13 August 2018 FT — Articles to Read

13 August 2018


List-Serve Comment (Divorce) – Regarding financial settlement when separating from spouse or partner: In addition to all of the above, I would recommend that a couple talk openly before they move in together.  It is a difficult conversation, but perhaps a good one to test the relationship up front.  List each other’s assets and liabilities and agree on how they would be dealt with “in case our relationship does not work out.”  This is especially important if there is a significant difference between the individuals’ career moves away from the current town, spending priorities (house, cars, clothes, vacations, fishing gear, …), assets, liabilities and current + future earnings streams.  I can imagine how hard it is to engage in such a conversation – we did not discuss it in our 20s, but we got lucky because we are still married after four decades, having overcome some big spending and savings decision differences.

I am speaking from having observed other people’s misery.


But, since most millennials who are getting married/live together are mostly in their 30s and 40s now, they bring much more into the union: assets, liabilities, children, established careers, better defined aspirations, …  In cases of very different financial profiles, a detailed prenuptial agreement should help.  Again, if someone asked me to do that all those years ago, I would have balked because when you are in love, you hate to spoil your feelings by parsing out potential separation of assets and liabilities.  Looking back, it helped that our aspirations and assets/liabilities/future incomes balanced out (I did not say they were equal – they balanced out).


I would like to add that, both my husband and I are saddened by the current trend in the western world where young people live together but are not getting married.  A trial living together arrangement is OK short term for some people to see if you are compatible.  From the limited sample of my relatives’ and friends’ children in their 30s and 40s, I can say that it is mostly the men who do not want to be married, even when they have children.  The women in those situations generally feel that, while they would prefer to be married, the current situation is the best they can get.  That means that these women feel somewhat insecure, and that has a negative impact on their children.


Question: According to MSN:Money, what are five habits that will prevent you from getting rich?


Moscow plans to cut down on US assets – Pg. 2

–        Russia is trying to reduce its dependence on the dollar by cutting US securities holdings and settling more trade payments in other currencies

–        …Russia’s holdings fell from $96bn to just under $15bn…


US profit margins look close to peak – Pg. 13

–        Profit margins at US companies have risen to their highest level in at least a decade, raising questions over whether the most recent quarterly results are at a peak

–        Companies have been shaving costs for years, while more recently they have enjoyed the benefits of the corporate tax cut agreed in December.  Revenues in the second quarter also grew by nearly 10% year on year, the biggest rise since 2011

–        The US dollar was up 4.6% in the year to date against a basket of other currencies

–        Oil prices were up 8.9% in the same period


Record caseload for UK financial regulator – Pg. 14

–        The caseload includes 86 suspected financial crime and another 75 of suspected insider dealing, which the FCA has the power to criminally prosecute

–        Under new accountability rules called the Senior Managers and Certification Regime, the FCA frequently opens a parallel case into top brass with particular responsibility for an issue under investigation.  The increase in cases is also due to an explicitly push to open more investigations and sooner


Answer: (1) Not following a budget (Prof Note: Make a plan and stick to it!  Identify costs in two categories, i.e. Fixed and variable.  Adjust variable in real time to hit plan); (2) Living paycheck to paycheck (Prof Note: It is tough but consider lower one’s standard of living.  Perhaps not living on Foxhall but rather Main Street.  I have personally reviewed a lot of personal balance sheets for Foxhall residences and they are more levered than one may think!); (3) Giving to impulse buys (Prof Note: A large coke at McDonalds is $1.06.  The coke at the register at most stores is smaller and $1.75.  Be aware.); (4) Borrowing too much (Prof Note: Be care how you borrow and for what reasons.  Is there a revenue off set?  Every loan I have is paid by a third-party, i.e. there is a revenue off set.  Be careful how you borrow, the amounts, and structure.); (5) Choosing only safe investments (Prof Note: This really depends upon where you are age wise and risk tolerances.  If you are going to me in ultra safe investments, then consider more side hustles.)