Would retirement planning be easier if you had a pension?
It's a silly question, I know. For most people, the answer is, "Yes, of course."
Here's a less-silly question: Did you know that you can buy a pension?
Blogging is often touted as a means to earn some extra income. But many people believe that you need tens of thousands of people reading your blog everyday before you can make any real money from it.
I can tell you from experience: That's simply not true.
In the first twelve months of my blog's existence, my writing generated over $20,000 of revenue. And by the end of those twelve months, I still only had 588 subscribers to my blog — barely half way to 1,000. Now, I'm not trying to make the case that a large readership isn't valuable. Of course it's valuable. A big subscriber list is not, however, the only way to make decent money with a blog. Continue reading...
I know I'm taking a risk by starting an article by defining a term from economics. But please, stick with me. It's not a hard concept to understand, and it directly relates to your financial success.
Utility is a term used in economics to describe how much value or happiness one derives from a good or service. Marginal utility refers to how much additional value/happiness is derived from one additional unit of the good or service. Most goods and services are said to have "decreasing marginal utility."
"Decreasing marginal utility" sounds like gibberish, but it's actually pretty easy to understand:
Like many other investors, J.D. and I are fans of taking the slow, sure path to wealth. We invest much of our money in index funds. An index fund is a low-maintenance, low-cost mutual fund designed to follow the price fluctuations of a broader index, such as the S&P 500 or the Wilshire 5000. They're boring investments, but they work. (If you're investing for the excitement, you're doing it for the wrong reason.)
Because of their low costs, index funds have been shown over and over to dominate the majority of their competition. Yet many investors shy away from index funds with the reasoning that "the stock market is too risky for me."
People seem to think that index funds are simply mutual funds that track the U.S. stock market. And that's not particularly surprising given that S&P 500 index funds are: