Does it pay to go to college? The non-monetary rewards of higher education can be significant and varied. But what if you focus on just the financial benefits? After all, higher education has become an expensive proposition.
The cost of college has increased almost five times the rate of inflation over the last 30 years. This has led to two-thirds of college graduates taking out student loans to pay for school. Even worse, many young people are saddled with debt without obtaining a diploma. Only 57% of students obtain a four-year degree within six years.
Providing someone financial advice in Italian is not particularly helpful when the recipient of the advice doesn't speak the language. As explained in the video, a purely rational discussion about finances does not resonate with someone whose behavior is motivated, in whole or in part, by emotions. We need to recognize that financial decisions often have an emotional as well as logical component. It's necessary to find a common language in order to come to an understanding on financial matters.
Listen to one of my favorites, Crowded House. The song "Weather with You" references Julius Caesar and the Roman Empire. You can also listen to "Italian Plastic" in the live or studio version.
Just a reminder that the stock market does not always go up in a straight, linear fashion. Or, as the Wall Street Journal recently put it: "Your long-term returns won't be determined by this month's market swings."
A few people mentioned to me recently that they thought index funds were a safe investment. Index funds can be a good investment option. But many index funds can experience varying degrees of volatility and all are subject to losses at one level or another. Safety is not inherently a characteristic of index funds.
In general, an index fund is one that invests in a basket of securities to mirror the underlying returns of a specific index. Stock market index funds offer an incredible variety of investment approaches -- from broad-based funds that seek to capture exposure to a wide swath of the market to those with a narrow focus on a particular niche within the investment universe. The most well-known index fund is based on the S&P 500.
Your adult children likely know the "facts of life" by now. As time goes on, it becomes just as important to have "the other talk" -- a discussion of how you plan to live out your later years. Waiting until a crisis occurs is not the optimal time to deal with often delicate financial issues. Watch the video to hear some advice on this topic based upon a recent interview in the Journal of Financial Planning with Tim Prosch, who wrote The Other Talk: A Guide to Talking with Your Adult Children about the rest of Your Life.
A major impediment to discussing these financial matters is the fear of losing control. Retaining control is a deeply ingrained human emotion. Maybe that's why George and Ira Gershwin's "You Can't Take That Away from Me" has such an appeal. I've included versions from Lisa Stanfield as well as Fred Astaire, which features him singing to Ginger Rogers (about 1:30 into the video).