Money

With the new tariffs on Mexican imports, will I still be able to afford avocado toast?

Answer: It's going to get more expensive. To back up, President Trump announced 5% tariffs on goods imported from Mexico on June the 10th, to go up to 25% tariffs in October — beginning of October. While the President talks about these tariffs, it makes it sound like the Mexican government is going to cut a check to the US government. In fact, what happens is these costs are borne by companies as they import goods into the US, and therefore is borne by, and passed along to, the US consumer. So this can have the impact — and will have the impact — of dampening the economy, and by quite a bit. There's an economic consulting firm in Texas that says the tariff could cost the US more than 400,000 jobs and $40 billion of GDP. So it's going to hurt the cost of your avocado, as well as everything else that comes from Mexico, and will hurt the economy as well, which is why you're seeing some stock market volatility right now.

It's Pride Month! How can we use our dollars to celebrate?

Answer, of course, is by spending those dollars or investing those dollars with LGBTQIA-owned companies. As well as in the workplace, hiring, promoting, mentoring, giving references to LGBTQIA individuals, and really building an inclusive environment. Because the research tells us that when people feel like they belong at a company, they are three and a half times more likely to fully contribute.

Should companies be fined for not closing their gender pay gap?

Kamala Harris put forth a proposal this past week in which companies with 100+ employees would be required to show the pay data and would pay fines if they‚ are not closing their gender pay gap. I am pretty open to new solutions to this problem because, for forever, there have been gender gaps in pay, gaps for minorities in pay, that have been stubbornly persistent. We know that even having laws against them haven't worked. So, disclosure, paying fines - perhaps doing something to move this along will have a great benefit for women, for their families, for people who are not in the majority of the workforce, and eventually, for the economy.

What the heck is going on with Uber after it went public?

Well, look, there are market forces, there's a trade war with China, there's the fact that Uber was sort of long in the tooth by the time it went public -- that can be contributors to the pressure on the stock. But one that I would put out there that's worth thinking about in the venture-funded companies: The investors in those companies -- the price is set by folks who want to be in them, one might say the high bidder. Whereas in the public markets, it's the average of those who are looking to buy and looking to sell, not the high bidder. So you're seeing Uber, from the last round of financing sort of settle back in.

I see advice that I should give up my daily latte, invest the money, and retire a millionaire. Is this good advice?

Answer: No, it's not. That's because in order for this to happen, over the next 40 years, you need to take that $5 a day you save and invest it and earn a 10% after-tax, after-fees return. Hmm.


Question 2: Is that likely?

Answer: No. The stock market has gone up, let's call it 5.6% annually over the past five years, so you gotta get close to doubling. Individual investors have earned about 1.9% over the same period, so less than the stock market has. So is it possible that individual investors could do five times better? I guess it's possible. I guess anything is possible. It's not likely. 10% better? That's a stretch. 20% better? That's huge. Five times better? I wouldn't bet my retirement on it.

Question 3: Anything else bother you about this advice?

Yeah, you know, it's a little simplified, a little bit "give up the small luxuries," and a little bit — since so much of it tends to be aimed at women, and women finishing rich, and retiring rich — it tends to be a bit patronizing. The litmus test of this is if they're not talking about it on CNBC, if Jim Cramer and Mike Santoli aren't discussing it, you know … meh.

What should be a bigger priority for me: saving for my children's education or saving for retirement?

This one hurts me. It hurts me to say this, because I've got children, and I really like 'em a lot. It's gotta be your retirement. I know that doesn't feel right as a parent, but if you have to make a choice, there are scholarships and there are loans for college. Nobody ever got a scholarship for retirement. And so this is one where you need to strap your oxygen mask on before assisting others, and — as much as it hurts me — to put yourself first.

The stock market's had a good year so far. Is now a good time to invest?

Yeah! Wow, what a difference. Remember December? I remember sitting, December 24th, when the market was down like 2.4 or 2.5% and it was just like [choking sound]. And it's up 16% since then. Now it feels like, gosh, maybe this isn't a good time to invest. But let's be perfectly clear: You have no idea. And anybody who says they have an idea has no idea. No one knows where the market is going from one week or one year to the next. There are just too many factors into it. So you want to — for those of you who are familiar with the term — dollar-cost average. For those of you who aren't, you want to invest through up markets and down, a bit out of every paycheck, sometimes it'll be lower, sometimes it'll be higher, and then it evens out over time which doesn't feel sexy, but actually is very sexy. It's very sexy in order to earn market returns, because most folks don't.


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Question 1: Over the past 20 years, how have individual investors done? What kind of returns have they had?

Well, back up. We know that active managers tend to underperform the markets by about the amount of fees — mutual fund managers underperform by about the amount of fees. Over the past 20 years, individual investors have done even worse. So at a time when, according to Dalbar, the stock market has gone up annually 5.6, 5.8%, bonds have gone up annually 4.5%, individual investors — their money has gone up annually about 1.9%. So that doesn't even keep up with inflation, which is estimated to be 2.2%. Why is this? Because we sometimes are our worst enemies. I mean there are many reasons for it. But you over-trade, you tend to panic when times are tough, markets are bad, and you're trading in and out at the wrong time.

Question 2: My company doesn't report its gender pay gap, so it doesn't have one … right?

Uh, wrong. On average, if women are making 80 cents to a man's dollar — sometimes it's 78 cents, sometimes it's 82 cents — then on average, your company has a gender pay gap. And that can be even if it's great people who are there, because in a society in which men have been socialized to negotiate and women have been socialized not to, and bosses — who are just looking for the bottom line — if someone asks for the money they'll give it to them, and if they don't, they won't … you've got a gender pay gap. So if your company isn't reporting one, ask them to.


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