure, four pounds is a lot
in one package, but it
freezes well.
36+%2-'0%6+)
&63;2)++7
4%61-+-%23
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$7.39 for 24
$12.50 per pound
You don’t get much more
versatile than eggs, a
staple for the humblest
and most sophisticated
chefs. While many food
labels are just marketing
talk, the eggs’ humane
and organic certifications mean they meet
strict criteria.
PHOTOGRAPH BY SPENCER LOWELL
Fresh Parmigiano Reggiano—not the already
grated stuf—enriches
any dish, from pastas
to omelets to pizza.
Costco’s version comes
straight from Italy and
costs about half of what
you’d shell out at upscale Whole Foods.
:3(/%
$29.99 for 1.75 liters
36+%2-'4)%298
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$11.99 (two 28-ounce jars)
The prices of top-shelf
vodkas can be puzzling,
given the spirit tastes
like … nothing in
particular. Kirkland’s
version has bested
the ultrasmooth Grey
Goose in blind taste
tests, while a 1.75-liter
bottle costs about
half as much.
M AY 2 0 1 8
While Jif has its place,
Kirkland’s peanut butter
ofers a more strippeddown and healthful
snack for nutritionconscious eaters.
There’s no added sugar,
just a sprinkling of sea
salt. Supersize containers are great for kids.
M O N E Y. C O M
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The digital economy provides plenty of
opportunity for young entrepreneurs—if they
put in the hustle. BY PAU L S C H R O DT
M O N E Y. C O M
M AY 2 0 1 8
For Grant Sabatier, founder of
the Millennial Money blog, the
“aha moment” came with his first
freelance project. “I was working
full-time at a digital marketing
agency and had only been there
about three months when I sold
my first side-hustle gig,” Sabatier,
32, says. “The project was building
a website for a small law firm in
Chicago for $500. I was so pumped
to sign my own client, but really
realized I was onto something
when I sold a $50,000 website to a
much larger law firm about 60
days later.” From that point on,
Sabatier devoted himself “150%”
to his business, eventually
accumulating over $1 million in
five years.
For others the road is obvious
from the start. Taso Du Val, the
cofounder and CEO of the
freelance talent network Toptal—
which counts J.P. Morgan and
Airbnb among its clients—had a
C O U R T E S Y O F G R A N T S A B AT I E R
BECOMING A MILLIONAIRE by your thirties isn’t easy, unless you
happen to come from a lot of money. Tips abound on how to
accumulate wealth by saving and investing, but unless you’re putting
away a lot of cash, a seven-figure net worth at such a young age can seem
like a pipe dream.
But it is attainable if you’re resourceful, driven, and, of course, lucky.
While millennials have gotten a bad reputation for their sense of entitlement, many in their cohort have proved exactly how flexible, creative,
and ultimately successful they can be in the business world. In some
cases, they’re redefining what success looks like, all while pulling in
massive incomes. We talked to two millennials who have achieved
millionaire status about what it took to get there—and the wisdom they
have to share.
FIND THE IDEAL “SIDE HUSTLE”
MAKING YOUR MARK
clear vision for his company. He
felt secure in his idea when Toptal
signed its first deal. “The ability to
scale it, for me, was clear,” Du Val,
32, says.
WANT IT MORE THAN ANYTHING ELSE
“You have to really want it. A
lot of people say they want it, but
they don’t really,” Sabatier says of
the efort required in becoming a
millionaire. “You have to cancel
your Netflix subscription and
stay of Instagram and focus on
building a business. You have to
be willing to spend your extra
time learning and pushing
yourself. Read business books,
listen to podcasts, or take a free
online course instead of watching
Netflix. Focus on investing in
yourself and your skills. Slowly
you’ll start seeing moneymaking
opportunities in places you’ve
never seen before.”
Expect to make tradeofs. “I
was working 80- to 100-hour
weeks for a few years in my midto late twenties,” says Sabatier, “so
I missed out on a lot of opportunities to hang out with friends and
to travel as much as I wanted to.”
that, so you can free up time to do
everything you’ve dreamed of.
MAKE MONEY BY ADDING VALUE
Being young and hungry is
necessary, but not enough. You
also need to understand what
people in a position to pay you
want or need.
“Money is a means to add value.
You make it by adding value,
and you spend it on what’s valuable
to you,” Du Val says. “I understood its importance by having
little of it and studying every
intricate component that adds
value to a business.” His ability to
identify how a talent network like
Toptal could serve major companies in new ways propelled his
business. Toptal supplies freelance software engineers to
clients with fluctuating demands.
“WORK TO INVEST, NOT TO SPEND”
Of course, it’s not just about
making money, you also need to
hold on to it.
C O U R T E S Y O F TO P TA L
VALUE YOUR TIME. IT IS MONEY
“The biggest lesson for me came
from the book Your Money or Your
Life, by Vicki Robin,” Sabatier says.
(See our feature on Robin in this
issue.) Whenever you’re working
for a paycheck, he realized, you’re
trading large pieces of your life for
money. “This blew my mind, and
the mindset shift was immediate. I
started valuing my own time and
tried to make as much money as
possible for my time.” He believes
in figuring out how much you need
for the life you want and aiming for
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“Common wisdom is that you
should save 5% to 15% of your
income, depending on whom you
ask. But if you can push it to 25%,
50%, or higher you can dramatically cut the number of years it
takes to retire,” Sabatier says.
“Sure, you have to cut back, but
you should view saving as an
opportunity not a sacrifice.”
And once you’re able to save
money, putting as much of it as
possible in a diversified investment portfolio is the fastest route
to wealth-building. “I was saving
at least 60% to 80% of my income,
and put literally every dollar I
made on the side into investments
so it could grow. I worked to
invest, not to spend,” he adds.
EMBRACE THE OPENNESS OF BEING
A MILLENNIAL, BUT ALSO BE TOUGH
Being a digital-native generation
puts millennials at the forefront of
the fast-changing economy—meaning there’s no lack of opportunity.
“You can make money doing
tons of diferent things online from
anywhere in the world. That’s
empowering. We are super
scrappy and are figuring it out,”
Sabatier says of his age cohort.
But Du Val has observed a
certain personality quirk among
his generational peers that could
put them at a disadvantage in
becoming self-starters who add
value to the world and make a lot
of money while doing so.
“They seem to be easily
ofended,” Du Val says of American millennials. “This is often
correlated with being weak, so I
would suggest improving that.”
Part of developing strength,
after all, is acknowledging your
weaknesses.
M AY 2 0 1 8
M O N E Y. C O M
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A study of 5,000 people reveals the way
happiness and job satisfaction are connected.
BY M O R T E N T. H A N S E N
ILLUSTRATION BY CHAD HAGEN
to selecting
a job or career, the usual
advice is to love what you do. In
fact, given all the talk about
“passion” and “following your
dreams,” you might believe that
loving what you do is the only
consideration.
And yet following your passion
can be dangerous. As many a
failed actor in Los Angeles will tell
you, doing what you love can lead
to unemployment. But what’s the
alternative? Ignoring your passion
isn’t so great either. It leads people
to plod along, doing dull, empty
work to earn a paycheck.
WHEN IT COMES
M AY 2 0 1 8
M O N E Y. C O M
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M O N E Y. C O M
M AY 2 0 1 8
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INFORMATION, UNIVERSITY OF
CALIFORNIA AT BERKELEY
Studying people like Guay,
I came to understand why matching passion and purpose helps us
perform so much better. It comes
down to energy. Because Guay
loved what she did and felt that she
was serving a purpose, she charged
out of bed each morning, eager to
get to her hotel. Once there, she
greeted guests warmly and did
everything she could to make their
stay memorable, even when she
was tired and cold on dark January
mornings in icy Quebec. Yes, she
tapped into her natural talents,
and yes, she worked long hours—
both contributed to her success.
But it was the energy she brought
to her work—born from her sense
of passion and purpose—that
allowed her to excel.
My data confirmed that passion
and purpose strongly predict how
much efort people put in for each
hour they’re on the job, rather
than the sheer number of hours
they work. That intensity leads in
turn to higher performance. If you
love what you do, you’ll show up
with a certain amount of vigor.
And if you also feel that you’re
helping other people—that they
need you and depend on your
contributions—your motivation to
excel becomes that much greater.
You’re targeting your eforts
toward making contributions to
your purpose. You activate
positive emotions such as joy,
excitement, pride, inspiration, and
hope, all of which gives you more
energy. And that lets you do
everything better on the job.
Now, you might think that this
kind of matching is possible only
in certain industries, like health
care, teaching, and hotel service.
Not true! We found that nearly
every industry or occupation
boasted at least some people who
reported having lots of passion
and purpose. That finding has
implications for many of us: Try
to cultivate more passion and
purpose in the place where you
already are. Chances are that you
will find more ways to feel
passionate and a strong sense
of purpose. It will make your job
more interesting, and you will also
likely perform far better.
Morten T. Hansen’s new book, Great at Work: How Top
Performers Do Less, Work Better, and Achieve More,
is out now.
HANSEN: TERRY HUSEBYE
Many of us bounce between
following and ignoring our
passion, unsure of what to do,
groping for the best way forward.
Is there a solution to this tradeof?
Yes. My study of 5,000 employees
and managers uncovered a third
option, what I call “matching.”
Some people not only pursue
passion in navigating their
careers, but they also manage to
connect this passion with a clear
sense of purpose on the job—they
contribute, serve others, make a
diference. While passion is “do
what you love,” purpose is “do
what contributes.” As my research
shows, people who match passion
with purpose in this way perform
much better than their peers.
Take Genevieve Guay, a
concierge at a luxury hotel in
Quebec City. As she told me, she
goes to extreme lengths to please
guests. Once she spent several
days racing back and forth across
town to locate objects that a
particular guest needed for a
photography shoot. What kind of
concierge does that? A passionate
one. “I love to improve the lives of
others with my personal touch,”
Guay said. “This job gives me a
chance to meet a lot of people from
everywhere around the world
without having to move from my
desk.” But Guay also felt a strong
sense of purpose in her job: “I have
direct impact. I can see directly
what I gave, even with simple
things like a restaurant that
worked for them.” Guay’s great
passion for her job served a
purpose, helping and caring for
hotel guests. Unlike so many of us,
she found magic in her career,
landing in that special place where
passion and purpose overlap.
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What’s your game plan? To get help with yours, visit mutualofamerica.com or call 1-866-954-4321.
Mutual of America® and Mutual of America Your Retirement Company® are registered service marks of Mutual of America Life Insurance Company,
a registered Broker/Dealer. 320 Park Avenue, New York, NY 10022-6839.
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CORPORATE LADDER
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Want to get ahead at work? Recent research suggests
this characteristic is key. BY K R I ST E N BA H L E R
M O N E Y. C O M
M AY 2 0 1 8
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A M Y L O M B A R D —T H E N E W Y O R K T I M E S / R E D U X
Charisma? Drive? The
perfect blend of Ivy League degrees, lots of
experience, and a blemish-free résumé? Hardly.
According to The CEO Next Door, a new book by
leadership consultants Elena Botelho and Kim Powell,
the people at the top of the food chain aren’t the
prodigies we think they are. Statistically, a chief
executive officer is more likely to drop out of or skip
college than go to an Ivy League school, they found.
And the typical CEO definitely wasn’t “born to
lead”—only about 30% of top executives had their eye
on the C-suite at the start of their career.
And it makes sense. Some of the most powerful
CEOs in history sprang from humble beginnings.
Henry Ford grew up on a farm. Dave Thomas, the late
WHAT MAKES A GREAT CEO?
CEO of Wendy’s, left high school to
bus tables at a local restaurant.
Tech industry CEOs like Bill
Gates, Steve Jobs, and Mark
Zuckerberg all dropped out of
college. Glossier’s Emily Weiss
turned a blog into a multimilliondollar cosmetics company and
e-commerce giant.
The average CEO, in fact, starts
out a lot like the rest of us.
“We don’t think of CEOs as
‘normal people,’ ” Botelho says.
“But a lot of the aspects of
becoming a CEO are … accessible
to everyone.”
Over the course of 10 years,
Botelho and Powell surveyed
more than 17,000 chief executives
and took an in-depth look at
the careers of 2,600 of them—
a study they dubbed the “CEO
Genome Project.”
They took a special look at
“CEO sprinters,” or fast-rising
executives who reached the
executive role in less than the
average 24 years after their first
job. Like the larger pool of
executives, these CEOs weren’t
any more extroverted, or motivated, than the average joe. The
common denominator, rather, was
a willingness to step into the
unknown. More than a third of
these CEOs made a “big leap” at
some point in their career, like
taking on a role that tripled
their leadership authority. And
about 60% made a strategic
decision to “go small,” by moving
to a smaller company, or taking on
a lower rank.
This is an important distinction—it proves leadership isn’t
written in the stars. And the path
to the C-suite might be more likely
than we think.
OFFICE LIFE
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Daytime dining with coworkers doesn’t have to be a
drag—follow these tips to feel suave and satisfied.
C A R I N B A E R — A M C /C O U R T E S Y: E V E R E T T C O L L E C T I O N
BY PAU L S C H R O DT
THE PROFESSIONAL LUNCH is supposed to be a pleasant break
from the office, but it can be fraught with pressure. If you’re
sitting across the table from a higher-up, you may wonder, What
should I order to look sophisticated? Or if you’re organizing said
of-site meeting: Which restaurant will make everyone like me?
It helps to remember that work lunches are supposed to be
somewhat relaxed afairs. So don’t overthink them. They’re not
boardroom meetings. But simple guidelines can help ensure
you’re sending the appropriate message. Here’s a guide that will
guarantee your experience will be stress-free.
5 RULES
FOR LUNCH
SUCCESS
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Whether you’re footing
the bill or it’s on the
company’s tab, a business lunch should project a certain level of
seriousness. Aim for a
restaurant that’s on the
higher end but not
inaccessibly pricey or
stufy, which can alienate either your reports
or managers. Any place
with rules about dish
substitutions or a complicated menu is out.
American and Italian
meals are always crowd-
you’re a senior member
of the team assembled,
it’s fine to start of by ordering a beer or a glass
of wine and encouraging
others to do the same if
they would like to. If
you’re lower in the pecking order, wait to get a
signal from the boss. If
the lunch is a celebratory occasion, booze is
all but guaranteed.
And don’t order a drink
for yourself that’s
over $15, unless you
want to be judged as
cost-inefective.
pleasers, but so is Asian
or Mexican cuisine. Just
be sure the setting and
menu deliver.
8,-2/'31*368
Just as sophistication
matters, so do the
simpler pleasures like
comfortable chairs and
ample elbow room. A
relaxing venue will do a
lot to ease nerves and
add to atmosphere. The
point, after all, is to get
people to open up so
you can share ideas and
connect, which will ultimately improve your
standing in the office.
+)8731)8,-2+
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The people you work
with ultimately want to
feel heard, and the people above you want to
be flattered, though not
too obviously. There’s
no easier way to bond at
a business lunch than
by asking what people
like, and suggesting
possible starters to
share. Oysters and other
items from a raw bar are
luxurious, as long as
people aren’t squeamish. Antipasti like salami and cheeses at an
Italian joint will get everyone talking and satisfied during the wait for
the main courses.
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The days of Mad Men–
style martini-soaked
lunches are indeed dead.
In today’s work world,
getting drunk in the
middle of the workday is
seen as highly unprofessional, not to mention
unproductive. But a
round of drinks can help
lubricate conversation
and get spirits up. If
As on a first date, you
don’t want to distract
with your eating or any
food liable to get stuck
on your face. Unwieldy
pastas like spaghetti are
tasty and often afordable, but maybe not the
best choice. Unless, that
is, you’re feeling really
comfortable with your
coworkers.
M AY 2 0 1 8
M O N E Y. C O M
FIDELITY
WEALTH
MANAGEMENT
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a dedicated advisor who provides:
Straightforward advice
Tailored recommendations
Tax-eicient investing strategies
Guidance designed to grow
and protect your wealth
Schedule an appointment
with a Fidelity advisor today.
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Investing involves risk, including risk of loss. Investment minimums may apply.
Fidelity Brokerage Services LLC, Member NYSE, SIPC. © 2018 FMR LLC. All rights reserved. 837004.2.0
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Worried about how shaky stocks have become
lately? These five investments can act like
shock absorbers in a diversified portfolio.
FO L I O A RT
BY PAU L J . L I M
ILLUSTRATION BY MUTI
THE WALL STREET SCARE that spooked
investors in February proved to be a
false alarm, showing how risky it can be to
abandon stocks altogether out of fear.
But it was the start of something. Though
the sellof didn’t turn into a bear market,
stocks have entered a new, bumpier stretch.
“Volatility returned in the first quarter of
2018 with a vengeance,” says David Kotok,
chairman of Cumberland Advisors.
So far this year, investors have already
witnessed more days in which the S&P 500
index rose or fell by at least 1% than in all of
2017. And that type of volatility is likely to
M AY 2 0 1 8
M O N E Y. C O M
remain, market strategists say.
For starters, at nine years old,
this is the second-oldest bull
market, and rallies get jittery as
they age. Plus, “the market is
reacting to the uncertainty around
this President’s style,” Kotok says.
There are also plenty of
fundamental reasons investors are
getting nervous, such as rising
inflation, which could force the
Federal Reserve to hike rates
more aggressively than investors
would like, and a trade war.
Yet the bull keeps plodding
along, so you have to find a way to
smooth out the bumps without
slamming the brakes on stocks.
1. “STEADY EDDIE” STOCKS
M O N E Y. C O M
M AY 2 0 1 8
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Fewer Spills, More Thrills
History says that by sticking with lowvolatility stocks that pay dividends, you
won’t just smooth out the market’s
bumps, you’ll also outperform.
ANNUALIZED TOTAL RETURNS
Low-volatility-plus-dividend strategy
S&P 500
Past
3 years
14.5%
10.8%
14.9%
Past
5 years
Since
1990
14.2%
13.1%
10.2%
NOTE: Based on the S&P 500 Low Volatility High Dividend
Index. SOURCE: Standard & Poor’s
S&P 500, while Waste Management shares gained value. Thanks
to these types of stocks, this ETF
has lost only about two-thirds as
much as the market in down
months over the past five years.
2. DIVIDEND-PAYING STOCKS
Income-generating stocks have a
built-in cushion: the dividends that
they throw of. If share prices were
to fall, say, 10%, a payout of 3%
would alleviate some of that pain.
In 2008, when the S&P 500 lost
37%, dividend payers lost just 23%.
There’s another reason to favor
dividends now that volatility is
rising with inflation: “Over the
long term, dividends have done a
good job of staying ahead of
inflation,” says Jack Ablin of
Cresset Wealth Advisors.
How to invest: If the economy
slows, financially weak firms could
cut their payouts, as many banks
did in the financial crisis. So look
for businesses healthy enough to
COU RT ESY O F 3 M
What’s the easiest way to reduce
volatility in your portfolio? Stick
with low-volatility stock, or shares
of humdrum companies that
gyrate less than the market.
These Steady Eddies held up
better than the S&P 500 index in
the global financial crisis. And in
the 2000–2002 tech wreck, they
actually gained 21%. Low-volatility
stocks have also outperformed
over the long run, by around two
percentage points annually.
How to invest: There are a
number of mutual and exchangetraded funds that focus on
low-volatility stocks. iShares Edge
MSCI Minimum Volatility USA (USMV), for
one, is a big, low-cost ETF that
invests in about 200 U.S. stocks
exhibiting lower-than-average
volatility and strong profit growth.
Among its top holdings are
boring names like the medical
instrument maker Becton Dickinson
and Waste Management. In the 2008
crash, Becton Dickinson fell only
about half as much as the
A SMOOTHER RIDE
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—DAVID KOTOK, CHAIRMAN OF CUMBERLAND ADVISORS
case today. In such periods, stocks
lost value in 34 out of 105 quarters
since 1970. But in those down
quarters, “commodities delivered
a positive total return about 75%
of the time,” Paulsen found.
How to invest: On our MONEY
50 list of recommended ETFs,
there’s iShares North American Natural
Resources ETF (IGE), which gives you
exposure to energy and natural
resources for the relatively cheap
cost of 0.48% of assets a year.
keep paying in good times and bad.
A good place to find them is in
the SPDR S&P Dividend ETF (SDY), which
tracks an index of companies that
have increased their payouts for at
least 20 straight years. Among its
top holdings are AT&T and Exxon
Mobil, which have both boosted
payouts every year for more than
three decades.
3. COMMODITIES
Why dedicate a small portion of
your portfolio—say, 5% to 10%—to
raw materials? For starters,
commodities are a natural
inflation hedge. Plus, “commodities have cheapened significantly”
relative to stocks, says Jim
Paulsen, chief investment strategist for the Leuthold Group.
But the real reason is their
diversification efect. Paulsen
looked at past inflationary times—
specifically, periods when nominal
GDP was growing faster than the
unemployment rate, which is the
4. BARGAIN-BASEMENT STOCKS
For years, stocks have been
trading at lofty prices. But
investors have argued that high
price/earnings ratios aren’t a
problem in low-inflationary times.
With consumer prices moving
higher now, that valuation
argument loses some punch.
This is why Lewis Altfest,
president of Altfest Personal
Wealth Management, says
investors ought to “trim some of
the high-flying stocks with high
P/Es” from their portfolios.
How to invest: Use the equity
portion of your portfolio to invest
in undervalued stocks. On our
MONEY 50 list, there’s the
PowerShares FTSE RAFI U.S. 1000 ETF
(PRF), which owns blue-chip stocks
that are cheap based on fundamental factors such as earnings
and dividends. The fund’s average
stock sports a P/E of less than 15.
That’s nearly 15% cheaper than the
average valuation for the S&P 500.
5. HIGH-QUALITY STOCKS
If you’re worried that stocks are
gyrating on economic fears, then
recession-proof your portfolio.
In addition to low-volatility and
lower-priced stocks, history says
that high-quality stocks—or
shares of dominant companies
with strong balance sheets and
little debt—are able to withstand
stormy economic times better
than the market as a whole. What’s
more, high-quality companies tend
to perform better in the latter
stages of a bull market.
How to invest: PowerShares S&P
500 Quality Portfolio ETF (SPHQ) “invests
in profitable firms with strong
balance sheets and conservative
operating asset growth,” noted
Morningstar analyst Alex Bryan.
These are companies like the
manufacturer 3M and consumer
staples giant Procter & Gamble. As a
result, said Bryan, the ETF “should
hold up better than most of its
peers during market downturns
and ofer attractive performance
over a full market cycle.” Over
the past five years, the ETF has
outpaced U.S. stocks slightly. Yet
in those months when the S&P 500
lost value, this fund fell only
around three-quarters as much.
M AY 2 0 1 8
M O N E Y. C O M
-RZIWX
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Could the surprising decline in housing
starts signal a slowdown ahead? B Y PA U L J . L I M
M O N E Y. C O M
M AY 2 0 1 8
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P H O TO G R A P H B Y L U K E S H A R R E T T— B L O O M B E R G V I A G E T T Y I M A G E S
market indicators is that
they can shift on a dime. Investors, for instance,
may seem utterly confident about the economy one
day—until the Dow plunges more than 1,000 points in
a week, at which time that assuredness goes away. Yet
there is one indicator with a great record at predicting
the mood several months out: housing starts.
“Housing starts are a terrific leading indicator of
the economy,” says Terri Spath, chief investment
officer at Sierra Investment Management. To begin
with, housing—and all the ancillary spending associated with the purchase of a home, including utilities—
is a huge part of the economy, representing roughly
one-sixth of total U.S. gross domestic product.
And new-home construction is a unique bellwether.
Since it can take months to plan, build, and sell a new
THE PROBLEM WITH MOST
house, homebuilders will be
reluctant to break ground on
a project if there’s any hint of an
economic slowdown ahead.
Plus, new-home construction is
tied to longer-term consumer
confidence. “Who wants to engage
in the biggest investment of their
life—buying a house—if they’re
worried about losing their job?”
asks Sam Stovall, chief investment
strategist for the research firm
CFRA. That’s why before every
recession since 1960, housing
starts saw a significant decline.
What is this indicator signaling today? In February, housing
starts tumbled unexpectedly—by
7% compared with January and
4% vs. the prior year—raising
red flags. It’s still too soon to
panic, though. Stovall found that
in the months leading up to past
recessions, the typical year-overyear drop in housing starts
averaged around 25%.
But other data suggest there’s
softness in housing that could spill
over into starts later on.
New-home sales fell more than
expected in January, by 7.8%, while
existing-home sales slumped 4.8%
vs. the same period a year ago.
That marked the steepest decline
since August 2014, according to the
National Association of Realtors.
Another canary in the coal
mine: Home Depot’s shares have
sunk 16% since late January, twice
as much as the S&P 500. Investors
could view the slowdown in real
estate as a sign of future headwinds
for the biggest home-improvement
chain. In other words, Home Depot
stock could be a leading indicator
of housing starts, which are a
leading indicator for the market
and economy.
-RZIWX
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After making big inroads
in e-commerce, the
retailer hits an online
speed bump.
BY RYA N D E R O U S S E AU
INVESTORS HAVE COME to believe
that Walmart is the one brickand-mortar store with a legitimate shot at challenging
Amazon for e-tailing supremacy.
Driving that narrative:
Walmart’s push into “omnichannel retailing,” a strategy
that lets people peruse, purchase, receive, and return goods
through various channels from
online to mobile apps to delivery
to physical locations.
This has helped the world’s
largest retailer turn its costly
storefronts into a competitive advantage. Walmart has more than
5,300 U.S. big-boxes from which
it can facilitate grocery pickups,
easy returns, and same-day
deliveries. Amazon has fewer
than 500 Whole Foods locations.
Another plus: Walmart’s omnichannel customers spend twice
as much as store-only shoppers,
according to MKM Partners.
But a funny thing happened to
Walmart on its way to omnichannel dominance. The one channel
that really matters to investors
right now—online sales—suffered a surprising slowdown,
casting doubt on Walmart’s
long-term strategy.
1
Walmart’s online sales growth has slowed
unexpectedly, raising concerns.
E-COMMERCE REVENUE GROWTH
60%
50%
23%
Q2
Q3
Q4 1
The retail giant reported that
e-commerce sales grew 23% in the past
quarter. Relative to the retailer’s overall
revenue growth of 4%, that seems
pretty good. But rival Amazon enjoyed
38% revenue growth in the most recent
period. And compared with Walmart’s
50%-plus growth rate in several prior
quarters, it was downright disappointing. “It is diicult to ignore the magnitude of the slowdown,” RBC analyst
Scot Ciccarelli said.
Plus, to maintain its growth, Walmart has had
to lower prices, cutting into profit margins.
Walmart oicials project that online
sales will accelerate and grow 40% this
year. But at what cost? Already, current
growth “is coming at the expense of
margins,” said Morningstar analyst
John Brick, as the retailer lowers prices
and invests in new technologies to keep
up with Amazon. Going forward, “it will
be hard to raise margins in a world
where Amazon seems obsessed with
lowering prices to gain market share,”
noted Argus analyst Christopher Graja.
GROSS PROFIT MARGIN
25.5%
25.0
24.5
24.0
Q2
’17
Q3
’17
Q4
’17
Q1
’18
Q2
’18
Q3
’18
Q4 1
’18
And Walmart has a long way to go to compete
with Amazon’s online dominance.
SHARE OF TOTAL E-COMMERCE SALES,
DECEMBER 2017
4%
44%
Amazon
Walmart
Walmart’s 2018 fiscal year began Feb. 1, 2017, and ended Jan. 31, 2018. SOURCES: Walmart, eMarketer
There are signs of hope. The percentage of customers with annual
incomes above $100,000 visiting
Walmart’s website has gone from 30%
in 2016 to 35%, according to Credit
Suisse. And the categories Walmart
excels at—food, drink, and personal
care—have ample room to grow online.
But Amazon and Target have younger,
wealthier customer bases, and both are
making a push into the same spaces
Walmart wants to own online.
M O N E Y. C O M
Now is not the time to roll over, it’s time to adopt
change. Every day, more than 4,100 dogs and
cats are killed in shelters across the country — but
with Best Friends Animal Society leading the
charge, and your help, we can Save Them All.
save-them-all.org
V E C T O R I L L U ST R AT I O N B Y M AY ST R A — G E T T Y I M A G E S ; N E ST E G G B Y N I C K B L U T H — N O U N P R O J E C T
6IXMVI
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A seven-figure nest egg is within
grasp—if you invest like a cheapskate.
BY E L I Z A B E T H O’ B R I E N A N D WA LT E R U P D EG R AV E
over the past few
years have helped create a record number of
401(k) millionaires, according to Fidelity, the country’s
largest administrator of workplace retirement plans.
Some 150,000 of Fidelity’s savers had seven-figure
401(k) accounts as of the end of last year, up from
93,000 a year earlier. While these supersavers represent just 1% of the company’s 15.3 million retirement
plan participants, they show a positive trajectory.
Now, if you’re worried that this trend could
reverse course should the bull market slow down,
Fidelity raises this important point: This new group
of millionaires wasn’t born out of stock market gains
alone. Retirement accounts were also buoyed by
contribution rates that rose to 8.6% at the end of
2017, up from 8.4% a year ago. “2017 was a good year
for retirement savers—not only because of the stock
STRONG STOCK MARKET RETURNS
M AY 2 0 1 8
M O N E Y. C O M
6IXMVI
WHO WANTS TO BE A MILLIONAIRE?
market’s performance but because many investors
took positive steps toward managing their retirement savings, such as increasing their contribution
rate,” noted Kevin Barry, Fidelity’s president of
workplace investing.
THE OTHER SECRET TO 401(K) SUCCESS
Besides maintaining a high savings rate and having
the discipline to stay invested in a diversified mix of
stocks, bonds, and cash, what else can you do to boost
your chances of amassing wealth?
One easy strategy is to figure out how much you’re
losing to fees in your retirement accounts—and then to
do something about that.
A recent TD Ameritrade survey of 1,000 investors
found that only 27% knew how much they were paying
in their 401(k)s. Worse still, nearly 60% either didn’t
know if their plan levied fees or mistakenly believed
they weren’t being charged anything.
Given the recent turmoil in the market—with the
S&P 500 index of U.S. stocks slipping into an official
correction (a loss of at least 10%) in February—investment expenses may be the last thing on your mind.
But over the long run, the amount you pay in fees can
play a surprisingly big role in determining the
eventual size of your nest egg.
HOW FEES DIMINISH YOUR CHANCES OF SUCCESS
Investment fees come straight out of your account,
efectively reducing your net returns. But when you’re
investing over the course of many years—as is the
case with retirement savings—the impact goes well
beyond the amount you pay for the fees themselves.
To illustrate how and why, consider two investors,
each with a 401(k) balance of $100,000 earning 6% a
year before fees. But let’s assume one loses 1% of
assets a year to fees, while the other pays just 0.25%.
At first glance, that diference may not seem like
much. In the first year, the higher-cost account pays
1%, or $1,000, which reduces net returns to 5%, leaving
HOW
AMERICANS
INVEST
IN 401(K)S—
BY THE NUMBERS
$104,000
Average account
balance among
participants
71%
Average
account’s
exposure to
equities
$5.3
TRILLION
Total amount
held in
all 401(k)
accounts
8.6%
Average savings
rate among
participants
SOURCES: Vanguard,
Fidelity, ICI
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—KEVIN BARRY, PRESIDENT OF WORKPLACE INVESTING AT FIDELITY INVESTMENTS
M O N E Y. C O M
M AY 2 0 1 8
it with an end-of-year balance
of $105,000. Expenses for the
lower-cost account, meanwhile,
are $250 in year one, resulting in
a net return of 5.75% and a balance
of $105,750.
Clearly, the lower-cost account
has earned a higher return, but the
diference isn’t earth-shattering.
Over time, however, the gap
grows substantially. It’s not just
because of the drag of the fees
themselves, even though they
do get larger each year as the
accounts grow. There’s also the
“opportunity cost” associated with
higher fees—or the gains you miss
out on because money that went to
loftier expenses is no longer
invested in your account.
Going back to the example
above, $100,000 in the higher-cost
account would grow to about
$163,000 in 10 years, which is
$12,000 less than the balance
of the lower-fee account. Roughly
80% of that $12,000 diference
is due to the higher-cost account
paying $9,300 more in fees over
the course of 10 years. But 20%
of the gap is owing to gains lost,
since $9,300 went to expenses and
was not allowed to compound in
the account.
After 20 years, the higher-cost
account falls further behind—by
about $41,000, since it has shelled
out $24,000 more in fees. But the
portion of that gap attributable to
lost investment gains is nearly
$17,000, accounting for 40% of
the diference.
And over 30 years—which is the
course of a career investing in a
401(k)—the diference swells even
more, with the higher-cost account’s
balance now trailing its cheaper
counterpart’s by about $103,000.
FEES MATTER MORE OVER TIME
Notice the pattern here? By
avoiding high fees, more of your
money remains in your account,
allowing that extra dough to
compound in value and boost your
account balance over the years.
Fortunately, there’s a simple
way to avoid having your nest egg
sandbagged by high expenses—
invest in funds with modest annual
costs. That’s pretty easy to do
these days, given the proliferation
of low-cost index funds, ETFs, and
even reasonably priced actively
managed funds.
Granted, in a 401(k) or similar
workplace retirement plan, your
choice of low-cost options could be
limited. Still, you want to hold
down costs the best you can. You
can compare fees on the investment options in your 401(k)—and
get info on administrative and
other plan fees—by checking out
the annual disclosure the Department of Labor requires plan
sponsors to provide for plan
participants. Many companies also
provide fee information on their
401(k) website.
C O U R T E S Y O F J C O N N E L LY
WHAT ELSE COUNTS?
As important as holding the line
on expenses is, you don’t want to
overlook other crucial elements
of planning for retirement.
For example, you want to be
sure you’re creating a portfolio of
investments that’s truly diversified,
that jibes with your tolerance for
risk, and that’s tax-efficient.
And you can’t lose sight of the
fact that no matter how good—and
cost-conscious—an investor you
are, how much you save is still
likely to be the single biggest
determinant of your success.
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can be framed as a
really cool, positive
thing instead of trying
to hold the business
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You might assume
there’s not a lot you
can do if you’re in a
lousy 401(k), especially if you work for a
small business. Small
401(k) plans are often
handled by the owner,
and you may not feel
comfortable complaining to the boss.
But Josh Robbins,
whose firm designs,
administers, and provides record-keeping
for workplace retirement plans, says you
may have more sway
than you think:
ACCENTUATE THE
POSITIVE. Lobbying your
boss to improve your
401(k) need not be
antagonistic.
“Typically the
person with the
highest balance in your
plan is the owner,”
Robbins says. “I think it
PITCH IT AS A COSTCUTTING MOVE, NOT AN
EMPLOYEE BENEFIT.
Robbins notes that his
firm worked with a
company in which the
owner routinely tasked
employees to come up
with creative costcutting ideas.
If your employer
does the same, “this
might be another
interesting way to
frame it: You bring this
as your cost-cutting
idea for the company,”
says Robbins, adding
that lower 401(k) fees
could save the plan and
its investors millions.
AT THE VERY LEAST,
ASK FOR INDEX FUNDS.
If you run into diiculties persuading your
company to change
401(k) providers to
lower costs, you
should at least ask to
get access to a few
more low-cost index
funds as investment
choices in your plan.
The key term in that
sentence is “low-cost.”
Robbins warns that
M AY 2 0 1 8
even if index funds
are added to a suite of
investment options,
some plans mark up
management fees on
those products. So
stress that you want
low-cost index funds.
BE WILLING TO USE
OTHER TOOLS. A 401(k)
is a great savings tool,
but only if the fees are
reasonable. And it’s
not the sole retirement
account around.
How high is too high
when it comes to fees?
“If your all-in plan fees
are north of 2%, you’re
in what I would call the
realm of egregious,”
Robbins says.
Now, if you have a
really generous match
on that high-fee plan,
it’s worth taking advantage of the match
and then taking your
remaining contributions and using a Roth
IRA instead.
But “if there’s not
a match, it’s a nobrainer,” he says.
You’re better off going
to a low-cost IRA
provider and investing
in really low-cost
index funds than maxing out on a high-cost
401(k) with expensive
investment options,
he says.
M O N E Y. C O M
Picture those perfect days at the beach. But without your youth. Or your hair.
LIVE LIKE A 20 YEAR OLD.
INVEST LIKE A 50 YEAR OLD.
There was a time to live your youth. Now
may be the time to invest for your retirement.
The Main Advantages of
Municipal Bonds
Investors are attracted to municipal
bonds for three reasons; safety of
principal, regular predictable income
and the tax-free benefits. Together,
these three elements can make a
compelling case for including tax-free
municipal bonds in your portfolio.
Potential Safety of Principal
When investing in municipal bonds,
investors are paid back the full face
value of their investment at maturity
or earlier if called, unless the bond
defaults. This is important because
many investors, particularly those
nearing retirement or in retirement,
are concerned about protecting their
principal. In May of 2016, Moody’s
published research that showed that
rated investment grade municipal bonds
had an average cumulative 10-year
default rate of just 0.09% between 1970
and 2015.* That means while there is
some risk of principal loss, investing in
rated investment-grade municipal bonds
can be an important part of your portfolio.
and, depending on where you live,
may also be exempt from state and
local taxes. Tax-free can be a big
attraction for many investors.
Potential Regular Predictable Income
Municipal bonds typically pay interest
every six months unless they get
called or default. That means that you
can count on a regular, predictable
income stream. Because most bonds
have call options, which means you
get your principal back before the
maturity date, subsequent municipal
bonds you purchase can earn more
or less interest than the called bond.
According to Moody’s 2016 research,*
default rates are historically low for
the rated investment-grade bonds
favored by Hennion & Walsh.
About Hennion & Walsh
Since 1990 Hennion & Walsh has
specialized in investment-grade
tax-free municipal bonds.The company
supervises over $3 billion in assets
in over 16,000 accounts, providing
individual investors with institutional
quality service and personal attention.
Our FREE Gift To You
We’re sure you’ll want to know more
about the benefits of tax-free Municipal
Bonds. So our specialists have written
a helpful Bond Guide for investors.
It’s free and comes with no obligation
whatsoever.
Potential Tax-Free Income
Income from municipal bonds is
not subject to federal income tax
FREE Bond Guide
Without cost or obligation
Call (800) 316-1837
© 2018 Hennion & Walsh, Inc. Securities offered through Hennion & Walsh Inc. Member of FINRA, SIPC. Investing in bonds involves
risk including possible loss of principal. Income may be subject to state, local or federal alternative minimum tax. When interest
rates rise, bond prices fall, and when interest rates fall, bond prices rise. *Source: Moody’s Investor Service, May 31, 2016
“US Municipal Bond Defaults and Recoveries, 1970–2015. Past performance is not a guarantee of future results.
SOCIAL SECURITY
6IXMVI
fancy financial products to stretch your
retirement savings. In fact, most
Americans have access to the best
retirement income generator
around: Social Security, according
to a study by researchers at the
Stanford Center on Longevity.
In collaboration with the
Society of Actuaries, these
researchers recently analyzed
292 retirement income strategies,
looking for optimal ways middleincome workers—Americans with
$100,000 to $1 million in savings
who don’t have significant help
from financial advisers—can fund
living expenses in retirement.
Their conclusion: Social
Security, if tapped strategically
in concert with other sources of
income—such as your 401(k)s,
individual retirement accounts,
and home equity—will meet most
of your planning goals.
This may come as a surprise,
since a recent Gallup poll showed
that nearly two-thirds of Americans assume Social Security will
be either “a minor source” of their
retirement income or “not a
source at all.”
Yet the researchers point out
that “for most middle-income
retirees, Social Security is the
foundation of retirement income,
providing anywhere from half to
more than three-fourths of total
retirement income.”
P H OTO G R A P H BY ST E V E M A S O N — G E T T Y I M AG E S
YOU DON’T NEED
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The one resource Americans have little faith
in—Social Security—could be the key to
securing lifetime income, research shows.
BY E L I Z A B E T H O’ B R I E N
MAXIMIZE YOUR SAFETY NET
The study’s authors created a
retirement income strategy around
Social Security that they call
“Spend Safely in Retirement.” Their
approach tries to wring out the
most from your existing savings,
while maximizing Social Security’s
M AY 2 0 1 8
M O N E Y. C O M
6IXMVI
SOCIAL SECURITY
guaranteed income, writes Steve
Vernon, research scholar at the
Stanford Center on Longevity and
lead author of the study.
This strategy also protects
against inflation and the risk of
outliving savings and is designed
to minimize taxes and complexity.
STEP 1: DELAY CLAIMING BENEFITS
In order to maximize how much
you collect, you should delay
tapping Social Security until you
turn 70, the report concludes.
Financial advisers have long
urged clients to wait as long as
possible to begin receiving Social
Security benefits, as claiming
earlier than your full retirement
age reduces the potential size of
your monthly check by about 30%.
Another way to think about it:
Every year you hold of claiming
benefits from age 62 to 70 efectively guarantees you an annual
return of 6.5% to 8.3% on the
amount you could generate,
according to Bruce Wolfe, executive director of the BlackRock
Retirement Institute.
Yet only 4% of those who
started taking Social Security in
2016 waited until that age,
according to the Social Security
Administration.
Patience Pays
STEP 2: BRIDGE THE INCOME GAP
UNTIL YOU TURN 70
Waiting to claim Social Security can boost
your payouts significantly. Here’s how it
would afect a worker eligible to get $2,000
a month at a full retirement age of 67.
The study suggests several
strategies to generate sufficient
income early in retirement to
allow you to delay claiming Social
Security for a few more years.
Among the suggestions:
Continue working longer if
possible, at least enough to cover
your basic living expenses such as
housing, taxes, utilities, transportation, food, and insurance.
Meanwhile, see if you can slash
your discretionary spending in the
first few years of retirement to
give you added breathing room.
Discretionary expenses include
things like travel, entertainment,
dining out, memberships, and
charitable donations.
Consider using a reversemortgage line of credit as a pool
of funds to help cover living
expenses, especially if working
later in life isn’t possible owing to
health or economic circumstances.
In a traditional reverse
GETTING HELP
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M O N E Y. C O M
M AY 2 0 1 8
MONTHLY PAYOUTS
62 years old
$1,400
63
$1,500
64
$1,600
65
$1,733
66
$1,866
$2,000
$2,160
$2,320
$2,480
CLAIMING AGE
67
68
69
70
NOTE: Assumes a single worker born after 1960 with an average
annual salary of $60,000. SOURCE: AARP Social Security calculator
It’s one of the most important
decisions you’ll ever make.
But it’s not always easy to find
reliable advice on how and
when to claim Social Security.
It doesn’t help that government workers tasked with
advising the public don’t
always tell beneficiaries the
moves that would yield them
the highest benefit, watchdog
reports and experts say. “They
are consistently inconsistent,”
says financial planner Mary
Beth Franklin, a contributing
editor at InvestmentNews.
More than three-quarters
of widows and widowers, for
instance, were eligible to
receive higher benefits than
they did but were never
informed, according to a
mortgage, homeowners 62 or older
can tap the equity they’ve built up
in their house and receive monthly
payments until they either pass
away or move. In a reversemortgage line of credit, money is
made available to you, but you
don’t have to start receiving it
until you need the cash. And if you
don’t tap it immediately, that line
of credit can grow with interest.
Consider building a “retirement transition bucket.” You can
fund this account with a portion
of your retirement savings equal
to the total amount of Social
Security you’d forgo by waiting
until age 70 to claim.
Here’s how that would work:
Say you retire at 65 and would
have received the average monthly
benefit of $1,369 (or about $16,000
a year) if you claimed at that age.
That means you should move
roughly $95,000 from savings into
the transition bucket to cover the
amount you would have received
in benefits from age 65 to 70,
indexed for inflation.
This pot should be invested in
an easily accessible fund with
minimum volatility, such as a
report by the Social Security
Administration’s Oice of
the Inspector General.
Social Security Administration oicials are “currently developing our action
plan that responds to the
recommendations” outlined
in the inspector general’s
report, according to a
spokeswoman.
money-market fund or a shortterm bond fund.
STEP 3: CREATE A “PAYCHECK”
AND “BONUS” SYSTEM
Once you reach age 70½, the
Internal Revenue Service requires
you to withdraw a minimum
amount each year from your
tax-advantaged 401(k) or IRAs and
pay ordinary income taxes on it.
The government regards these
required minimum distributions
(RMDs) as a way to get its hands
on money that’s been tax-sheltered
for decades. But you should think
of RMDs as your annual “retirement bonus,” the report says.
By contrast, think of your
Social Security as your “retirement paycheck,” a fixed amount
adjusted annually for inflation that
covers basic living expenses.
Just like the bonuses you get at
work, the amount generated from
your RMDs will fluctuate—in this
case, with your age and the market
performance of your retirement
accounts in the prior year.
Keep a hefty portion of the
money you withdraw via RMDs in
stocks, the report recommends. If
you can stomach the volatility, you
In the meantime, where’s
a pre-retiree to turn for
guidance? While free online
calculators, such as AARP’s,
are helpful, it often pays to
seek out a professional. You
can find one at Garrett Planning Network, a national
network of independent
planners who charge by the
hour or project. Most Gar-
can go as high as 100% equities—
remember, you’re getting a large
chunk of your income from Social
Security, which is guaranteed and
bond-like. Yet if that allocation
would keep you up at night, stick
to 50% or 60% in stocks, the
authors advise.
STEP 4: FINE-TUNE YOUR STRATEGY
In addition to your retirement
account, the report recommends
you maintain an emergency fund
that wouldn’t be tapped for
regular income. Also, if you want
to spend more money in your early
years of retirement, say, to travel,
then set those funds aside. For
example, if you budget an extra
$5,000 for fun for the first five
years of retirement, put $25,000 in
an account that isn’t used to
generate retirement income.
This approach won’t make up
for inadequate savings, Vernon
cautions. And it also won’t
protect against catastrophic
long-term-care expenses, which
can quickly drain savings. But
“Spend Safely in Retirement” has
many advantages, including a
simple design most retirees can
execute on their own.
rett advisers provide retirement planning advice, including Social Security help,
but it’s always a good idea
to ask prospective planners
about their expertise.
There are also online
services. One of Franklin’s
favorites is SocialSecurityAdvisors.com, which
charges from $24.95 to
$124.95 for customized
claiming help.
Workers with 401(k)s can
also talk to their plan administrators. Fidelity offers free
Social Security claiming
advice from trained professionals to its plan participants at 800-835-5097,
says Tom McGirr, senior vice
president. —E.O.
M AY 2 0 1 8
M O N E Y. C O M
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M O N E Y. C O M
M AY 2 0 1 8
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had no idea she’d become a millennial icon. • The 72-yearold coauthor of the 1992 bestseller Your Money or Your Life
was recuperating from a hip replacement early last year
when a young man she’d met at a sustainability event
months prior told her she was popular on a Reddit forum
about financial independence. • At the time, she was confined to the pullout couch of her Whidbey Island, Wash.,
living room, with its view of the Cascade Mountains and
Puget Sound. So she had plenty of time to explore the
online community where, to her surprise, she discovered
she was something of a celebrity.
M O N E Y. C O M
M AY 2 0 1 8
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“It was stunning,” Robin says.
“I’m an elder in a community I didn’t
know existed.”
Robin’s fans belong to an
impassioned, mostly millennial
movement known online as the
FIRE community, or simply FIRE.
It’s an acronym that stands for
“financial independence, retire
early.” Adherents track down to the
penny where their money goes,
mindful of how much each purchase
will really cost, with the idea that
dollar amounts should be equated to
“hours of life energy,” in Robin’s
words. So if you make $300 a day
and want to buy a $100 pair of
shoes, you ask yourself: Are those
shoes really worth nearly a third
of a day of your precious time
on earth?
As the first part of the acronym
suggests, the goal of the movement
is to gain financial independence,
meaning you’re no longer relying on
paid employment to keep afloat.
It’s no coincidence that the ranks
of FIRE followers are spreading
like, well, wildfire right now: The
stock market has been very good
to investors in recent years,
especially to those who understand
the magic of compound interest.
Unemployment is low, and
opportunities to earn extra money
in the sharing economy are
plentiful. Add the do-it-yourself
spirit of a generation that can learn
anything on YouTube, and you’ve
got ripe conditions for a movement.
What’s more, we all know that a
traditional retirement is a thing of
the past. No one works for 40 years
at the same company anymore and
retires to a front porch with a gold
watch and a pension to show for it.
So instead of tweaking the
traditional model around the edges,
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these young people are saying, let’s just blow up the
whole concept of career, and retirement, and start
from scratch.
The financial independence subreddit has more
than 350,000 subscribers around the world. A
directory on the blog Rockstar Finance counts
nearly 1,600 personal finance blogs, many dedicated
to early retirement.
Grant Sabatier, 32, was living with his parents in
2010 and eking out a meager postcollege existence
when he came across Your Money or Your Life. “It
completely changed my life and trajectory,” he says.
“It is still my favorite book of all time.” Sabatier,
who says he amassed a fortune of more than
$1 million in five years primarily through lucrative
web-design side gigs, founded Millennial Money, an
online community dedicated to personal finance
education and entrepreneurship.
To say Robin is an unlikely financial guru is an
understatement. She didn’t spend any time on Wall
Street, and she seems more inclined to pass along
her favorite kombucha recipe than the name of a
favorite mutual fund. She speaks not in the
empathetic bursts of Suze Orman but in the melodic
voice she uses to sing soprano in a local choir. Her
look these days is Golden Girls chic—and while she
would seem like a blast to live with, she lives alone
above two tenants, whose rent more than covers her
housing expenses.
Having paved the original FIRE path decades
ago, Robin hasn’t worked for a traditional paycheck
in 50 years. After stints as an actress and in film
production in New York City, she parlayed an
inheritance at age 23 into a modest income that
sustained a groovy 1970s lifestyle in which she lived
in an “intentional community,” which is kind of like a
commune, but less marginalized and more centered
around mutual values—“the sharing economy before
it was the sharing economy,” she says.
There, Robin taught herself practical skills, from
auto repair and hunting to “making booze from
dandelions,” a DIY strategy to become self-reliant by
acquiring know-how that would enable her to tread
lightly and travel cheaply through life.
It was only when people began asking how she
lived on so little money that Robin realized she had a
story to tell. She and her friend Joe Dominguez, with
whom she had lived in the intentional community,
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teamed up to give financial
education workshops around the
country. They spread their money
values, including planet-friendly
frugality, the old-fashioned way
in those pre-Internet days.
Dominguez, who retired from a brief
career on Wall Street at age 31, gave
the lectures, and Robin produced
them. The two used their
experiences to cowrite the first
version of Your Money or Your Life
in the early 1990s, a process she
says took just nine months. The
book first hit shelves in 1992, when
she was 47.
The revised second edition of
Your Money or Your Life is due out
this spring. Robin wanted to write
something for today’s millennials,
whose prospects she worried were
crimped by student debt. She had
already begun working on the new
draft when she discovered that the
original still lived on Reddit; had she
known that, she says, she might not
even have embarked on the reboot.
“It was providential,” she says.
Your Money or Your Life takes
readers through a nine-step
program intended to transform
your relationship with money. It’s
not about becoming rich; it’s about
figuring out how much is enough.
Once you buy less stuf, you won’t
need nearly as much money to
sustain your lifestyle as you
previously did. Wisely invest
the diference and wait until the
interest thrown of by your portfolio
exceeds your expenses. That’s the
“crossover point,” Robin writes, and
once you reach it, you can peace out
of the paid workforce decades
ahead of schedule.
The FIRE movement looks at
this text as a bible of sorts, one that
legitimizes its followers’ path to
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financial success and ofers freedom from being a
corporate drone, and ultimately a more satisfying life—
a life typically sought after by the 65-and-older
crowd. It sounds great. Who wouldn’t want to be in
retirement bliss by 40, learning how to make his or
her own version of dandelion wine?
But is it realistic?
-
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T’S A VERY DIFFERENT WORLD today than it was in
1992, when Robin’s book came out. Back then,
government bonds—long a favorite source
of retiree income—threw of a respectable
yield of around 8%. But interest rates haven’t
been that plump for a long time, and the 2018
version of the book acknowledges this new reality.
Instead, Robin writes about a favorite investment of
the FIRE folks: low-cost index mutual funds or
exchange-traded funds (ETFs). She also suggests
buying real estate, as she has done—in particular,
you should consider small duplexes, triplexes, and
quads, where you can occupy one unit yourself and
have your mortgage covered by your tenants.
This approach isn’t far-fetched, but it does come
with certain risks, according to financial advisers. In
order to retire at any age, a general rule of thumb
holds that you need to save up at least 25 times your
annual expenses. Say you need $50,000 to live on
each year—you’ll need to accumulate around
$1.25 million in order to withdraw 4% from it each
year in perpetuity, adjusted upward for inflation.
Robin’s calculations assume a 4% withdrawal rate,
with a caveat: “Remember, this is a general example
and not specific financial instructions.”
If the stock market posts strong gains, you can wind
up with more money than you started with, even as
you withdraw your inflation-adjusted living expenses
of 4% each year. But if the stock market tanks, and
you’re withdrawing on a declining balance, then you
face the risk of running out of money.
The 4% rule is a solid method, but it came from
research that assumed a traditional retirement of
no longer than 30 years, says John Salter, a
professor of financial planning at Texas Tech
University and a partner in the planning firm
Evensky & Katz/Foldes Financial Wealth
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Management. All bets are of if your retirement lasts
60 years. You’ll have to watch your withdrawals
closely and dial back your spending, potentially
significantly, if the market declines, he says.
Early retirees also have a longer runway to
experience inflation. Prices for regular goods
and services roughly double every 25 years, so a
30-year-old early retiree will see general prices rise
fourfold over his or her lifetime, Salter says.
(Medical costs rise at an even sharper rate.) In
other words, you had better hope that stocks
continue posting inflation-beating gains.
To be sure, there are many subcultures within the
FIRE movement that all have their own spending
goals and takes on Robin’s prescriptions. Some are
more drastic than others. There’s regular FIRE, for
all those people who want to exit the rat race early
but might like to occasionally enjoy a good
restaurant on the way, or hire a plumber to fix their
broken toilet instead of breaking out the wrench
themselves. There’s also barista FIRE, for those who
might need or want to supplement their savings with
a part-time job at a place like Starbucks for the
I N S I D E T H E P L AY B O O K
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—VICKI ROBIN
health insurance—a key necessity
for early retirees.
On the extreme ends, there are
the frugal FIRE adherents, who
base a lot of their ideology on the
writings of Pete Adeney, a.k.a. Mr.
Money Mustache, a FIRE hero who
in 2011 started blogging about his
retirement at age 30 from his short
career as a software engineer and
the frugality and DIY spirit that
contributed to his success. Adeney,
now 43, is so prominent, he’s
inspired a loose network of camps
in his name. Devotees gather in
spots like Gainesville, Fla., and
Seattle for Camp Mustache, where
talk of churning credit cards for
points mixes with traditional camp
activities like archery and bonfires.
Adeney himself attends the annual
Seattle retreat. The $425 tickets for
this year’s event, to be held over
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Your first step to financial independence means tallying your
assets vs. your liabilities to get a
clear picture of your net worth.
Robin advocates taking this one
step further and figuring out
how much money you’ve earned
in your entire life, starting from
your very first paycheck. This
“clears the fog shrouding your
past relationship with money,”
she writes, and dispels any
myths that you might tell
yourself about your earnings.
In order to determine how
much you can save, you have
to first know how much you
spend. Modern technology can
help. Personal Capital, for
example, is free web-based
financial software that can link
to your credit card and bank
account and give you a
detailed breakdown of your
spending each month.
V I C K I R O B I N A N D T H E F I R E M OV E M E N T
Memorial Day weekend, sold out last November
in less than a minute, as if they were for a Taylor
Swift concert.
On the other end of the spending spectrum, you
have fat FIRE, for people who want to spend a
healthy amount in retirement, maybe because they
want to keep living in an expensive city. They have
higher savings goals, starting around $2 million,
according to a young fat-FIRE devotee in New
York City.
Despite their diferent strains, FIRE walkers have
more in common than not. “You’re kind of an oddball
in our society if you make a lot of money and choose
not to spend it,” says Darrow Kirkpatrick, a former
software engineer who retired early at the relatively
ripe age of 50.
FIRE folks love meeting up in real life so they can
geek out on stuf they might not feel comfortable
sharing with friends or family. You know you’ve
found your tribe when you can call Roth IRA
conversion laddering “beautiful” and have a sea of
faces nod earnestly in agreement, as happened at a
recent FIRE meet-up in New York City.
3
F COURSE, REACHING financial
independence
is only part of the equation. Once you get
there, you have to figure out what to do
with the rest of your life—how you’ll
spend a retirement that could last 50 or
60 years. That’s a whole lot of downtime, and most
people planning on retiring early aren’t thinking
about the looming void. “The vast majority are
focused on numbers and calculations,” says Grant
Sabatier.
He’s now a business partner with Robin in the new
website yourmoneyoryourlife.com. He believes many
FIRE followers neglect the “spiritual transformation”
that can happen when you change your relationship
with money. The community remains overwhelmingly
male and is heavy on those who naturally organize
their thoughts in spreadsheets, like tech types and
engineers. Some look down from their huge pile of
savings on the masses who, the perception goes,
mindlessly go through the motions in their day jobs
so they can mindlessly spend on weekends.
Missing is any acknowledgment of the privilege
embedded in the ability to save 50% or 75% of your
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When you work, you trade your
“life energy” for money, Robin
says. Take this framework and
use it to evaluate prospective
purchases. Let’s say you calculate your real hourly wage at
$20. You’ve been eyeing a new
pair of designer jeans that cost
$200. Ask yourself whether
that purchase is really worth
10 hours of your precious
life energy.
Done right, the FIRE path is not
about deprivation. It’s about
finding cheaper ways to satisfy
your needs. Say you require a
new suit for a business trip. How
about visiting a local consignment store before going to the
mall and picking out something
new? Or maybe you’ve always
wanted to go snorkeling in
Bora-Bora. Maximize credit card
rewards points to score cheap—
or even free—plane tickets.
When it comes to building
wealth, the simpler the investment, the better. Stick to lowcost index funds from Vanguard
or Fidelity, which have expense
ratios of well under 0.1%. Many
FIRE devotees add incomegenerating real estate to their
portfolios, either by buying an
actual property or by purchasing the passive equivalent:
a real estate investment trust,
or a REIT fund.
You’ll know you can call it quits
when the total monthly income
from your investments (measured by investment gains and
dividends) exceeds your
monthly expenses. Robin
recommends making a chart
for your wall that maps your
work income, expenses, and
investment income, so you can
visualize the moment when
you reach what she calls the
“crossover point.”
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JUST FIVE YEARS AGO, Bianca DiValerio was struggling through
a divorce and the last of three short sales that nearly wiped
out her savings during the financial crisis. Today the Chicago
flight attendant projects she’ll reach financial independence
within a year—that is, she calculates she will have saved
enough so she won’t need to work for the rest of her life.
“I am in disbelief that I am where I am,” says DiValerio, 39.
“But the numbers don’t lie, and I worked my butt off to get here.”
DiValerio is a FIRE devotee, but she doesn’t plan to actually
retire when she reaches financial independence. She loves her job
too much for that. But she does hope to be choosier about her
shifts and take extended breaks to travel and volunteer.
PHOTOGRAPH BY SAVERIO TRUGLIA
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DiValerio saves three-quarters
of her $75,000 flight attendant
salary, plus she makes additional income from side hustles including selling furniture
she refurbishes on Craigslist
and eBay. She says she lives on
roughly $20,000 a year. And,
no, as she writes on her blog,
it’s not because she has a
sugar daddy footing her bills.
So how does she do it?
For starters, she owns her
small studio apartment outright, and it’s in a not-so-fancy
part of town. She has no children. And she has trimmed the
fat out of her budget … literally.
DiValerio eats mostly vegetarian, with some fish. Once she
discovered how much of her
paycheck went to Whole
Foods, she stopped going
there and now shops for
groceries at Aldi and Costco
instead. Bottled wine went out
too, in favor of the cheaper
boxed version.
It helps that her hobbies are
free or low-cost. “Hiking is one
of my greatest joys, and that
costs nothing,” she says.
Thanks to her job, she can fly
free to many destinations,
slashing her vacation costs.
Low-cost trips as a volunteer
help her save money also.
V I C K I R O B I N A N D T H E F I R E M OV E M E N T
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Many folks go overboard when
they start down the FIRE path,
DiValerio says, slashing their
spending to the bone. “You
could wind up being miserable
for months or years,” she says.
And if you get hit by the proverbial bus, or get a terminal
diagnosis, then your sacrifices
will have been for nothing.
So DiValerio says it’s good
to recalibrate and find a comfortable groove, as she did last
year. In 2016 she boosted her
earnings by setting a monthly
goal of 100 flight hours, compared with her prior average of
around 60. (Flight attendants
are paid only for hours actually
in the air; they’re not compensated for layovers or delays.)
This boosted her pay by 40%,
and she banked all of it.
While that decision helped
turbocharge her savings, it also
took a toll. She came to dread
the start of the month, imagining all the hotel rooms that
she’d be occupying, away from
her dog and her boyfriend at
the time. Flying so much is also
hard on the body, with erratic
sleep and eating schedules.
DiValerio eased her flying
goals last year and loosened
her budget a bit. After all, she
says, “you don’t want to frugal
yourself into a corner.” That is,
you don’t want to reach financial independence through
draconian means, because that
could lock you into a low
spending rate that makes you
miserable. Her goal is to amass
a portfolio that throws off
$2,000 a month for life, a comfortable amount for her that
she expects to achieve next
year if the market doesn’t tank.
“The point of this is to
thrive in your life,” she says,
“and not feel like you’re
missing out.”
income to begin with. The FIRE
movement, to a large extent,
remains a culture of “very entitled
white men who are very proud of
themselves when it wasn’t much of a
stretch for them anyway,” says
Emma Pattee, 27, a writer based in
Portland, Ore., who retired last year
at 26 after making successful real
estate investments. Many FIRE
followers, she says, are already
high-earners who “disdain all the
Midwest minions who can’t get out
in front of their truck loan.”
Another unforeseen hazard: Some
FIRE bros flame out months after
pulling the plug on their jobs. When
you’re clocking 14- or 18-hour days at
a startup, it’s easy to fetishize a life of
home brewing and farming in bucolic
Vermont or rural Virginia. But
actually home brewing and farming
can be lonely and backbreaking
work, says Pattee, who knows people
who have had to publicly walk back
their much-celebrated retirements
when the reality fell short of their
fantasy. “That’s the problem with just
trying to win,” she says.
So how do you fill all those
decades when you no longer have to
work for pay? It’s not an idle question:
There’s a body of research linking
early retirement to premature death.
“We think it’s not about taking Social
Security per se, but it’s about the act
of retiring,” says Maria Fitzpatrick,
an associate professor at Cornell
University, who found that men who
retire at age 62 have an increased
early-mortality risk of about 20%.
Although her research isn’t on the
exact FIRE demographic—after all, it
focuses on those who retired at 62 as
opposed to 32 or 42—some FIRE
followers are well aware of it. Adeney
says retiring very early makes it
easier to live a longer life than people
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who retire in their early sixties.
In many ways, FIRE followers are
forging into uncharted territory. We
don’t have any data on whether
extreme early retirees have a
tendency to get sicker or even die
earlier in greater numbers than their
traditionally employed peers, whether
they burn out from all the leisure time
and return to paid work, or whether
they instead live decades in fulfilled
contentment, nurturing their passions
and giving back to their communities.
Tanja Hester, a FIRE follower who
leans toward the frugal strain of the
movement and retired late last year
at age 38 from her career as a
consultant for political and social
causes, realizes she’s in a privileged
position. “I feel like one of the
luckiest people to ever live, and if I
can’t use some of it to help others, it
will feel like a waste,” she says. She
and her husband, who live in the
North Lake Tahoe area of California,
volunteer at the local humane society
and plan to start teaching financial
basics in their community.
For her part, Robin gives back by
investing in local businesses. Aside
from using royalties to pay for cancer
treatments in the mid-2000s, she
says she’s given away a significant
portion of the money she’s made over
the years from her bestseller. And
she still thinks our society places too
much stock in paid work.
She knows the FIRE walkers have
an uphill battle, both in their personal
finance goals and in the cultural
norms they’re bucking. Still, she
wishes the best for those who would
follow in her footsteps. “If they can
endure the identity crisis, then they’re
the folks who are woke, and they can
take action,” she says. “There’s
another generation, hallelujah, that’s
adopting these values.”
M O N E Y. C O M
M AY 2 0 1 8
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SOME KIDS WANT TO BE A FIREFIGHTER, an
astronaut, or a ballerina
when they grow up. Lily He wanted to be a millionaire.
Lily and her parents immigrated to the U.S. when she was 9
and lived in poverty on the outskirts of San Francisco. She had
just two pairs of pants in elementary school and couldn’t aford
glasses, even though she had trouble seeing the blackboard.
Now 26, Lily is working to ensure that she—and any future children she might have—never experience poverty again. She and
her husband, Jared, save $150,000 a year and project they’ll
become financially independent by 2029.
“I’ve been pretty much planning this since I was 12,” she says.
She and Jared live in Seattle, where Jared is a software
engineer and Lily works as a full-time Airbnb host, renting out an
investment property and two bedrooms in her and her husband’s
primary home on the outskirts of town.
“We’re hard-core,” she says.
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When Lily met Jared soon
after graduating from college,
she learned he had plunked
his earnings into a savings
account that brought in about
0.01% interest. So she began
to teach herself investing, diving into the Bogleheads forum,
an online discussion group
named after Vanguard founder
Jack Bogle. “It was a steep
learning curve,” she says.
But she plowed on, persuading her husband to begin
contributing more to his
workplace 401(k) and investing future savings in low-cost
index funds.
Lily established a retirement account for herself
so she could put the Airbnb
rent she collected into taxdeferred savings.
Lily was never an acquisitive
child, maybe because acquiring
wasn’t even an option. Her
mother and father made less
than $6 an hour chopping vegetables and meat at a Chinese
grocery store, and there wasn’t
any money left over for an allowance. Plus, her mom objected in
principle to the American practice of handing out money for
every A on a report card.
When she went to the mall
with friends, Lily wasn’t
tempted by the trinkets they
bought. “I was always perplexed
by why my friends wanted so
many things, she says. A $7 lip
gloss wasn’t worth more than an
hour of her parents’ time, she
would think.
Today she enjoys free entertainment with her husband, like
headbanging to Scandinavian
heavy metal. They used to go to
concerts, but now they simply
dance around the living room.
“Don’t attach purchases to
happiness,” Lily says. “That’s
the secret to getting of the
treadmill.”
PHOTOGRAPH BY IAN ALLEN
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CHANCES ARE YOUR HOME is the most expensive thing you’ve
ever bought. Yet if you’re like most of us, what you spent to acquire
it is only the beginning.
Anyone who’s seen hit shows like Fixer Upper and Property
Brothers knows that home renovations are something of an
American obsession. As a group, we’re expected to spend
$340 billion fixing up our homes this year, according to Harvard
University researchers. That’s about four times as much as we
spend on summer vacations and nearly as much as we sock away
annually in our 401(k)s.
Despite what you see on TV, home renovations aren’t necessarily
a great investment. In fact, the average remodeling job recoups less
than two-thirds of its cost at sale, according to trade publication
Remodeling magazine.
Not that you should be deterred. They’re not called dream
homes because they’re practical.
What you do need to do is plan carefully and make smart
choices. With that in mind, we talked to experts, including
contractors, real estate agents, and interior designers, about the
smartest ways to approach the home upgrade you’ve always longed
for, from the practical, like installing smart lights ($100 to $600), to
the truly extravagant, like your own indoor pool ($24,000 and up).
M O N E Y. C O M
M AY 2 0 1 8
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M O N E Y. C O M
STUDIES SHOW that living in an
organized home lowers stress
hormones, and that’s good for
your health. Fancy solutions
like installing custom-built
closet shelves cost $1,000 to
$3,000. But there’s plenty you
can do without spending
anywhere near that much.
Start with the most critical
areas—your kitchen, bathrooms, and closets, recommends Layne Brookshire, an
Austin-based professional
M AY 2 0 1 8
organizer. “The contents of
them are constantly cycling,
leaving them very susceptible
to total chaos,” she says.
Label makers ($25,
officedepot.com), drawer
dividers ($3.49–$57, the
Container Store), and door
hooks ($10, Bed Bath &
Beyond) all help. But the key
elements, according to
Brookshire, are clear storage
boxes. “These are the only items
I bring to every client’s home
before I even start,” Brookshire
says. She recommends getting
a variety of sizes—such as
small ones that hold items
like spare keys and sunglasses
($1.69, the Container Store)
and oversize ones to slide
under beds ($22). The clear
plastic will make it much easier
to find what you’re looking for if
(or, let’s face it, when) you
forget where you stashed it.
“You can see everything at a
glance,” she says.
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HOLLYWOOD STARS HAVE BEEN INSTALLING home cinemas
for years, but falling prices and improving technology mean
you can do it too. The average price of a home projector was
$869 last year, according to PCMag.com data, down from
more than $3,700 in 2001. Meanwhile, oversize “home
theater” televisions still cost about $2,700 on average.
What’s more, plenty of the mid-price options, like the $545
Optoma HD142X and the $700 Epson PowerLite 1781W, got
top marks from online reviewers. Projectors might do more
these days, but you’ll still need to make some compromises.
Though most home projector models come with HDMI, USB,
and computer connection ports, connecting to cable is
difficult, so they work best for cord cutters. Additionally,
built-in sound is generally not as good on projectors as it is
on TVs. If that’s a deal breaker, consider connecting a
speaker system.
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MOVE YOUR HOME into the
MORE THAN TWO-THIRDS of
real estate agents recommend
repainting the inside of your
home before putting it on the
market, according to a 2017
survey by home-renovation
website Houzz. Other studies
have shown a fresh coat in the
right shade can add thousands
to your sale price. In recent
years, neutral tones like gray,
beige, and “greige,” a mix of the
two, have been popular,
according to the National
Association of Home Builders.
If you’re willing to do the job
yourself—and there’s no reason
you shouldn’t—repainting can
be one of the cheapest ways to
spruce up your living space for
prospective buyers or your own
enjoyment. A 10-by-12-foot
room with eight-foot ceilings
should require one gallon
($30–$60 at Home Depot) per
coat, according to paint brand
Glidden’s online calculator
(glidden.com/how-muchpaint-do-i-need). Factoring in
other necessities like brushes,
tarps, and painter’s tape, and
assuming two coats of paint,
you should expect to pay
$200 to $300 per room
to paint yourself, or $400 to
$800 to hire a professional,
according to Angie’s List.
future by replacing your old
incandescent light bulbs with
Wi-Fi- or Bluetooth-enabled
versions that save energy and
make your light switch
obsolete. Companies from GE
to Ikea manufacture these
so-called smart bulbs, which
often, but not always, require
connection to a central hub.
A starter kit of four light bulbs
plus hub device from Philips
Hue, one of the systems
favored by gadget site Tom’s
Guide, is $100. Packs of four
additional bulbs cost $50.
Considering that the average
home has close to 40 light
bulbs, you can outfit your
entire home with smart bulbs
for $550. Assuming you
haven’t already upgraded to
LED or CFL bulbs, you will also
cut the cost of lighting your
home by half or more.
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M O N E Y. C O M
A LITTLE LAWN CARE can go
a long way. Six applications of
fertilizer and weed control,
a project that should cost
roughly $330, returns $1,000
at sale, according to a recent
survey by the National
Association of Realtors. Willing
M AY 2 0 1 8
to spend a bit more? A stone
walkway lined with greenery
estimated to cost $4,750
returns an average of $5,000 at
sale, the survey found. Why?
“You can only have one first
impression,” says Bufalo
appraiser Jim Murrett. Just be
sure to keep it simple. While
maintaining a well-kept lawn is
usually smart, don’t expect
extras like elaborate designs,
paver stones, or fountains to
hold their value. “You don’t
want to be above the top,”
Murrett says.
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AS MANY AS NINE in 10 houses
in the U.S. are under-insulated,
according to the U.S. government’s Energy Star program.
What about yours? Chances are
good if it was built before 1980
or your winter heating bills
regularly top your neighbors’,
says Dan DiClerico, in-house
expert at renovation website
HomeAdvisor. To find out for
sure, check the attic for at least
11 inches of fiberglass insulation
or eight inches of cellulose
insulation.“If it’s dirty, that’s a
good sign that it’s at the end of
its service,” he says. Fixing the
problem can cut your heating
bills by about 10%, according to
the Environmental Protection
Agency—a huge potential win in
colder states like Connecticut
and Rhode Island, where heating
oil costs can run $60 to $80 a
month, according to personal
finance website WalletHub.
While shopping for something
you won’t even see isn’t as fun
as picking out the perfect color
for a brand-new kitchen, the
monthly savings can be
significant, considering the
modest cost of the project. The
average price to professionally
install fiberglass attic insulation
was $1,343, according to a 2017
estimate from building-industry
trade publication Remodeling
magazine.
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SPENDING SEVERAL thousand
dollars on a piece of furniture
may seem extravagant. But if
you shop wisely, what you buy
should last forever, says
Brooklyn-based interior
designer Keren Richter.“We find
stuf going back all the way to
the ’30s,” she adds. If you want
to buy one beautiful item, a
couch will do the most to
transform your living room.“It’s
usually the centerpiece,” Richter
says. On the other hand, accessories like art or lamps can be
less expensive and ofer more
flexibility if, for instance, you
later need to fit them into a new
space. While mall chains ofer
serviceable standbys, Richter
says construction quality usually
doesn’t match what you can find
in antique shops or from small,
independent designers if you
put in the time to research your
purchase. Don’t know where to
start? For new designs try Etsy
or furniture website workof.com.
If vintage is more your style,
head to 1stdibs, an online aggregator for antique shops. One tip:
A well-made couch or chair
should be able to be reupholstered again and again. Consider
purchasing a less expensive
piece and using the remaining
room in your budget to re-cover
it, says Richter. Expect to spend
anywhere from $500 to several
thousand dollars for a project
including extras like tufting and
throw cushions.
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ONCE THE PROVINCE of luxury spas, it has gotten
surprisingly inexpensive to put a sauna in your own
home. While traditional saunas rely on hot rocks to
make steam, a newer approach, which employs
infrared rays that mimic the sun to heat bathers, has
fast been gaining adherents in the past few years.
(Lady Gaga recently sang the praises of her in-home
infrared model on Instagram.) One benefit is that
infrared saunas heat your body more quickly, says
Mark Raisanen, general manager at Minnesota-based
sauna maker TyloHelo. But that’s not the biggest
advantage. While a traditional, custom-built sauna can
easily cost $25,000, Raisanen says many prebuilt
infrared models run from $2,000 to $6,000. TyloHelo’s
most popular infrared option, the 38½-by-48-by-77inch S820 model, costs $3,590.
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FROM JULIA CHILD’S utilitarian rows of hanging
copper pots (now on display at the Smithsonian)
to Ina Garten’s sunny white cabinets, no single
space says as much about us—and our
aspirations—as the kitchen.
Perhaps it’s no wonder that this room was the
No. 1 most renovated interior in 2016, according
to a survey by home-design website Houzz. And
along with the master bath, it’s also the room
most carefully scrutinized by potential
homebuyers, according to Trulia.
The problem, however, is that all those dream
features—from marble countertops to elaborate
wine coolers—are pricey, and it’s easy to let costs
spiral out of control. Houzz also found that just
under a third of homeowners spent $50,000 or
more redoing their kitchens in 2016. Nearly one
in 10 said they spent over $100,000.
Of course, there’s nothing wrong with splurging
if you can aford it. But don’t fool yourself into
thinking those extras will hold their value.
According to a survey by Remodeling magazine,
major kitchen renovations, costing $60,000 or
more, typically earned back only about 60% of
what was spent when a house was sold.
“Cost is not always equal to value,” says
Bufalo-based home appraiser Jim Murrett.
If, like most of us, you need to stick within
a budget or are hoping to recoup costs, making
smart decisions upfront, like focusing on smaller,
more functional upgrades, can make a big
diference, Murrett says. And the numbers back
that up. More modest kitchen jobs, in the $20,000
range, typically earned back about 80%.
Here’s what you need to know:
A M E R I C A’ S F A V O R I T E P R O J E C T
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Vibrant colors and flashy
materials are in, according to
design experts at Trulia and
elsewhere. The trick is to be on
trend without seeming trendy.
“You don’t want anyone to
come in and hate it,” Longmeadow, Mass., appraiser Nick
Gelfand says. If you plan to sell
anytime soon, stick with classic
features like subway tile,
stainless-steel fixtures, and
granite countertops.
Then, to add style, try a
splash of colorful paint or
accent wallpaper, both of which
are inexpensive and easy to
remove, instead of adding
costlier, more permanent
touches like soapstone or slate
countertops.
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At up to $1,200 per square
foot, custom cabinets are
an easy way to blow out
your remodeling budget
without adding much value
to your home.
“It’s important to account
for what buyers look at,”
Gelfand says. “Most can’t tell
high-end cabinets from
mid-range ones.”
Gelfand recommends opting
for “semi-custom” models
ofered by chains like Home
Depot and Lowe’s ($100 to
$650 per square foot) and
avoiding extras like glazing and
built-in organizers, such as
utensil drawers and spice racks.
Even better: Save hundreds if
not thousands more by working
with what’s already there.
Many old cabinets can
simply be sanded down and
refreshed with a new coat of
paint or varnish, Murrett says.
If that’s not an option,
refacing your existing cabinets
with new doors and frames can
transform the look of your
kitchen and typically costs
one-third to half of what you’d
spend on completely new ones.
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Aim to match but not outdo
what would-be buyers are
finding in neighboring homes.
In a newly revitalized suburb
with booming home prices, for
instance, buyers might expect
a luxurious kitchen attached to
even a comparatively small
house, according to Gelfand.
That’s much less likely the case
if prices are relatively sluggish
and you already live in one of
your area’s grander homes.
One rule of thumb: If the
value of your land represents
more than half the value of your
total property, it’s relatively
easy to boost the total value
with a significant home
improvement, like an upscale
kitchen, Gelfand says.
If your house already
represents more than half the
property’s total value, then
improving it any further is risky.
“The value of the home is
already maximized,” Gelfand
adds.
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NEARLY NINE IN 10 HOMEBUYERS want partially or fully combined kitchen and dining areas,
according to a study published earlier this year by the National Association of Home Builders.
The problem: Many homes, especially older ones, lack them. Depending on the style of house
you own, creating one could be surprisingly inexpensive. In ranch and split-level homes, interior
walls, such as the one separating the kitchen and dining room, typically don’t bear structural
loads or contain heating and plumbing apparatuses, says Warren Douglas Graves, owner of
Graves Design & Remodeling in Springfield, Va. Removing one of these so-called partition
walls along with repairing the surrounding drywall typically costs $2,500 to $3,000, he says,
although he recommends setting aside an additional $1,000 to $2,000 to patch the floors and
paint. If you own a cape or colonial, the job is likely to be more complicated and expensive.
Still, you can save by opting for an “exposed beam” renovation, with a structural frame
(which can be covered in drywall and trim) visually separating the two spaces, rather than
choosing a pricier “upset beam” project, which removes any trace of there being separate
rooms. For an exposed beam project, budget $6,000 to $7,000, plus painting and patching
costs, says Graves. For an upset beam, expect to spend at least $15,000.
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FORGET THE DRIVEWAY. You
can practice indoors all winter
like an NBA star. To be sure, a full
94-by-50-foot indoor court can
run upwards of $50,000, and
that’s assuming you have the
space. But those are the exceptions not the rule for private
homes, according to SnapSports, an athletic flooring
company based in Salt Lake
City, which installs about 1,000
play spaces a year. A 30-by-30foot practice area with synthetic
flooring, painted key and foul
lines, and a hoop costs as little
as $5,000, or about $5.50 per
square foot. Bumping up your
budget to $10,000 gets you a
30-by-50-foot half court with
wall pads and a logo. The
company says it has installed
courts of all sizes in basements,
barns, and unused guesthouses.
While 16-foot-high ceilings are
ideal, salesman Jimmy Wood
says SnapSports has worked
with ceilings as low as 10 feet.
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REPLACING OLD WINDOWS
with newer, energy-efficient ones
can save you anywhere from
$25 to $450 a year in heating
and cooling costs, according to
the government’s Energy Star
program. But that’s not even the
biggest reason to upgrade. New
windows can do a lot to freshen
your home’s appearance, while
also eliminating drafts that can
quickly turn of prospective
buyers when you decide to sell,
says Bufalo home appraiser
Jim Murrett. A mid-range
window replacement running
about $5,000 typically delivers
the best value, since the priciest
options tend to be more about
aesthetics than insulation,
according to Zillow Talk:
Rewriting the Rules of Real
Estate. A full window replacement isn’t always necessary.
Look for rotting frames or
condensation between
windowpanes as surefire signs
it’s time to replace your
windows, says Dan DiClerico of
HomeAdvisor. If the glass is
damaged but not the frame,
homeowners might be able to
save up to 25% by partially
replacing the windows with
window inserts that fit inside the
existing frame, he adds.
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M O N E Y. C O M
THE WAY TO GET the most out
of a bathroom upgrade? Spend
less. The typical mid-range
$19,000 remodel—one in which
you add a ceramic tile floor and
replace the tub, toilet, vanity
counter, and medicine cabinet
in an already existing
M AY 2 0 1 8
five-by-seven-foot bathroom—
will net you a 70% return at
sale, according to Remodeling
magazine.
But that return can fall
precipitously if you overspend.
Homeowners who embarked
on a more upscale $61,000
project—including moves
like blowing out the footprint
and installing heated
floors, a frameless glass
shower, and other luxuries—
recouped an average of
only $34,633 once the house
hit the market.
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G E T T Y I M AG ES ( 3 )
OUTDOOR KITCHENS have
gotten more and more
elaborate over the past
decade to incorporate luxury
items like smokers and pizza
ovens, according to trade
publication Kitchen & Bath
Design News. LeBron James
recently made news when
he bought a $23 million L.A.
mansion whose marble grilling
space included beer taps and
something described as a
“heated dining loggia.”
You can grill in style without
going crazy. Assuming you have
an adequate patio, a $10,000
budget should get you a straight
or L-shaped island with stone
countertops as well as a refrigerator and grill housed in a
custom-built cabinet, according
to Mark Allen, owner of Outdoor
Kitchens by Design in Orange
Park, Fla. The two best ways to
ensure you don’t overspend:
Avoid top-line grills like ones by
Viking and Alfresco, which cost
$3,000 to $4,000 and which he
considers overpriced. He recommends a $1,500 Lion-brand
model instead. Also, skip the
granite, which costs about
$4,000, in favor of travertine,
which runs about half the price.
“Granite is too formal,” he says.
“Travertine looks better outdoors—it’s a bit more rustic.”
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HARDWOOD FLOORS ARE PRICIER TO INSTALL than wall-to-wall carpet, but they look more
elegant and in the long run may actually save you money too. For instance, the all-in cost for
a mid-range red-oak floor in a 2,000-square-foot home runs from $16,000 to $23,100,
according to the price calculator on home-renovation site Homewyse.com. That’s almost two
times the price of carpeting the same-size space—which would cost between $8,800 and
$12,000. (Exact prices vary by zip code.) Still, carpets last only about 10 years, while
hardwood floors typically carry a warranty for at least 25. In other words, you’ll be on your
third carpet by the time you even need to think about replacing a hardwood floor. To
make sure your floor lasts, sweep and vacuum regularly, reapply a protective coating
every three to five years, and sand and refinish the floors “every few decades,” says
HomeAdvisor’s Dan DiClerico. “This is why we have hardwood floors that are 100 years
old in historic homes,” he says.
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ACCORDING TO the Pew
Research Center, 19% of the
U.S. population lived in
multigenerational family
households in 2014, up from
12% in 1980. As these
arrangements become more
common, so-called in-law
suites—additional living space
that gives independence to
family members like elderly
parents or adult children while
keeping them nearby—can look
attractive.
It’s often difficult for these
spaces—which cost anywhere
from $40,000 to $125,000—to
fully cover their cost in terms of
adding value to your home. But
the equation can change if you
weigh the outlay against other
options like an apartment in an
assisted-living facility ($45,000
a year on average, according to
Genworth Financial).
Before getting started, think
carefully about your loved ones’
future needs. Outfitting the
bathroom with grab bars can
help prevent falls; undercabinet lighting brightens dim
spaces; and building units at
ground level will help keep the
space accessible.
If you’re worried about
resale value, keep the space
flexible, says Indianapolis
architect Lee Constantine. For
instance, an in-law suite built
adjacent to your existing living
room can easily be converted
into a home office or an
enlarged common area.
M O N E Y. C O M
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THE COST TO install solar
panels has dropped by twothirds since 2010, according
to the Energy Department.
Expect to pay $15,000 to
$30,000, depending on the
size of your home and how
much power you need, reports home-improvement
website HomeAdvisor. You
should get a big chunk of
that back almost immediately, however, in the form of
a federal tax credit worth up
to 30% of your outlay.
Going forward you can
also count on estimated
electricity cost savings of
$500 to $1,500 a year, according to solar marketplace
EnergySage. Kick in additional state tax incentives,
and the project should eventually pay for itself. Plan to
get quotes for installation
costs and estimated electricity savings from at least
three companies certified by
the North American Board of
Certified Energy Practitioners, says Ben Delman,
communications director at
Solar United Neighbors, an
advocacy group.
Homes best equipped for
going solar are those without
structures like chimneys or
dormers that complicate
installation, Delman says. It
also helps to have a roof that
faces south, with lots of
direct sunlight, and that
won’t require work anytime
soon: Though most solar
installations are under
warranty for 25 years, they
can make roof repairs
a hassle.
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WITH A PRICE TAG well into
the six figures, installing a
traditional indoor pool is going
to remain a fantasy for the vast
majority of us. But there are
options. Swim spas—which
resemble oversize hot tubs and
can be installed without any
ground excavation—start at
$12,000 and range up to
$20,000 for models with a
motor to create a current you
can swim against. One caveat:
Spas are typically made from a
single, large piece of fiberglass,
meaning unless you’re planning
new construction or have a
barn or porch to enclose the
unit, fitting it into your home
can be a problem.
One alternative, built by
Endless Pools of Aston, Pa.,
comes in separate pieces that
can be assembled inside an
existing room. The seven-by12-foot model with swim motor
costs $23,900, although that
doesn’t include $800 to $1,800
for shipping and another
$2,000 if you want an independent contractor to help you
install it, says retail sales manager Janet Luther.
M AY 2 0 1 8
M O N E Y. C O M
FIX IT UP!
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IF THERE’S ONE rule of thumb
M O N E Y. C O M
only $60 when you put your
house on the market. “If you’re
going to sell [anytime soon],
this gives you almost immediate
return,” says Bufalo-based
appraiser Jim Murrett.
While you may not think of
the garage door as an object
of beauty, replacing an old,
battered door with a smart
new one can lend your house
a fresh, clean appearance,
adding to its curb appeal, even
if would-be buyers can’t put
their finger on the reason why,
M AY 2 0 1 8
Murrett says. There are other
benefits too—like improved
insulation, especially in colder
states—which can lower your
energy bill.
But perhaps the biggest
reason for the garage door’s
attractive payof: It doesn’t cost
you much to begin with. Of
the nearly two dozen projects
Remodeling ranked, replacing
a garage door was one of the
least expensive.
The cheapest of all the jobs
Remodeling looked at—
installing a new steel entry
door—returned almost as
much as the garage door,
fetching about 91% of the
average $1,170 outlay. (The
report didn’t look at touch-up
jobs like repainting or sodding
your lawn.)
The most expensive
projects, costing $100,000,
such as adding bedrooms
or a major kitchen renovation
(see story on page 56),
typically recouped half or less
of what they cost.
C AVA N I M A G E S
when it comes to home
renovations, it’s that less is
more. In fact, the project that
delivers the best value of all,
according to Remodeling
magazine’s 2018 Cost vs. Value
report: the humble garage door.
The all-in cost of replacing
an outdated garage door
with an upscale steel model
boosts your home’s value by
98.3% of what it costs to install.
In other words, a $3,470 garage
door will really set you back
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The pulmonary hypertension heart
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AVENGERS: INFINITY WAR IN THEATERS APRIL 2018
8LI%ZIVEKI
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BY K A I T L I N M U L H E R E
Salary isn’t everything.
See how local costs can boost
(or cut) your family’s income.
M O N E Y. C O M
;LIVI
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Highest
Mid-range
Lowest
Some states deliver rich household
income but high costs; others may have
relatively low pay, but it’s cheap to
live there. MONEY classified all
the states, plus D.C., into one of three
groups according to their adjusted
median income.
Turn the page to see all
the state-by-state numbers.
California
Nebraska
has the 10thhighest median
income in the
U.S., but the
high cost of
living erodes
buying power—
making it a midrange state.
has a median
income that’s
solidly midrange, but the
low cost of
living bumps
the state into
the highest
category.
That is, how much
your wages are actually worth depends largely on where
you live. On some level, everyone understands that—even if
you don’t have a firm grasp on precisely how far a $50,000
salary would go in California, compared with, say, Ohio.
MONEY set out to find the answer, meshing income data
with a cost-of-living measurement for each state.
We pulled pay data for each state, using 2015 median
household income from the Census Bureau’s American
Community Survey. Then we adjusted those figures
according to each state’s 2015 “regional price parity”—a
U.S. Bureau of Economic Analysis calculation showing
how far your money will go in a given place.
The higher a state’s price-parity number, the more
residents will pay for items such as housing, food, and
GEOGRAPHY CAN TRANSFORM A PAYCHECK.
M O N E Y. C O M
M AY 2 0 1 8
transportation. A price parity figure of 118.8, like
Hawaii’s, means that goods and services there cost
almost 19% more than the national average. Prices
in Mississippi, meanwhile, with a price parity of
86.2, are about 14% less than the national average.
Living expenses tend to cluster by region. The
Northeast is comparatively more expensive than
much of the Southeast, for example. But there are
considerable diferences even among states that
are neighbors. In Illinois, for example, the real
value of $1,000 is $1,003. In next-door Indiana and
Missouri, that rises to $1,103 and $1,120, respectively, since those are lower-cost states.
In some states, such as Delaware, there’s little
diference between the median household income
*Hawaii and Alaska not shown in actual locations
INSET:
District of Columbia
Florida
residents
have low
median
incomes and
have to cover
costs that
come closer
to national
figures.
New
Hampshire
households
have a high
median income
($70,303);
living costs
are only a bit
above national
norms.
and how much it can purchase locally. Delaware
has a price parity (100.4) that’s nearly in line with
the national average (which gets indexed to 100).
But in other areas, such as North Dakota or
Massachusetts, the price-parity calculation can
either add or subtract thousands of dollars from a
typical earner’s spending power.
A few notes: Household income doesn’t count
noncash benefits and doesn’t account for property or
personal income taxes, other deductions, or Social
Security—so it’s not the same as take-home pay.
The cost of living and average income can also vary
considerably within a state, so your state’s real
salary may not reflect what workers in a specific
city earn or pay to live.
M AY 2 0 1 8
M O N E Y. C O M
7II=SYV7XEXIŞW
ŝ6IEPŞ-RGSQI
Highest pay
Mid-range pay
Lowest pay
For each state, MONEY took the median household
income and adjusted it for the state’s “regional price
parity”—a measure that tracks cost differences for
goods and services. See how your state compares.
State
Median
income
Price parity
score
“Real”
median income
Massachusetts
$70,628
106.9
$66,069
Michigan
$51,084
93.5
$54,635
Minnesota
$63,488
97.4
$65,183
Mississippi
$40,593
86.2
$47,092
Missouri
$50,238
89.3
$56,258
Montana
$49,509
94.8
$52,225
Nebraska
$54,996
90.6
$60,702
Nevada
$52,431
98.0
$53,501
New
Hampshire
$70,303
105.0
$66,955
New Jersey
$72,222
113.4
$63,688
New Mexico
$45,382
94.4
$48,074
New York
$60,850
115.3
$52,775
North Carolina
$47,830
91.2
$52,445
North Dakota
$60,557
92.3
$65,609
Ohio
$51,075
89.2
$57,259
Oklahoma
$48,568
89.9
$54,024
Oregon
$54,148
99.2
$54,585
Pennsylvania
$55,702
97.9
$56,897
Rhode Island
$58,073
98.7
$58,838
State
Median
income
Price parity
score
“Real”
median income
Alabama
$44,765
86.8
$51,573
Alaska
$73,355
105.6
$69,465
Arizona
$51,492
96.2
$53,526
Arkansas
$41,995
87.4
$48,049
California
$64,500
113.4
$56,878
Colorado
$63,909
103.2
$61,927
Connecticut
$71,346
108.7
$65,636
Delaware
$61,255
100.4
$61,011
District
of Columbia
$75,628
117.0
$64,639
Florida
$49,426
99.5
$49,674
South Carolina
$47,238
90.3
$52,312
Georgia
$51,244
92.6
$55,339
South Dakota
$53,017
88.2
$60,110
Hawaii
$73,486
118.8
$61,857
Tennessee
$47,275
89.9
$52,586
Idaho
$48,275
93.4
$51,686
Texas
$55,653
96.8
$57,493
Illinois
$59,588
99.7
$59,767
Utah
$62,912
97.0
$64,858
Indiana
$50,532
90.7
$55,713
Vermont
$56,990
101.6
$56,093
Iowa
$54,736
90.3
$60,616
Virginia
$66,262
102.5
$64,646
Kansas
$53,906
90.4
$59,631
$45,215
88.6
$51,033
Washington
State
$64,129
104.8
$61,192
Kentucky
Louisiana
$45,727
90.6
$50,471
West Virginia
$42,019
88.9
$47,265
Maine
$51,494
98.0
$52,545
Wisconsin
$55,638
93.1
$59,762
Maryland
$75,847
109.6
$69,203
Wyoming
$60,214
96.2
$62,593
NOTE: Real pay values based on 2015 median household incomes in the Census Bureau’s American
M O N E Y. C O M
M AY 2 0 1 8
Community Survey and the 2015 regional price parity from the U.S. Bureau of Economic Analysis.
THE MONEY 50
6)'311)2()(
*92(7
*YRHW
TOTAL RETURN
8VEHI;EV8EPO
+VMTW7XSGOW
AFTER A BRIEF SCARE on Wall Street in February, the
stock market averted crisis as equities rebounded in
the four weeks ended March 21. New concerns,
however—and a fresh bout of volatility—emerged
after President Trump imposed tarifs on imported
steel and aluminum, sparking concerns that this
would trigger a global trade war.
The result: Investors altered their strategy and
began to favor small-company stocks over large
multinationals. That’s because smaller businesses
tend to generate most of their sales domestically.
On our MONEY 50 recommended funds list, Schwab
Small Cap Index gained 3.2% in the month, vs. just
0.6% for the Schwab S&P 500 Index fund.
,3;8397)3966)'311)2()(0-78
Building-block funds: For broad exposure to core asset classes
Custom funds: Specialized investments that can tilt your strategy
One-decision funds: If you want stocks and bonds in one portfolio
TOTAL RETURN
FUND (TICKER)
ONE
MONTH
EXPENSES
(AS % OF
ASSETS)
PHONE
NUMBER
(800)
18.0% 11.0%
18.1
10.5
0.03
0.03
435-4000
435-4000
16.8
18.9
8.2
9.2
0.18
0.05
662-7447
435-4000
16.7
18.7
21.3
22.8
5.2
6.7
9.3
8.3
0.16
0.17
0.25
0.32
544-8544
662-7447
662-7447
662-7447
–4.6
–0.7
0.26
662-7447
0.6
–0.1
0.8
0.6
0.15
0.15
662-7447
662-7447
ONE
YEAR
THREE
YEARS 1
BUILDING-BLOCK FUNDS
Large-Cap
Schwab S&P 500 Index (SWPPX)
0.6%
Schwab Total Stock Market Index (SWTSX) 0.9
Midcap/Small-Cap
Vanguard Mid-Cap Index (VIMSX)
2.1
Schwab Small Cap Index (SWSSX)
3.2
Foreign
Fidelity International Index (FSIIX)
–0.5
Vanguard Total Intl. Stock Index (VGTSX)
–0.3
Vanguard FTSEA/W ex-U.S. Small (VFSVX) 0.3
Vanguard Emerging Markets (VEIEX)
0.0
Specialty
Vanguard REIT Index (VGSIX)
2.9
Bond
Vanguard Total Bond Market (VBMFX)
0.3
Vanguard Short-Term Bond (VBISX)
0.0
M O N E Y. C O M
FUND (TICKER)
Vanguard Inflation-Protected (VIPSX)
Vanguard Short-Term Infl.-Prot. (VTIPX)
Vanguard Total Intl. Bond Index (VTIBX)
ONE
MONTH
0.8%
0.4
0.9
ONE
YEAR
0.1%
0.2
3.3
THREE
YEARS 1
0.8%
1.0
2.0
EXPENSES
(AS % OF
ASSETS)
PHONE
NUMBER
(800)
0.20
0.15
0.13
662-7447
662-7447
662-7447
CUSTOM FUNDS
Large-Cap
Dodge & Cox Stock (DODGX)
Schwab Fundamental U.S. Large (SFLNX)
Sound Shore (SSHFX)
Vanguard Value Index(VIVAX)
Primecap Odyssey Growth (POGRX)
T. Rowe Price Blue Chip Growth (TRBCX)
Midcap
Vanguard Mid-Cap Value Index(VMVIX)
Vanguard Mid-Cap Growth (VMGIX)
T. Rowe Price Div. Mid Cap Gro. (PRDMX)
Small-Cap
Vanguard Small-Cap Value (VISVX)
Schwab Fundamental U.S. Small (SFSNX)
Vanguard Small-Cap Growth (VISGX)
T. Rowe Price QM U.S. Small-Cap Gro. (PRDSX)
Specialty
T. Rowe Price Dividend Growth (PRDGX)
Vanguard Intl. DividendAppreciation (VIAIX)
Cohen & Steers Realty Shares (CSRSX)
Vanguard Global ex-U.S. Real Estate (VGXRX)
Fidelity Select Natural Resources (FNARX)
Foreign
Oakmark International (OAKIX)
Vanguard International Growth (VWIGX)
T. Rowe Price Emerging Markets (PRMSX)
Bond
Dodge & Cox Income (DODIX)
Fidelity Total Bond (FTBFX)
Vanguard Short-Term Inv. Grade (VFSTX)
Fidelity Corporate Bond (FCBFX)
Loomis Sayles Bond (LSBRX)
Fidelity High Income (SPHIX)
Vanguard Intm.-Term Tax-Ex. (VWITX)
Vanguard Limited-Term Tax-Ex. (VMLTX)
Templeton Global Bond (TPINX)2
Fidelity New Markets Income (FNMIX)
–0.4
0.4
0.0
–0.1
4.5
2.3
15.7
13.5
12.6
13.6
38.9
38.6
11.2
9.0
7.1
10.1
17.2
15.7
0.52
0.25
0.91
0.18
0.67
0.72
621-3979
435-4000
551-1980
662-7447
729-2307
638-5660
1.0
3.2
2.6
13.4
20.8
24.4
8.6
7.8
10.2
0.19
0.19
0.87
662-7447
662-7447
638-5660
1.8
2.0
3.8
3.3
12.2
13.8
23.6
22.9
8.4
8.2
8.5
10.1
0.19
0.25
0.19
0.81
662-7447
435-4000
662-7447
638-5660
0.5
–0.2
3.2
1.4
3.8
15.4
15.8
–1.5
19.0
3.4
10.1
N.A.
0.5
6.6
–1.4
0.64
0.35
0.96
0.34
0.84
638-5660
662-7447
437-9912
662-7447
544-8544
–2.9
1.5
0.6
18.5
36.5
33.4
7.3
12.8
13.2
0.95
0.45
1.23
625-6275
662-7447
638-5660
0.1
0.2
–0.1
–0.1
0.2
–0.4
0.0
–0.2
–0.2
0.0
2.0
1.3
0.5
2.7
4.3
6.0
2.2
0.8
–0.2
4.0
2.3
2.0
1.4
2.2
2.9
5.3
1.7
0.8
1.8
7.6
0.43
0.45
0.20
0.45
0.91
0.72
0.19
0.19
0.93
0.82
621-3979
544-6666
662-7447
544-6666
633-3330
544-8544
662-7447
662-7447
632-2301
544-6666
0.55
1.03
0.25
544-6666
544-6666
662-7447
0.58
0.63
638-5660
638-5660
0.14
0.14
662-7447
662-7447
ONE-DECISION FUNDS
M AY 2 0 1 8
Balanced
Fidelity Balanced (FBALX)
1.0
13.8
7.2
Fidelity Global Balanced (FGBLX)
1.6
19.7
6.3
Vanguard Wellington (VWELX)
0.0
10.3
7.3
Target Date
T. Rowe Price Retirement series (STOCK/BOND ALLOCATION)
Ex.: 2005 Fund (36%/64%) (TRRFX)
0.5
7.5
4.7
Ex.: 2020 Fund (58%/42%) (TRRBX)
0.6
12.0
6.5
Vanguard Target Retirement series
Ex.: 2025 Fund (62%/38%) (VTTVX)
0.5
12.1
6.3
Ex.: 2035 Fund (77%/23%) (VTTHX)
0.5
14.7
7.4
NOTES: As of March 21, 2018. N.A.: Not available. Load funds are included for those who prefer
to use a broker. 1Annualized. 24.25% sales load. SOURCES: Lipper, New York, 877-955-4773;
the fund companies
THE MONEY 50
6)'311)2()(
)8*W
)8*W
TOTAL RETURN
FUND (TICKER)
ŝ6IEPŞ%WWIXW
+EMR7XVIRKXL
coupled with a
weakening U.S. dollar, drove investors into so-called
real assets such as real estate and commodities. On
our MONEY 50 recommended ETF list, the iShares
Cohen & Steers REIT ETF gained 3.7% in the four
weeks ended March 21. Meanwhile, iShares North
American Natural Resources ETF rose 2.5%.
RISING INFLATIONARY PRESSURES,
7
46%8-37
P/E
DIVIDEND YIELD
2.1%
24.0
CURRENT
2.0
23.0
1.9
ONEYEAR
RANGE
22.0
1.95
ONEYEAR
RANGE
1.8
CURRENT
21.2
21.0
1.7
,3;8397)3966)'311)2()(0-78
Building-block ETFs: For broad exposure to core asset classes
Custom ETFs: Specialized investments that can tilt your strategy
One-decision ETFs: If you want stocks and bonds in one portfolio
TOTAL RETURN
ONE
MONTH
FUND (TICKER)
ONE
YEAR
THREE
YEARS 1
EXPENSES
(AS % OF
ASSETS)
PHONE
NUMBER
(800)
BUILDING-BLOCK ETFs
Large-Cap
Vanguard 500 ETF (VOO)
Schwab U.S. Broad Market ETF (SCHB)
Midcap/Small-Cap
iShares Core S&P Mid-Cap ETF (IJH)
iShares Core S&P Small-Cap ETF (IJR)
Foreign
iShares Core MSCI EAFE ETF (IEFA)
Vanguard Total Intl. Stock ETF (VXUS)
M O N E Y. C O M
0.6% 18.0% 11.0%
0.9
18.2 10.5
0.04
0.03
662-7447
435-4000
2.3
3.3
15.7
18.9
9.4
11.4
0.07
0.07
474-2737
474-2737
–1.4
–0.3
16.9
18.7
6.3
6.7
0.08
0.11
474-2737
662-7447
M AY 2 0 1 8
Vanguard FTSE A/W ex-U.S. Small (VSS)
Vanguard FTSE Emerging Markets (VWO)
Specialty
Vanguard REIT ETF (VNQ)
Bond
Vanguard Total Bond ETF (BND)
Vanguard Short-Term Bond ETF (BSV)
Schwab U.S.TIPS ETF (SCHP)
Vanguard Short-Term Infl.-Prot. (VTIP)
Vanguard Total Intl. Bond ETF (BNDX)
ONE
MONTH
ONE
YEAR
THREE
YEARS 1
0.3% 21.5% 9.4%
0.0
23.0
8.5
EXPENSES
(AS % OF
ASSETS)
PHONE
NUMBER
(800)
0.13
0.14
662-7447
662-7447
2.9
–4.5
–0.6
0.12
662-7447
0.3
0.1
0.6
0.4
0.9
0.7
0.0
0.3
0.3
3.3
0.9
0.7
0.8
1.1
2.0
0.05
0.07
0.05
0.06
0.11
662-7447
662-7447
435-4000
662-7447
662-7447
12.8
13.7
11.8
11.9
13.9
23.6
8.9
10.3
9.5
10.1
10.7
11.5
0.39
0.06
0.28
0.15
0.29
0.06
983-0903
662-7447
909-94732
474-2737
983-0903
662-7447
13.5
10.2
21.0
8.7
8.9
7.9
0.07
0.38
0.07
662-7447
909-94732
662-7447
12.3
9.5
18.1
23.8
8.5
8.2
9.4
8.7
0.07
0.38
0.39
0.07
662-7447
909-94732
983-0903
662-7447
10.1
15.9
–3.8
19.3
2.2
10.4
N.A.
–0.4
6.8
–1.3
0.35
0.25
0.34
0.14
0.48
787-22572
662-7447
474-2737
662-7447
474-2737
–1.0
15.4
5.7
0.45
983-0903
–0.2
–0.1
14.1
17.7
6.4
8.3
0.20
0.65
474-2737
787-22572
0.2
0.3
0.1
1.1
1.4
1.6
1.7
1.3
1.5
0.45
0.61
0.35
343-3548
400-43832
400-43832
–0.5
–0.1
–0.4
–0.1
–0.2
1.9
0.6
3.8
2.5
0.1
1.7
1.4
3.6
N.A.
0.4
0.15
0.07
0.49
0.09
0.20
474-2737
662-7447
474-2737
662-7447
787-22572
–0.5
–0.4
12.8
8.7
3.2
4.4
0.50
0.40
983-0903
787-22572
0.4
0.4
0.4
0.4
0.6
6.5
8.2
11.7
15.1
15.2
3.6
4.4
6.0
7.5
5.0
0.25
0.25
0.25
0.25
0.35
474-2737
474-2737
474-2737
474-2737
787-22572
CUSTOM ETFs
Large-Cap
PowerShares FTSE RAFI U.S. 1000 (PRF) 0.3
Vanguard Value ETF (VTV)
–0.1
WisdomTree U.S. LargeCap Dividend(DLN) –0.2
iShares Edge MSCI Min.Vol. USA (USMV)
1.1
PowerShares S&P 500 High Qual. (SPHQ) 0.1
Vanguard Growth ETF (VUG)
1.4
Midcap
Vanguard Mid-Cap Value ETF (VOE)
1.0
WisdomTree U.S. MidCap Dividend (DON) 0.8
Vanguard Mid-Cap Growth ETF (VOT)
3.2
Small-Cap
Vanguard Small-Cap Value ETF (VBR)
1.9
WisdomTree U.S. SmallCap Dividend (DES) 1.1
PowerShares FTSE RAFI U.S. 1500 S-M (PRFZ) 2.4
Vanguard Small-Cap Growth ETF (VBK)
3.8
Specialty
SPDR S&P Dividend ETF (SDY)
1.0
Vanguard Intl. Div. Appreciation (VIGI) –0.2
iShares Cohen & Steers REIT ETF (ICF)
3.7
Vanguard Global ex-U.S. Real Estate (VNQI) 1.5
iShares N.Amer. Nat. Res. ETF (IGE)
2.5
Foreign
PowerShares FTSE RAFI
Developed Markets ex-U.S.(PXF)
iShares Edge MSCI MinVol EAFE (EFAV)
SPDR S&P Emerging Markets Small
Cap ETF(EWX)
Bond
Fidelity Total Bond ETF (FBND)
Pimco Active Bond ETF (BOND)
Pimco Enhanced Short
Maturity Active ETF(MINT)
iShares iBoxx $ Inv. Grade Corp. (LQD)
Vanguard Short-Term Corp. (VCSH)
iShares iBoxx $ High Yield Corp. (HYG)
Vanguard Tax-Exempt ETF (VTEB)
SPDR Nuveen Bloomberg
Barclays S/T Muni (SHM)
PowerShares Intl. Corporate (PICB)
SPDR Bloomberg Barclays
Emerging Markets Bond ETF (EBND)
ONE-DECISION ETFs
Balanced
iShares Core Conserv.Alloc. ETF (AOK)
iShares Core Moderate Alloc. ETF (AOM)
iShares Core Growth Alloc. ETF (AOR)
iShares Core Aggressive Alloc. ETF (AOA)
SPDR SSGA Global Alloc. ETF (GAL)
NOTES: As of March 21, 2018. N.A.: Not available. 1 Annualized. 2Phone numbers
are 866. SOURCES: Lipper, New York, 877-955-4773; the fund companies
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S[R GEVIIV BY W I L L L I N E N D O L L
MONEY: How much did it
cost you to train for the
Olympics?
ADAM RIPPON: When I’m
training, the expenses can be
a lot. I have a private coach
that I work with every day,
from 15 minutes to an hour.
M O N E Y. C O M
And the rate can be from
$100 to $145 an hour. My costumes are done by a friend of
mine, and they range anywhere between $1,200 and
$4,000 each. And then I have
choreography and ice time. A
lot of the money that I make
M AY 2 0 1 8
from skating goes right back
into my career.
Your financial situation now
is probably a bit diferent
from a few years ago, when
you were starting out.
I had to really manage and
budget. I would spend $50 a
month to be a member of the
only gym in the area. It had apples out in a little area where
you could sit and have a glass
of water. When money was
tight, I would go into the
lounge area, and I would steal
all the apples. The gym also
had tea, so I would take all the
tea too. When I couldn’t afford
to get too many groceries,
I would just [eat] the apples,
which I’m allergic to.
You’re allergic to apples?
Yeah, but when you’re dirtpoor you’re like, “Oh, I’ll take
the risk.”
What is the biggest money
lesson that you’ve learned
up to this point?
You may think you know what
you’re doing, but you should
always ask somebody to help
you. You should have somebody help you budget, make
a goal sheet, plan out what
you’re doing. Do you want to
buy a new car? Do you want
to buy a house? What I’ve
learned is that you don’t
always know best.
Sometimes, asking for help
is the hardest thing to do, but
it’s also the thing that you’ll
be most grateful that you did.
At the end of the Olympics,
you said the first thing you
would do when you got
home was go to Target
and buy wine. Did you
end up doing that?
I said that I wanted a glass
of Sauvignon Blanc [from]
Oyster Bay. And they actually
sent me four cases of wine.
So I didn’t even need to go
to Target, which was great.
Do you have any money
weak spots?
The one thing that is super
dangerous is shopping online.
It’s just three clicks and it’s
already sent to your house in
five minutes.
Will you be at the 2022
Winter Olympics?
I mean, if I go to the Olympics
next round it’s because
I found a good deal on a vacation or something.
PHOTOGRAPH BY ALEXANDRA SCIMECCA
Active Matters:
Life isn’t a passive
activity. Investing
shouldn’t be either.
Whether you’re planning on retiring in the not-too-distant future or years from now,
being actively involved matters in achieving results.
When it comes to managing our funds, we share the same active philosophy. Our investment
teams seek to navigate down markets, find opportunities, and manage risk so you can stay on track
toward reaching your retirement goals.
Over 90% of T. Rowe Price Retirement Funds beat their 10-year Lipper average as of 12/31/17.*
Put our active investment approach to work for your retirement.
We offer IRAs, Rollover IRAs, and retirement planning.
Call our retirement specialists at
877-872-5475 or go to troweprice.com/retirement
Consider the investment objectives, risks, and charges and expenses carefully before investing. For a prospectus
or, if available, a summary prospectus containing this and other information, call us. Read it carefully.
*36 of our 39 Retirement Funds (Investor, Advisor, and R class) had a 10 -year track record as of 12/31/17 (includes
all share classes). 34 of these 36 funds beat their Lipper averages for the 10 -year period. 38 of 39, 39 of 39, and 35
of 36 of the Retirement Funds outper formed their Lipper average for the 1-, 3 -, and 5 -year periods ended 12/31/17,
respectively. Calculations are based on cumulative total return. Not all funds outper formed for all periods. (Source
for data: Lipper Inc.)
Past performance cannot guarantee future results. All funds are subject to market risk, including possible loss of principal.
T. Rowe Price Investment Services, Inc., Distributor.
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