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Tales from the Wallet: Asset Allocation and Rebalancing Your Investments

04/24/2013 By 41 Comments

asset-allocationWhat does it mean to have balanced investments, and how do you do it? What is a proper asset allocation?  I first tried to answer these questions about six months ago (maybe longer) and finally think I’ve got it figured out… kind of.  Still, do note: this is not intended as a tutorial, just a jumping off point for a discussion. (Pictured: Kate Spade New York Carmine Street – Lacey Wallet, available at Nordstrom for $158 in green, pink, and black.)

Why You Should Balance Your Investments

First — why should you balance your investments, or allocate your assets?  I read Ramit Sethi’s I Will Teach You To Be Rich a while ago — a great introductory book if you’re new to financial stuff, and definitely a quick read.  One of the only things that was new to me was his explanation of how and why to balance your investments, which I’d heard about through the years but never really focused on.  (To be honest, I kind of thought all I needed to know was that bit about subtracting your age from 100 and putting that percentage in stocks, which roughly translated to me as “invest mostly in stock index funds.”)  In Sethi’s book, he talks about how you should have a target asset allocation (also quoted on his website) of something like 15% TIPS, 15% Government bonds, 20% REITs, 5% emerging-market equities, 30% domestic equities, and 15% developed world international equities.  Whoa! That’s a bit different than “mostly stocks.”  But I suppose it’s easy enough to figure out, at least if you’re just setting up your investments for the first time.  So, let’s say you invest accordingly, and in that first year, domestic equities do AMAZING and emerging-market equities have a lousy year — so at the end of the year you may end up with 60% of your holdings in domestic equities and only 2% in emerging-market equities.  So, Sethi says, at the end of each year you should figure out what your target allocation is and then readjust so that you’re putting something like 20% into emerging-market equities and only 10% into domestic market equities.  Uh huh. Ok.  Simple! [Read more...]

Filed Under: Investing, Money, Tales from the Wallet

Tales From the Wallet: How Much to Save For Retirement

02/20/2013 By 98 Comments

women-savings-retirementHow much should you be saving for retirement? Are there savings benchmarks by ages? Is saving different for women? These are all questions that come up frequently (and no one really has all the answers) that I thought we should talk about them today. (Pictured:  Marc by Marc Jacobs Wallet, on sale at Bloomingdale’s — was $148, now $103.60.)

A few notes from poking around the Internet:

- According to the Department of Labor, on average women live longer than men, invest more conservatively, work fewer years (or work part-time/freelance jobs without access to a retirement plan).  Joy! MoneyLiving notes that women also have higher health care expenses, in part due to maternity expenses, but also higher premiums. [Read more...]

Filed Under: Family Planning, Investing, Just Starting Out, Money, Tales from the Wallet

Tales from the Wallet: Setting Financial Goals

01/23/2013 By 108 Comments

You always see personal finance articles advising you what to do at the end of the year — but I see far fewer of them advising what to do financially in the beginning of the year. Personally, I like to do two things around now:
a) I take a “financial snapshot,” and
b) I make three or four financial goals for the year.

(Pictured:  FOLLI FOLLIE Blue Stripes Wallet, available at Lord & Taylor (having awesome sales of up to 80% off today) — was $85, now $51.)  

The “snapshot” was inspired by the Excel spreadsheet that I started when we were looking to buy the apartment.  It’s just a listing of all of our accounts, investments, debts, and property — and it lists the current value for each of those line items.  Big deal, you say — [Read more...]

Filed Under: Home Ownership, Investing, Money, Organization, Tales from the Wallet

Tales from the Wallet: How to Open a Roth IRA in Less than 45 Minutes

12/19/2012 By 85 Comments

Alexander Wang Quillon perch walletWe’ve talked about tax-advantaged savings before, but I actually just helped a friend get set up for a Roth IRA, so I thought I’d share some findings, and open discussion to readers — do you save money in a Roth IRA, IRA, 401K, or other tax-advantaged savings vehicle?  How much do you save — and what do you invest in?  (Pictured: Alexander Wang Quillon perch wallet, available at The Outnet for $142.50 (was $285).) [Read more...]

Filed Under: Money, Tales from the Wallet

Tales from the Wallet: Who Manages the Money In Your House?

11/28/2012 By 91 Comments

Kate Spade New York Glitterball Coin PurseWho is in charge of your money — you? your partner? everyone?  This came up recently with a friend, and I thought it might be an interesting open thread.  For those of you without a partner, do you want to stay in charge of your finances — or will you be happy to give that drudgery over? (Pictured: Kate Spade Glitterball Coin Purse, available at Zappos in pink and black for $50.)

For my $.02: In our household, I’m the primary one in charge of our finances, both day-to-day and long-term.  (We tried when we were first married to put 80% of our income into a joint account and 20% into separate accounts for spending money, but we simplified everything and have totally joint accounts now.)  I give my husband a “State of the Union” summary about twice a year (or whenever the mood strikes) — what the balances are, how the investments are doing, how we’re doing on our goals for the year, the good news (how much debt we’ve paid down/savings we’ve banked), the bad news (if we had to dip into savings to pay any bills, how much, when, etc).  He also gets the weekly summary emails from Mint, as well as text messages when our accounts drop below a certain balance (I think that’s another Mint feature, but it may be through our bank, Chase.)  In all honesty, I think it’s easiest to have one person manage everything, but that’s just what I know.  (Especially in our situation, where I occasionally write about personal finance and so I’m reading about it more, whereas my husband just was never into it that much.)

I think it’s funny how sometimes this is seen as a “gendered” family role — I think it’s usually seen as “the man’s job,” but my mother was the primary one in charge of day-to-day finances while I was growing up, as were both my grandmothers before her.

Ladies, who manages the money in your house? If you’re not the primary person, do you get “reports” from your partner?  Was this something you negotiated before you intermingled finances, or did you just fall into your roles?

Filed Under: Love, Money, Tales from the Wallet, Under $150

Tales from the Wallet: Flexible Spending Plans, Health Spending Plans, and More!

10/31/2012 By 55 Comments

DEUX LUX Jax Glitter Zip WalletWe’ve talked a bit about how you can save big money by making use of different employer-offered perks, such as flexible spending plans, health spending accounts, and more. But as 2012 starts to wind down, and people make their decisions for 2013, I thought now would be a great time to have an open thread. Here are some questions to get the discussion rolling:

  • How much do you put into an flexible spending plans (FSA)? What have you used it on in the past; what will you use it on in 2013?
  • Do you use a Health Spending Account (HSA)? How much do you put into it every year?
  •  What other year-end housekeeping are you doing to your financial health?  What else are you doing to get your ducks in a row for 2013?

(Pictured:DEUX LUX Jax Glitter Zip Wallet, available in four colors at Lord & Taylor for $60.)

Filed Under: Money, Tales from the Wallet, Under $150