The gimmick of dollar cost averaging (DCA)
You just received a $100,000 in cash. Do you invest the money all at once, or do you spread it out into equal investments using dollar cost averaging? Most advisers will say to dollar cost average, but I do not think this is the right answer. Dollar cost averaging has nearly ...

The Flexible Spending Account: an “investment” with a great “ROI”
Flexible Spending Accounts (FSAs) are an incredible way to pay for health expenses. While FSAs can be complicated and require some effort, I now think their rewards are worth the hassle. I want to explain a bit about how FSAs work, and then I'll get into the math. Most people know ...

Why Skydiving is not safer than driving
I had a hard time accepting that skydiving could ever be considered a low-risk activity. Call me old fashioned, but it just doesn't seem prudent to be jumping out of an airplane with a parachute as your life support. But however I feel personally doesn't really matter. I'm happy to judge ...

Allais Paradox: how low probability events deceive us
This is a fun example in decision theory that demonstrates how are preferences can be inconsistent. As a point of trivia, Maurice Allais won the Nobel Prize for other research, but he is most remembered today for this paradox. (h/t: Falkenblog). The paradox is best illustrated with a brief experiment that I'll ...

Video: do not invest your emergency fund
This is really basic, conventional financial advice that too many people ignore. With saving accounts offering very low interest rates, it can be tempting to invest emergency funds into the market for gains. This is not a good idea due to stock market volatility, as explained in the following video from USAA.

Do you protect yourself against identity theft? A cool risk assessment survey
Identity theft is serious business. According to the Bureau of Justice, U.S. households suffered $13.3 billion in DIRECT financial losses from identity theft in 2010. A few households were lucky to have identity theft with no financial loss. Those that did suffer had an average loss of $2,200. That doesn't ...

How stupid people make fools of us all
People are so familiar with survival of the fittest, we often forget there are situations that favor the weakest. Four years ago I wrote about survival of the weakest and discussed a game in which it can be better to be weak: your very weakness lets you hide as tougher players ...

Brendon, Brendon, you gotta read this. 8 financial lessons from Coach McGuirk
He's not the most famous character, but he is one of my favorites. Coach McGuirk is an oddball character from an old animated show called Home Movies that originally aired on Cartoon Network from 1999 to 2004. To get a sense of the character, you need only know that Coach McGuirk ...

Getting adult dental sealants to prevent cavities and save money
I'm in my 20s and keep good dental hygiene. But a couple of years ago, for the first time in my life, my dentist found cavities. He said it was probably because food was getting stuck in my molars. He said my teeth had rough grooves and sticky food like raisins ...

Protecting your nest egg
This is so beautiful, and yet in a way so scary. A bird's nest in the winter is entirely exposed to the elements, much like your stock portfolio "nest egg" during a recession. Birds seek shelter. Shouldn't you? (Today is just a picture piece...detailed articles to come) (picture credit: Crystalline Radical)

Why I would gladly pay millions for disability insurance…
...if I were a star professional athlete, that is. Okay, so the title is a bit of a stretch and dream. But I wanted to make a point that too often we complain about the cost of insurance without considering the benefits. Yes, paying millions for insurance would be expensive, but ...

The Misbehavior of Markets
Personal note: this is the first post since my hiatus a few weeks ago...Postings will still be slow in the next week. Also, if you're emailed me I'm still working on replying back--but hope to be back to full speed soon. Thanks for understanding during this transition. Why do markets misbehave? ...

Think about more than timing: 6 questions you should ask yourself before making any investment
While there are many issues to consider when investing, most people make a decision based on a single question: "Is it a good time to buy?" I can sympathize because I used to think that way. My first investment was a speculation on an airline stock since I had a hot ...

Keeping perspective during the economic downturn
photo credit: notsogood Investment losses never feel good. Perhaps the worst part is that the losses remind us we are not always in control. The stock market is impacted by unpredictable macro-economic events. We can't control government bailouts, job layoffs, and irrational panic, but these are the things hurting all ...

Do stocks bounce back after a recession?
They do, but that may not be as interesting as it sounds. Many advisers have recently circulated a chart illustrating how the stock market recovers. Though each company has added its own touch, the original data come from Ned Davis Research, Inc. Here is one version from Charles Schwab: source The data seem impressive. ...