What the experts say
For better returns, change the channel
CNBC is a terrible investing influence, said Andrew Feinberg in Slate. The financial news channel means well. It “tries to make viewers better investors.” But its “fatal flaw” is “that giving investors more information” can hurt them. It “makes them think they need to act all the time to make money.” The channel, through shows like Fast Money, “encourages trading, and most people, both professionals and amateurs, stink at trading.” I’m a former money manager, and against my better judgment, “the loose trading talk got me squirming.” I nearly sold my Netflix shares after a guest in October predicted its earnings “would probably send the stock diving another 10 percent.” Netflix surprised the street (and CNBC) by posting terrific earnings. The stock rose 16 percent. I’m glad I managed to tune out the chatter. You should, too.
Keeping a mortgage into retirement
Paying off your mortgage before retirement may be an outdated rule, said Martha C. White in The New York Times. “For a growing number of older Americans,” retaining a mortgage “that is likely to outlive them makes good economic sense” if the mortgage rate is below 4 percent. Rather than scrounging a lump sum to pay off the loan upon retiring, “some are determining that those funds” could be better deployed, especially with the yields on ultrasafe financial instruments like certificates of deposit now topping 5 percent or higher. Not everyone agrees, however, that a mortgage is a prudent thing for people “to carry into retirement.” If a health crisis arises “or the death of a spouse destabilizes their life or finances,” the home could be jeopardized.
Giving your teen a chance to invest
Teens are jumping into the stock market with the help of so-called custodial accounts that parents can set up for them, said Hannah Miao and Gunjan Banerji in The Wall Street Journal. At Schwab, there were more than 300,000 such accounts, which automatically get turned over to teens when they turn 18. That’s “up from about 120,000 in 2019.” Other brokerages “also reported a surge.” Setting aside $10 a week from the day a child is born could leave your young investor “with a roughly $20,000 nest egg, assuming an 8 percent annual return,” by age 18. Just be warned that a lot of young people’s investment exposure is coming from social media, which can “promote riskier trading strategies that seem more like gambling.”