Author: personal-finance

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Social and Financial Capital Resources Can Lessen Hardships

Parks-Yancy, R., DiTomaso, N. & Post, C. (2007). The mitigating effects of social and financial capital resources on hardships. Journal of Family and Economic Issues, 28(3), 429-448.

Brief Description: Social and financial capital resources include knowing people who can help one obtain a job, offer cash or help defray expenses when layoffs or other hardships occur. These resources differ by gender and class (income/occupational status). This study found that middle class individuals had ample access to social and financial …

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Banking Experience and Individual Development Accounts

Grinstein-Weiss, M., Yeo, Y. H., Despard, M. R., Casalotti, A. M., and Zhan, M. (2010). Does prior banking experience matter? Differences of the banked and unbanked in Individual Development Accounts. Journal of Family and Economic Issues 31, 212-227.

Brief Description: This study compares the saving performance and program participation of participants who owned bank accounts and those who did not prior to program enrollment in 14 Individual Development Account programs. Banked participants were shown to have higher average monthly net …

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Effect of Expressing a Quantitative Goal on Savings Behavior

Loibl, C. & Scharff, R. L. (2010). Examining the effect of expressing a quantitative goal on consumer savings. Journal of Consumer Affairs, 44, (1): 127-154. http://dx.doi.org/10.1111/j.1745-6606.2010.01160.x.

Brief Description: The study extended the psychological concept of implementation intentions to the analysis of savings behavior. A field experiment was conducted with current participants of an America Saves campaign in a large city in a U.S. Midwestern state. The intervention required the treatment group participants to write down specific plans about the …

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Managing a Retirement Portfolio: Do Annuities Provide More Safety?

Spitzer, J.J. (2009). Managing a retirement portfolio: Do annuities provide more safety? Journal of Financial Counseling and Planning Education, 20(1), 58-69.

Brief Description:  One of the biggest concerns of retirees is the risk of outliving their assets. This study used a technique called “bootstrap simulations” to estimate the probability of someone outliving a retirement portfolio as increasing proportions of a tax-deferred account are annuitized. It also examined the sizes of the portfolio balance as the annuity amount increased. Required …

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Spousal differences in financial risk tolerance

 

Gilliam, J.E., Goetz, J.W. & Hampton, V. L. (2008). Spousal differences in financial risk tolerance. Financial Counseling and Planning, 19(1), 3-11.

Brief Description: This study explored the financial risk tolerance of 110 couples who completed a Web-based survey. Wives who were university graduates had a higher tolerance for risk, whereas their husbands’ mean risk tolerance score was lower than husbands whose wives did not have degrees. Perhaps, due to a higher level of household income, it is unnecessary for …

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What is a Roth 401(k)?

A Roth 401(k) is retirement savings option that became available in 2006. With Roth 401(k)s, companies can add an option to their 401(k) plan that enables employees to make after-tax contributions. The contribution limit for a Roth 401(k) is the same as the contribution limit for a regular 401(k). In 2017, the limit is $18,000 plus an extra $6,000 “catch up” amount for those who will be age 50 or older by the end of the year ($24,000 total).

If …

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What is a Veteran’s Administration (VA) Mortgage Loan?

Veteran’s Administration (VA) loans are available to members of the armed forces, veterans, and their spouses. Loans are made for up to 100 percent of the home’s value. The home must be the borrower’s primary residence. Loans may be assumable. The veterans must have served 180 days in peacetime or 90 days in wartime, including recent Gulf and Iraq wars.

For more information about VA loan eligibility, see http://www.valoans.com/va_article?id=319.

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What are Certificates of Deposit?

Certificates of deposit (CDs) require that money be kept in the account for a specific period of time to receive a specified return. CDs often require a larger initial investment than a savings account but yield a higher return. The longer the deposit length, the higher the interest rate will generally be because savers are keeping their money on deposit for a longer period of time. CDs are insured by the FDIC for up to $250,000, just like a passbook …

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What will it cost to make minimum payments of 4% ($40) on a $1,000 outstanding credit card balance?

According to the Credit Card Smarts Calculator from Advantage Publications, a $1,000 debt on a credit card that has an 18% annual percentage rate (APR) repaid by making 4% minimum monthly payments will take 6 years to pay off and cost $1,465, including $465 in interest. This assumes that no additional charges are made. If you can pay 6% of the outstanding balance ($60 per month), you will cut the repayment time by two years and save $399 in interest.…

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Should I Invest in the Stock Market Now?

The answer to this question depends on many personal factors including your age, your current portfolio holdings, your investment risk tolerance and financial goals, and how soon you might need to get back money from your invested assets. The younger you are, the more time is on your side to ride out the effects of stock market volatility.

A strong case for buying stocks can certainly be made. Historically, common stocks have outperformed all other investments over time periods of …

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