Credit Card Debt

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This is really, really cool.

From CNBC today:

There's nothing worse than credit card debt. Don't take that out of context.

Of our five grandchildren, one is now an independent adult. She is very, very frugal and manages her money well, but it must still be very challenging for her.

My wife and I want to ensure that our grandchildren do not get into credit card debt / trouble.

To that end, we will work with our grandchildren to pay off their entire credit card debt every six months. 

We also provide a monthly stipend for gasoline money for the two adult daughters who need dependable, personal transportation.

Side-Bar Discussion With Another Investor Friend -- Nothing New Here

This is what I tell my grandchildren (and have a blog for them on this very matter).

1. First of all, don't call it "investing for retirement." Call if "investing for financial independence." Plan to be financially independent by age 30.

2. I don't care how you invest, just invest from day one (1), and be serious about it, but don't let it be all-encompassing.

2a. Invest in yourself: education, education, education.

3. Read, read, read. And not just business / investment. It's amazing where you will find investment ideas.

4. My father had a very, very challenging  time investing (for many, many reasons). Your generation (his great-grandchildren) and your parents (his grandchildren) had it (investing) incredibly easy compared to my father (your great-grandfather). My generation was caught during the transition (from guaranteed pensions to "on your own") and the transition was very difficult for some in my generation.

5. It will be many, many years before you can invest all the money you have to invest ... in tax-free vehicles. You need to max out tax-free vehicles before anything else -- IRAs, Roth IRAs, 529s, real estate (?).

6. Until you know what you are doing, everything should be professionally managed.

7. Taxes and fees are not trivial.

8. Once you get to investing on your own which can be very enjoyable, look at the big picture and have a long horizon. The big picture -- everything -- global and sector. Global: I don't see anything on the horizon better than the US for overall investing. Sector: the eye of the beholder. I like energy and communications.

9. Personal lifestyle and habits: don't live beyond your means; either marry once or don't get married. In other words don't lose half  your "estate" through a divorce.

10. Personal lifestyle and habits: invest on a regular basis -- i.e., put at least one dollar into your savings / investments every month. Taking eve one dollar out of your savings / investments needs to be done for a very, very good reason and must be paid back as quickly as possible.

Now the fun part, or the challenging part.

1. Once you are comfortably on the road to financial independence, then and only then should you think about doing your own investment (rather than through a profressional).

1a. If you do not feel you are on the road to financial independence, you are not ready to do your own investing.

2. But that doesn't mean that you don't want to control your own investment decisions.

3. Professional management: IRAs, Roth IRAs, 529s. With IRAs (to include Roth IRAs), you have control over what kind of IRAs in which to invest: very, very conservative -- low rate of return, but safe -- or very speculative -- possibly high rate of return, but very risky.

4. 529s: they sound good but by their nature, are probably poor investments -- or better said, very, very, very conservative investments. They have to be. By law. They have a fiduciary responsibility to have cash ready when folks need it for education. Which means some of the investors are very, very short term, investing at age 16 years of age and using it when they are are 18 years of age for college. Technically, no one's horizon is more than about 15 years. On top of that, the manager of the 529 has to have enough cash to pay out every every for those going to college, or foreced to sell assets to pay those going to college. 529s are very, very close to a Ponzi scheme, if you think about it. Probably closer to term life insurance policies.

5. Anyway, that's a start.

Rule Of 72

Using the Rule of 72, which is a common rule of thumb to estimate doubling time for compound interest, an 8% compound interest rate would lead to the original investment doubling in approximately 9 years . 

The Rule of 72 formula is 72 divided by the interest rate (as a whole number). In this case, 72 divided by 8 equals 9.

Schwab And Wealth Management Fees -- July 19, 2025

Through the blog, a reader wrote to tell me how much he was dissatisfied with Schwab trying to "sell" him with a "wealth management firm" and 0.8% fee for the privilege.

This was my reply:

Yes, I did get "that" note from Schwab.

Sounds like you touched a nerve with your Schwab advisor. LOL. He seems to have protested too much.

We all have different investment styles and different ways of "interacting" / "approaching" others in all our endeavors in life.

People use the "approach" that works for them. At the very high levels, Trump is at one end of the continuum (mostly sue / threaten to sue any and everyone) and the Warren Buffett we see on stage once a year (smile a lot and talk a lot of pablum i.e., over-simplified ideas or information). 

Or perhaps a better example, Attila the Hun at one end of the continuum and Mahatma Gandhi at the other end.  

In my daily life as seen by others, I consider myself closer to Mahatma Gandhi. My wife, children, and one granddaughter (not Sophia) probably see me closer to Attila the Hun.

We are both on the same page when it comes to "wealth management" fees. I did the math when Schwab introduced a new "wealth management" partner here in the Southlake, TX, area. The "headline" / 30-second elevator speech looked incredibly enticing until one did the math. LOL. I only needed math (and, technically, it was only arithmetic that I used) that I had learned by eighth grade to see what it really cost in "raw" numbers.

I am 1000% sure that I could have done much better than I did in life had I had professionals manage my money. To a great extent I did. The following were all controlled by others, generally professionals, and I was only a spectator,which generally came once a year when I paid taxes: military pension; social security (which I don't take); mutual funds; ETFs; Roth IRAs; IRAs; 401(k)s; TSP (perhaps the best thing since sliced bread). I may be forgetting a few but one gets the gist. [By the way, more on investing in another note.]

I have so many pet peeves but the biggest pet peeve, when it comes to investing, is being penny-wise and pound-foolish. I go to every monthly Schwab seminar -- they are a local event, not sponsored by their corporate office -- and they are excellent.

I listen attentively, and then, as the Mamas and Papas sing, I go my own way. I probably hear only what I want to hear and assume that I am smarter than the Schwab folks and their partners. LOL. My wife, no doubt, has questions whether I am even smarter than she. A bigger LOL.

But back to that pet peeve. Folks in the audience seem concerned about beating the S&P 500 by 0.0001 percent (or 0.000001) and yet many of them will be much more greatly affected by things they can't control: vehicular accidents, cancer, old age; and things they can control: marrying the "wrong" person; getting divorced (multiple times); living beyond one's means.

I have been in the "education" business my entire life. Except for summer jobs -- which were some of the most difficult things I did in life -- door-to-door sales in a NYC suburb has to be one of the most challenging jobs a college student could have -- I don't think I have ever worked a day in my life; it's all been education and training.

I was in school or training, mostly public school, from ages five (kindergarten/summer Bible school) until 29 years of age, and then during my military career went to additional schools, including a one-year correspondence course (or was it two years, I forget) and another in-residence two years at Air War College -- usually offered for one year but I was able to attend two years with full pay for going to school, which included trips to Brazil, to Turkey, to Greece, among several other countries along the way; and even a course at George Washington University in Washington, DC, a highly sought-after course for wanna-be generals and future US presidents. Those military officers who went on to become general officers received even more education, all free of course. And a larger pension.

The military itself, that part that most would call "work," was, in fact, all "education and training." And I was often surrounded by some of the best and brightest. I even took Stephen Covey's course (at the taxpayers' expense) seven habits for highly effective people, perhaps one of the best "financial courses," as it were, that I ever took. The Forbes course on financing, I paid for myself.

So, having been in the "education and training" business my entire life, I have a lot of thoughts about "education and training" and have done my best to use what I have learned to pass on to my children and grandchildren. One can lead horses to water but you can't make them drink.

But through the blog I hope I'm providing information they can use long after I'm gone. I have an entire blog on "living and investing" that can only be accessed by invitation. It is for the children and grandchildren only and will be accessible only after I die -- it's my memoirs and last will and testament. I assume my executor, who will have access to the site, will use it if necessary to settle disputes (which I hope will be few) between the probate judge and heirs. 

I have a separate blog that is the basis for the financial course that my son-in-law and I use to educate and train our children and grandchildren now. That is accessible to all now, including the general public if they do a little sleuthing.

My dad, perhaps the most successful businessman in my life, taught me only one thing in life when it came to personal finances: to read the financial page of the local newspaper. But that's all I needed to get started. The Williston Herald had about a quarter page devoted to finances and economy and two pages devoted to sports, mostly high school. The Bismarck Tribune had a bit more and during my senior year in high school I had access to the Sunday Minneapolis Tribune. In high school I was exposed to the first two, sometimes three sections of The New York Times (the Sunday edition again) but never the finance pages.

Again, I would have done 1000% better had I had a financial advisor all these years, but the best decision, financially, I ever made was joining the military. And the financial aspect of the military was only an incredibly small sliver of how much I enjoyed and gained from the overall experience.

I assume you will see this note on the blog someday, somewhere, At this point, it has not been reviewed for content or typographical errors, and my editor, Sophia, has not yet read it.

With regard to your last bit of advice, tongue-in-cheek, one could do worse than invest in Schwab. I don't. 

Ninety percent of my wealth is managed by others (as noted above) but when I invested on my own, for me, in the 1980s it was the railroads, in the 1990s it was oil companies; in the 2000s it was pretty much letting things ride (I had a nice portfolio); and, now, in the 2020s it's "tech." 

I seldom sold and either held something forever but didn't add to the position, or kept adding to positions that made sense. In my investment portfolio, I'm always fully invested. I never hold cash -- I've never understood that concept -- except for short periods of time (weeks/months) to build a cash position to buy some specific equity.

Investing In Quantum Computing -- June 15, 2025

Link here.

ChatGPT: how many years before the average person has an affordable quantum computer?

Answer: The average person probably won’t have an “affordable quantum computer” at home for at least 20 to 30 years — if ever.

Invest today not in home ownership of quantum computers, but in the companies building the quantum cloud and the software ecosystem. 

That’s why companies like IBM, Microsoft, Google, IonQ, Rigetti, Quantinuum matter today — they’ll own the infrastructure.

Quantum investing timeline:

2025 - 2030: The Buildout Phase (where we are now)

• who wins:
• Hardware pioneers (IBM, Google, IonQ, Quantinuum, Rigetti
• Cloud providers (Microsoft Azure, AWS) 

The full answer is very, very long, but the above is a start. 

It is interesting: the same names pop up.

The "outlier"? Amazon (AWS).

Life Insurance

 Universal Life Insurance

savings

college

interest-based

not included in financial aid app

guarantee 4%

taxes deferred

no taxable event on withdrawal of cost basis

buying in at low interest rate; lucky break

9 guaranteed purchase option (GPO) events

Whole Life Insurance

dividend-based

based on Thrivent investment performance

6 - 8% historically

minimum cash value

minimum death benefit

not as flexible for college

All permanent insurance was “whole-life” at one time. Then EF Hutton introduced universal life insurance and that has become the preferred option for many (most?).

For Folks Making Their First Roth IRA Contribution Ever -- April 13, 2025

Cut to the chase.

There is no hurry to make decisions on where to place money in one's Roth IRA.

Just make sure you have a Roth IRA and that it is funded by April 14th (technically April 15, I suppose) for your 2024 tax year.

Until we get a bit more clarity in the market, parking your Roth IRA contribution in a money market fund or cash within your Roth IRA account probably makes the most sense.

Having said that, there's almost no wrong decision.

The equity (stock) market has pulled back from record highs earlier this year, making it a great opportunity to buy some great shares at a very low price. 

Regardless, you have 30+ years of investing in front of you.

My advice: just keep your money in a money market fund or cash within your Roth IRA and wait for some clarity.

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Roth IRA

If one's Roth IRA is less than $10,000 total and you decide to move from money market funds to an equity (stock) portfolio, I would not buy individual stocks. 

If one's Roth IRA is less than $10,000 total and you decide to move from money market funds to an equity (stock) portfolio, I would recommend an ETF among the family of ETFs offered by your account manager (for example, Fidelity or Schwab).

Examples of ETFs in Schwab that I recommend:

• SCHB: broad-based large cap; growth potential; currently overweight in tech stocks.
• SCHG: large cap stocks, with more balanced portfolio; concentrates on growth, not dividends
• SCHD: large cap stocks, with emphasis on dividends
  

Of the three (SCHB, SCHG, SCHD) for young investors with a 30-year horizon, I recommend SCHB.

I do not follow Fidelity, so I can't recommend specific funds in Fidelity but I can do some research later.