Gifts To Grandchildren

Gifts given to grandchildren by grandparents can be a great blessing.  Kelly Greene wrote an article in the Wall Street Journal September 14, 2012, titled "Are You Coddling Your Grandkids?"  In her article, Ms. Greene indicates five ways to give to a grandchild something and at the same time not creating a sense of entitlement from a grandchild.
First, Ms. Greene says you must, "Pare your gifts to offset the pain."  In other words, don't give to the extent that you jeopardize your own financial care.
Second, Ms. Greene say you might consider making a gift a loan rather than an outright gift.  If the loan is handled properly, it might be a good way to help the grandchild and at the same time allowing them to make their own way in the world.
Third, Ms. Greene says a grandparent can create teaching moments.  Gifting stock or investments rather than cash can be a way of teaching grandchildren the value of money as an example.
Fourth, Ms. Greene says it is a good idea to delay a grandchild's gratification.  Gifting money at certain dates or events rather than on a regular basis can help grandchildren rely on their own resources first.
Fifth, Ms. Greene counsels to practice equality.  One of the most common reasons for litigation between family members if perceived favoritism. 
As you choose to gift assets, it is wise to take into account the feelings of family members and how said gifts will affect them in the long run.

Book Review: "Last Laughs"

A fun cartoon book to look at regarding aging, retirement and death is "Last Laughs" edited by Mort Gerberg. For example, there is a cartoon depicting a grocery story with an old man pushing a shopping cart. Two old women discussing the old man say, "A great catch. He's a widower, still frisky, and has fully paid-up-long-term-care insurance." Take a look here.

4 for 50 - Mr. Bogles relentless rules of humble arithmetic

Business Week has a very nice profile on John C. Bogle, the founder of Vanguard Group. He founded Vanguard in 1974 and was a leader in offering low-fee mutual funds.

Mr. Bogle today, is outraged that while family wealth in this country fell 18% last year and the stock market gains of the last few years have vanished, financial services industry raked in $500 billion in fees. What are we paying them for? he asks. This is his latest and probably last mission - to persuade regulators to clarify and simplify the retirement savings process.

His 1951 senior thesis at Princeton argued that the typical mutual fund "can make no claim of superiority over the market averages." With this in mind, he established Vanguard to offer the world's first index fund that mimicked, not tried to beat the S&P 500. The fee was .46% compared to the typical fee of 1.31.

Bogle's "relentless rules of humble arithmetic" - A dollar invested over 50 years at an 8% annual return compounds to $47, less 2% for expense ratios and transaction costs, and you're down to $18. Factor inflation, and your gain is less than $4.

Mr. Bogle is running a race with a transplanted heart that his body is starting to reject, but he's speaking out where ever and when ever he can because he's dedicated to his cause.

From Bloomberg - President Barack Obama called for establishing automatic workplace pensions.

The budget “lays the groundwork for future establishment of a system of automatic workplace pensions, to operate alongside Social Security, that is expected to dramatically increase” retirement and personal savings, Obama’s Office of Management and Budget said in its outline, without giving details on the costs.

The plan would force employers that don’t offer retirement plans to enroll employees in a “direct-deposit IRA account,” with the option for workers themselves to opt out. Currently, 75 million working Americans, or about half the workforce, lacks employer-based retirement plans, according to the administration.

Retirement

Fun Fact. If you set aside $5 a day for twenty years you would have $36,500. If you invested with 9% return you would have $100,000. in 35 years you'd have $440,000. If you're smart enough and save from age 22 until you retire at 65, you'll retire in style with $1,000,000. Five dollars doesn't seem like much, but saved and invested steadily will provide you with a nice little nest egg.