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Why You Can't Trust Those Retirement Calculators

Why You Can't Trust Those Retirement Calculators

Making the right calculations. | amanaimagesRF/iStock/Thinkstock

There is a plethora of basic retirement calculators on the Internet, but Betterment CEO Jon Stein says few of them take into consideration the factors that are truly important to consumers. In an article for CNBC, Stein contends those calculators shouldn’t rely so heavily on current income to determine retirement finances, but rather, they should calculate how much consumers want and need to spend during retirement—a much harder calculation. “Few calculators offer all of these inputs under one roof with a robust algorithm and an easy-to-use interface,” he argues, saying a retirement calculations should take into consideration a spouse’s holdings, where retirees are planning to live, taxes during retirement and changes in spending.


The Wilshire 5000 Index is Shrinking

On the decline | pablographix/iStock/Thinkstock

According to indexers Wilshire Associates, the Wilshire 5000 index, which encompasses the whole of the U.S. stock market (barring those stocks traded over-the-counter), actually contains less than 4,000 securities. In short, the number of tradable securities on U.S. exchanges has been shrinking, from a high of 7,562 stocks in 1998, down to just shy of 4000 today, thanks to mergers, acquisitions, failures and a decreasing number of IPOs. Yet liquidity in the market has not matched the decline. That is, Ben Carlson argues, one reason active stock pickers have a harder time beating the competition than they have in the past.  “The logical conclusion is that this increase in activity and competition for good ideas has made it more difficult for portfolio managers to separate themselves from the pack and add value,” he writes.


Researching the Future

An effort to learn more | lolloj/iStock/Thinkstock

A study is underway to see how a technology behind bitcoin transactions could help improve efficiency, according to a report from Reuters. USAA is researching the potential of blockchain, which is an open ledger of a digital currency's transactions. According to Alex Marquez, managing director of corporate development at USAA, the organization isn't looking to use bitcoin as a currency, but rather is interested in the technology behind blockchain.


Take Your Advice to the Library

Simplifying for the masses. | YAOZi/iStock/Thinkstock

Most advisors are great at taking complex financial and investment topics and putting them into layman’s terms. So why not milk that talent? Some advisors are writing books on financial topics as a way to reach a wider audience, Investor’s Business Daily reports. But to make it work, you’ve got to make writing a priority. “It cannot be something that you do once a month or whenever you have the time,” Jim Blankenship, a financial advisor at Blankenship Financial, told the publication. Other tips for getting started: Write on a timely topic; using a co-author can help; and avoid self promotion.


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