## Tuesday, May 31, 2011

### A Baby Boom In Australia?

An interesting finding among Australian Echo Boomers:

While a better understanding of their own biological limitations is what convinces many Gen Y women to appreciate being able to have a child, regardless of whether it is planned or unplanned, for other Gen Y women (and men) it could be that they have already experienced so much by their twenties, that they see parenthood as a natural progression in their relationship.
Of course, to be fair, some of this is accidental and assumed - we don't know the actual percentage of Australian Echo Boomers doing so (anecdotes fail to logically defend assertions).

Nonetheless, some Australian Echo Boomers (namely, those mentioned) hold differing views than former generations.

## Monday, May 30, 2011

### The Deceit of Average

In an earlier post, I wrote a note on "averages" as they should come with a disclaimer in many cases. While averages (mean) are fascinating, a statistician can be tempted to promote the "average" without a disclaimer to appeal to his audience, as people - in general - want to know they are above average (or, in the least, average). In fact, when you typically see numbers listed without an average, an audience will often state, "Yeah, that's nice, but what is the average?"

However, multiple cases exist where averages can mislead people. I used the example of student loans in the former post

For instance, let's suppose that we had two college students who graduated medical school in \$200,000 of student loans each. And let's also suppose that 18 other college students graduated college with no loans whatsoever. In the group above of 20 students, what is the mean student loan amount in dollars per student? The answer is \$20,000.
Note that only two students possessed student loans - the other eighteen did not.

Another common deception involving average that people hear involves the stock market. Financial "experts" love to quote average returns, but how accurate are these average returns? Let's use an example involving average returns: suppose Bob invested \$100,000 in Market X, and the first year, Market X returned 100% (meaning Bob had \$200,000). The next year (2), Market X returned another 100% (meaning Bob had \$400,000). However, the third year, Market X collapsed 75% (meaning Bob had \$100,000). In terms of amount, Bob's investments went nowhere. Yet what was the average return per year? The answer might surprise you: 41.67% (you can check the math - 100 + 100 - 75 = 125; 125 / 3 = 41.67%). Note that Bob's average return routes the S&P 500, yet he gained nothing.

Like quoting literature, average needs a context. In certain circumstances, like investing, average needs a context with returns, but in studies and data references, average needs a median context. I would question any study that quotes an average without providing any context, and if the median is unavailable, I would consider the study to have proved nothing.

## Friday, May 27, 2011

### "Is Homeownership in America Dying?"

Each Friday, The Echo Boom Bomb will feature a common question among Echo Boomers and/or their parents concerning economics or finance concerning the Millennial generation. These questions are often asked by Echo Boomers and/or their parents that I survey or can be directed to my email at echoboombomb [at] gmail [dot] com. If you email a question, please be sure to keep it concise and direct.

Question: I want to be a real estate developer, but it seems like a lost cause now. Have sentiments toward homeownership changed since you've worked at a financial institution?

Americans dream of owning homes, right? Not anymore. While some still plan to buy a home "someday," many others have changed their financial goals to include a life time of renting. After the economy collapsed, some Americans realized a few things: (1) they can't predict the job market, (2) their mortgage holder will still expect payments even in a dire situation, (3) real estate doesn't always climb in value, (4) a home does not always provide stability, especially when you consider that the job market may be open in another area than you live.

Most of the people that still want homes are Baby Boomers or Generation Xers. Though, both groups have lost some interest in homeownership. Among Echo Boomers, however, only about one-third seem to be interested in owning a home (25% live with their parents and have told me numerous times that they couldn't financially make it on their own). Presently, 12-13% of Echo Boomers own homes, so there's little indication that demand will increase among Echo Boomers.

The secret to building a successful real estate company in today's market will be to know what your customers want and succeed through volume. Even wealthy Echo Boomers tend to want smaller homes - if they want a home at all - so relying on the big sale won't work as well as a lot of smaller sales.

Also, if you're a real estate developer, focus on building something that can appeal to renters. Who says that you can only make money by selling homes? The winners with the Millennial generation will be the ones who know how to appeal to the renters (notice the 63% demographic), not sellers (at least for the next decade). And if you run a successful renting enterprise, you always have the option to sell it later to another business or individual.

## Thursday, May 26, 2011

### How Echo Boomers "See" It

The following statements are not exact quotes from Echo Boomers, but capture the message of each Echo Boomer.

On pursuing what you want:

I wanted to travel to other places because I love foreign places. Yet no one around me wanted to, so I just did it by myself. You can't always wait around for everyone else in order to do something. Sometimes you just got to know what you want, and go for it.

Work ethic:
Man, I know a drug dealer with a harder work ethic than many of my friends. I see him every night out there in the street dealing drugs. I'm sure he's been arrested multiple times, but it's amazing how some of my friends never go to work because they don't see the value in it and yet this drug dealer sees the value in his commitment - he wouldn't make a dime without work.

Education never ends:
I mean, I didn't know the value of money when I was younger. But now I do. It's nice to know that I'm capable of learning things even as I get older.

On making assumptions based on appearances:
People probably think that I'm a bad person because I have tattoos all over my body. But I do exactly what I'm supposed to do - obey the law, work hard and take responsibility for my actions. If that's the characteristics of a bad guy, I guess I am one.

## Wednesday, May 25, 2011

### What Does Generation Y Say About Marriage?

Working at a financial institution, I would never initiate this question as it's impertinent to money. However, one study asked questions to Echo Boomers about marriage. Since I've written about low marriage rates and how this will affect the future economy (change the dynamics a bit, but nothing terrible), as a counter point to my prediction that marriage rates will remain low for Echo Boomers, this study presents a different perspective. Some excellent gems:

The five major groups and some demographic details about each group:
• 23% of Echo Boomers think that marriage is a partnership. This group tended to be educated and posses a high-income.
• 22% of Echo Boomers think that they are not ready for marriage. 70% of these Echo Boomers were males.
• 22% of Echo Boomers think that marriage is central to their life's plans. This group was made up of mostly highly-educated, white Echo Boomers.
• 19% of Echo Boomers think that marriage is a love story. Two-thirds of this group was made up female Echo Boomers.
• 14% of Echo Boomers think that they never want to partake in marriage. This group was made up of mostly low income Echo Boomers.
Other interesting information from the study:
• Female Echo Boomers didn't mind discussing marriage, while male Echo Boomers tended to be content with being "left out."
• Some male Echo Boomers considered marriage an "outdated" concept.
• 82% of Echo Boomers expect to be married for life.
• 75% of Echo Boomers stated that they would rather be alone for the rest of their life than marry the wrong person.
This study contradicts my prediction that marriage rates will be historically low for Echo Boomers by pointing out that only 14% of Echo Boomers never want to marry. The rest of the Echo Boomers it seems just aren't ready for it, or haven't found their partner/lover/central person. So anyone in the marriage/divorce industry, don't panic yet! Other Generation Y and Marriage Posts:
Will Low Marriage Rates Sap the Housing Demand?
Will Marriage Become A Minority?
Will Student Loans Lower Marriage Rates?
Another Thing Generation Y Doesn't Like: Marriage

## Tuesday, May 24, 2011

### What Services Does Generation Y Like/Dislike?

Some fascinating selections about Echo Boomer's taste in products and services (especially with technology):

• 9 out of 10 Echo Boomers above 18 use the internet.
• 3 out of 4 Echo Boomers use social networking, like MySpace, Facebook, et cetera.
• Over 4 out of 5 keep their cell phones with them at all time.
• 40% have no landline.
• 2 out of 5 Echo Boomers have at least one tattoo.
• 25% of Echo Boomers have a non-lobe piercing.
• Echo Boomers value services and products that do not harm the environment.
• Echo Boomers value real estate that is close to their work and their social outlets.
• Echo Boomers are less willing to own cars than previous generations.
• Echo Boomers value stable investments such as cash, bonds and money markets.

## Monday, May 23, 2011

### Another Thing Generation Y Doesn't Like: Marriage

In the past, I've predicted that, at least for now, Generation Y will have a lower marriage rate than previous American generations (see Will Low Marriage Rates Sap the Housing Demand, Will Marriage Become A Minority, Will Student Loans Lower Marriage Rates?). However, what about the trends at my current job? Do I have more callers who are married or single?

I spent the last 31 days counting the married and single Echo Boomers to see if I would discover different numbers than Pew (which places the Generation Y marriage rate at around 21% currently).

Post the 31-day collection of marriage data from Echo Boomers:

Overview: for 31 days, I counted how many married Echo Boomers called versus how many single Echo Boomers called. The graph shows the percentage of married and single Echo Boomers per day. While this is a fairly simple study and complimented collecting Millennial financial data with it, it shows you what you can expect as far as marriage rates among Echo Boomers. This means that if you are in a career field that relies heavily on future marriage rates (ie: Divorce Law), you can expect the above to represent about how many Echo Boomers are married.

The Final Numbers: similar to other studies, 21% of Echo Boomers were married overall, while 79% were single. Other studies such as Pew tend to indicate that about 21% of Echo Boomers are married, so this study fails to contradict anything that other studies have concluded. My prediction for marriage among Echo Boomers remains the same even after this study: Generation Y will have the lowest marriage rate of any American generation.

Granted, this may seem unimportant, but the media may try to spin this as Echo Boomers will be irresponsible and never "grow up." However, especially when it comes to real estate, I want to re-state an important point that I've written before this post:

even if all Echo Boomers stayed single (already untrue), and most female Echo Boomers bought homes and most male Echo Boomers rented, you'd still end up with similar numbers for housing demand in the future.

## Friday, May 20, 2011

### "Should I Move To Another City?"

Each Friday, The Echo Boom Bomb will feature a common question among Echo Boomers and/or their parents concerning economics or finance concerning the Millennial generation. These questions are often asked by Echo Boomers and/or their parents that I survey or can be directed to my email at echoboombomb [at] gmail [dot] com. If you email a question, please be sure to keep it concise and direct.

Question: Most of my family and friends live where I currently live, yet there are no jobs in this area. I've even looked for jobs in the surrounding cities, but have not found any jobs in those areas either. Should I move to where jobs are located?

The answer depends on a myriad of factors, the first factor being your net worth. If you have a decent amount of wealth saved, even with no jobs in your area, you could try to start your own company. However, if you currently have loans that you are paying, or you have no wealth whatsoever, your options will be limited.

Other factors you could look at with your city: what services are missing? What does your city rely on the most and can you use this to start a business or move into that direction? If you don't want to leave the area, trying to work your way into a job or business that is necessary will be key.

Otherwise, I'd suggest moving. During the Great Depression, people migrated to better opportunities, and sometimes that meant leaving family and friends. I would do the same if your dire situation shows no signs of improving - you have no idea how long it could be before jobs return to your area. When you're young, this is the time to build wealth and expand your opportunities.

## Thursday, May 19, 2011

### What Are the Characteristics of Wealthy Echo Boomers?

5 Surprising Characteristics of Affluent Echo Boomers

1. Wealthy Echo Boomers are single.

The assumption that married people manage money better than single people falls short among Echo Boomers. Approximately ten percent of the wealthy Echo Boomers were married, the remaining were single. However, married Echo Boomers within the general (non-wealthy) population tended to manage money better than single Echo Boomers.

Keep in mind, at this current time, only 22% of Echo Boomers are married.

2. Wealthy Echo Boomers have at least 2 sources of income.

Even when wealthy Echo Boomers lost their primary job, they still had other sources of income, whether it was through self-employment, rental income, investment income, or a secondary job. Wealthy Echo Boomers aim for several sources of income to prevent disaster from dealing a huge financial blow in their life.

3. Wealthy Echo Boomers are typically male.

Ironically, among Echo Boomers, females make 8% more than their male counterparts, yet you wouldn't know by looking at wealth. On average, male Echo Boomers had in the range of double to triple more in net worth than female Echo Boomers (which doesn't seem like much until you consider that 90% of Echo Boomers have less than \$2000 in net worth), and tended to have higher home ownership rates than females - even though females expressed more interest in owning a home. The percentage break down: 82% of wealthy Echo Boomers were males.

4. Wealthy Echo Boomers are young.

Approximately 33% of wealthy Echo Boomers were under 21. Several of these Echo Boomers had created companies and sold them, using the money to attend college and invest. One of them, who had just turned 18, was starting his third business by importing goods from China to sell in the United States.

5. Wealthy Echo Boomers do not want homes.

Only 29% of wealthy Echo Boomers owned a home (note that the percent is higher than the average of 10%), and the rest had no interest in buying a home in the next decade. Is it a sign of the times when someone, with over \$300,000 in his name, has no interest in ever owning a home? I'll leave that for the real estate agents to decide.

## Wednesday, May 18, 2011

### Generation Y Housing Update

2011 data:

At this present time, homeownership is up 2% for Echo Boomers in 2011. Older housing data for Echo Boomers.

## Tuesday, May 17, 2011

### Will Student Loans Lower Marriage Rates?

In a post I published for the Real Estate Wonk, a reader Chris commented:

I have no interest in buying a home using debt, nor do I have any interest in starting a family before I am totally out of student debt, that really bugs the women I date these days but I am honest with them upfront.
In the past, I've predicted that marriage rates will be low in the future (Will Marriage Become A Minority and Will Low Marriage Rates Sap Future Housing Demand) and even provided some reasons to explain why. However, the reader Chris calls attention to an issue that might consider some to delay or avoid marriage: student loans. And one of my favorite bloggers, Mish, wrote about it as well in How Student Debt Wrecks Marriages, Inhibits Family Formation, and Delays the Housing Recovery.

These two cases provide a different perspective: in one case, someone with a large amount of student loans avoids getting married until they're paid off, and the other, gets "dumped" because of a large student loan balance. One might think that these examples provide evidence that marriage rates will be low in the future, but there are three larger issues in front of student loans that will lower marriage rates:

1. The time and energy invested in education. While education provides many benefits, I would point out that Echo Boomers will be limited in their time to date and expand experiences with the opposite/same sex. Frankly, the amount of time spent in school encumbers marriage more than the cost.

2. The rise of single parents. Kids can cost as much as some professional degrees, and while people may argue about the positive experiences from having kids, you can see why some Echo Boomers might opt out of marriage if their partner already has a few kids (it is not uncommon to speak with Echo Boomers who already have two or three kids, yet no spouse).

3. Male and female Echo Boomers don't seem to be "moving" in similar directions. For the record, this won't stop those who are attracted to the same sex, but since the majority of current marriages involve members of the opposite sex, this issue seems to offer a large problem. While I would need 5000 words to elucidate this point, for now, my argument is that major differences exist between males and females in terms of environment, living preference, ambition, et cetera. Differences can often bring people together, but I'd argue you won't see this if opposite genders are living thousands of miles away from each other (or are trying).

In the future, I'll expand more on point three as I've been studying different patterns of behavior among males and female Echo Boomers for the past seven years (including many of my years in college).

Yes, student loans may play into the consideration to start a marriage or family, but as I see it, you have three other major factors that will play into marriage decisions over student loan balances.

## Monday, May 16, 2011

### Important Note on Student Loans

After last week's feature, the Education Bubble, I missed making an important point about student loans and interest. One thing that many Echo Boomers have told me is that they've placed their loans in deferment or forebearance due to economic or educational issues. While these situations can hurt your ability to pay back your loans, it is important to understand how taking a deferment or forebearance can hurt you worse.

For almost all student loans (and I write "almost all" because exceptions may exist, though I don't know of any), deferment simply means that your student loan is locked at its balance and your required payments are deferred to a later date. The good news with deferment is that your loan is locked at its balance and you won't owe more than what you deferred.

By contrast, forebearance, which I understand is easier to receive, adds the interest you owe back each month onto the principal balance. What this means is that you can end up owing more on your student loans than what you originally needed for school. Think of this like negative compound interest - your required payments in the future will grow into larger payments.

I write this because many Echo Boomers, who owe on loans, need to recognize the importance of paying at least their interest every month. If you pay enough to cover the interest, you can remain confident that your balance owed won't grow into a larger amount, but if you fail to cover the interest and end up in forebearance, you are creating a more difficult situation down the road.

## Friday, May 13, 2011

### "Should I Take the Full Ten Years?"

Each Friday, The Echo Boom Bomb will feature a common question among Echo Boomers and/or their parents concerning economics or finance concerning the Millennial generation. These questions are often asked by Echo Boomers and/or their parents that I survey or can be directed to my email at echoboombomb [at] gmail [dot] com. If you email a question, please be sure to keep it concise and direct.

Question: I have the standard ten year payment plan for my student loans. Should I pay them off early or avoid any rush to pay them off?

The answer depends on the student loans themselves. If they are very low interest rates (for instance, less than 3%) and fixed, you have the option to either pay them off in a hurry or take your time. Your interest rate will depend on when you received the loans, as some student loans, in the past, charged very low interest rates.

However, many of the current fixed student loans charge around 7% interest. 7% isn't a guaranteed return that you can receive in the market, and no savings account that I know current pays above 7%. I would focus your efforts on getting the student loans at that interest rate eliminated as fast as possible.

If you're on a variable rate student loan, pay them off quickly. While interest rates will probably remain low, the emotional stress from a variable rate have negative effects on your mind. The emotional relief from getting those loans eliminated will be worth any of the effort.

## Thursday, May 12, 2011

### Are Views on Higher Education Changing?

Among Echo Boomers, the short answer is a simple no.

Of the Echo Boomers I speak to, over half of them have taken at least one college class or plan to attend college at least for a semester. A few of them failed to continue their education or begin it, while most of them continued it or started it. Still what I find on a daily basis is that Echo Boomers value higher education.

One way the education bubble might pop - assuming an education bubble exists - is when people's views on higher education change. If people perceive that \$60,000 is a good deal for a four year degree, then they will borrow money to pay for it or work multiple jobs to cover the costs. Young people aside, parents will be willing to save money to cover their kids tuition without considering that tuition may be overpriced.

Echo Boomers are now amassing the college debt, and only ad hoc analysis will show us what the result of that debt was. Will these Echo Boomers spend decades paying back student loans instead of creating jobs and demand in other parts of the economy? Will high levels of debt affect the social environment and delay maturity? Will Echo Boomers eventually tire from massive loan balances and refuse to pay back their debt? All of these questions, while valid, won't be known.

We will, however, note changing views on education in the coming two decades. As we witness the result of this "educational experiment" on Echo Boomers, the next few generations will use Echo Boomers and their stories as motivation to either attend or avoid school, much in the same way that Echo Boomers used their parents stories on the validity of education to put massive amounts of money toward higher education.

Added: Specifically, for the final paragraph, it should be of note that when we report data for educated people and claim that they perform better than the "uneducated," we are relying on past data. Philosophy arguments aside, using past data and trying to make future predictions - while popular - can be quite dangerous. We cannot know for certain if education will pay as big of dividends for this generation as it has for former generations. I would assume that, in general, the educated will do better than the uneducated, but of course, I could also argue that the self-disciplined will do better than the lazy. Education, unfortunately, doesn't mean that a person will do automatically better, and Echo Boomers, who have focus and a work ethic, whether they attend school or not, will perform better than other Echo Boomers, who lack direction and are lazy.

## Wednesday, May 11, 2011

### Will Higher Education Tuition Continue To Rise?

3 Reasons Why Tuition May Continue To Rise

In a real estate post, I noted that many Echo Boomers wouldn't buy houses because they preferred to invest in their education. However, similar to housing prices, tuition costs continue to rise, and even with the current deflationary environment, tuition shows no sign of decreasing in cost. "Will tuition continue to rise" may be the question on everyone's mind when looking at college, and there are three reason to expect it to increase.

1. If you charge a high price for a product, and demand exists, why cut prices? Cutting prices works if a business begins to lose money or makes less money, but while some universities have experienced a few financial problems, many of them continue to charge high prices (or continue to raise their prices). At what price to students stop attending school and rely on their own ability to create wealth?

2. A weaker dollar will hurt Americans in a multitude of ways, and not only will commodities be higher, but college administrators can justify charging higher prices for tuition. Ironically, even though the dollar has fallen in value, housing prices have also stayed low. With the price of necessities rising (food and energy), a lack of a cutback in higher education demand from students indicates that many students still think that higher education is worth the high cost. How low will the dollar need to go before students opt out of school?

3. Competition remains weak. What competes with higher education? Even trade schools charge enormous amounts of money to students (quite a few of our customers attend trade schools). While I've heard the argument that sites like the Khan Academy compete against higher education, I would be quick to point out that one cannot receive a degree by completing work at sites like those. And, in fact, many of those sites work with the educational system even though we could argue that the entire system is corrupt. Granted, this area offers a huge opportunity for innovation where some idea could win big (competing against higher education), but no other alternative exists.

At this present time, I fail to see tuition decreasing. Unless demand drops or a competitive force appears, universities can charge whatever prices they want. After all, most universities will argue that a person with a college degree ends up earning a million more dollars than a person without a college degree - a statistic that is seldom challenged.

## Tuesday, May 10, 2011

### Will Bankruptcy Laws For Student Loans Change?

When entering college, many students fail to consider the financial implications of student loans. Unless students can provide evidence that they are experiencing a heteroclite financial hardship, student loans cannot be expunged in bankruptcy. Yet even if the laws suddenly changed, and students could discharge their loans, in both cases, our economy would be facing dire circumstances.

Note: In no way shape or form am I excusing the foolish behavior of some college students (remember, only 33% of Echo Boomers have student loans). I am well aware that some of these students played throughout college while borrowing huge sums of money, while other students worked responsibly without racking up any debt. I would agree with anyone who states that a society should encourage responsible behavior, and if students choose to rack up huge loan balances, they should pay what they owe.

In scenario one, student loans and current bankruptcy laws would remain in place. College students would be unable to discharge their student loans in bankruptcy unless they could prove they had an unusual financial circumstance. In this scenario, society punishes foolish behavior since the students with large balances pay for their own mistakes. The problem with this scenario is that it fails to discourage banks or the federal government from lending money, and encourages schools to "oversell" education.

Granted, this scenario won't play out well for our economy, but in the long run we'll find that more and more people begin to question the value of education.

Unfortunately, I do not think that scenario one will last much longer. Based on the events in the past five years, irresponsible behavior seems to be encouraged. Whether lawmkers bail out banks who made risky loans, hand out tax cuts to people who bought homes, or give cash for clunkers, lawmakers have made it clear that they don't care for responsible behavior. And this is not a debate about the ethics of those things listed, but a foreshadowing of things to come with the education bubble.

In scenario two, laws change and student loans can be discharged in bankruptcy. In this scenario, the federal government and banks will become reluctant to lend - meaning that some schools would fail to make money causing them to cut back on tuition costs. But, in this scenario, colleges would require fewer professors to save money, and if professors begin to lose jobs, the appeal of higher education suddenly dims. After all, why bother pursuing a Ph.D. if you can't bank on a good job once you're done.

The professional and specialized degrees win in this scenario (though, to a certain extent, they are already winning). Fortunately or unfortunately - depending on how you see it - the non-required degrees may drop off the university system or remain only for people who can afford to engage in idleness.

Of course, lawmakers might enact laws that lie somewhere between those polar possibilities. But for now, a student would be wise to consider how much they really need education and how much they are willing to pay for it.

## Monday, May 9, 2011

### Higher Education Bubble Week

Many students in my area graduate college this week while the remaining take finals and prepare for their next semester. Since students finish their semester this week, the Echo Boom Bomb will feature the coming higher education bubble all week. Of course, before writing about the higher education bubble, readers should be aware that any bubble occuring in the future is predicated on a few assumptions.

The first assumption of a higher education bubble depends on the student loan mania that we currently see. If banks and the federal government become reluctant to loan for school purposes, we cannot expect Echo Boomers or other students to continue in an educated path. Due to the fact that student loans cannot be discharged in bankruptcy, the probability that banks suddenly become reluctant to lend is fairly low. I would argue that the same logic holds true for the federal government.

The second assumption relies on the schools themselves: if they continue to raise tuition prices, the higher education bubble will continue to grow. While this will be covered in more detail this week, tuition prices have outpaced inflation and the market in some places. This fails to reflect reality, as in order for it to continue, people's income would need to continue at this rapid pace.

The final assumption of any higher education bubble is predicated on people's views of education. A real estate bubble would not have existed if people didn't value real estate, and the same logic holds true for the dot com bubble and current commodities bubble. Americans value higher education, but there comes a point at which higher education is a financial drain and not an opportunity. Add to that fact that our society only requires so many educated people and we still need the basic, yet important workers, like welders, plumbers, electricians, et cetera.

While pointing to the next bubble can bring about some insight, it should be of note that all bubbles assume certain events. If those events fail to occur, no bubble can form. The higher education bubble - like the other bubbles - depends on those certain events remaining in place.

## Friday, May 6, 2011

### "What Resources Should I Use Before Investing?"

Each Friday, The Echo Boom Bomb will feature a common question among Echo Boomers and/or their parents concerning economics or finance concerning the Millennial generation. These questions are often asked by Echo Boomers and/or their parents that I survey or can be directed to my email at echoboombomb [at] gmail [dot] com. If you email a question, please be sure to keep it concise and direct.

Question: I recently bought a new car in cash (no loans whatsoever), and have almost paid off all my student loans. I am thinking about investing my money once I'm done with my student loans, so what resources should I look at for investing my money?

Excellent question, and first off, you should be praised for buying a car in cash - a huge congratulations to you! With the extra money you have, I would focus first on building a large cash cushion. Once you've achieved that, pursue investing in a way that keeps you interested and excited.

I would recommend a few books that cover finances and investing, and put a great deal of energy toward investing and saving. You'll see other books mentioned in other places, but I wouldn't recommend those books because they mainly address debt and for a person with little debt, they don't carry the same value.

The Intelligent Investor (Revised Edition): A great place to start when you consider investing. The best part of this book: although this book is loaded with information, pay close attention to Benjamin Graham's warning about not exceeding 70% of your money in stocks. Trust me, you'll hear the opposite advice in many other places ("put it ALL in stocks"). No cash, no opportunity. Plus, you'll win every emotional battle (ie: fear) when you have a lot of cash on hand.

Greed Is Good: The Capitalist Pig Guide to Investing: I found this book to be a humorous book on personal finance. I appreciate that Hoenig doesn't waste much time on debt, so he expects his readers to exercise their finances in an intelligent manner. The best part of this book: his discussion on expectations. But Hoenig covers investing, as well as having a little bit of controlled fun as well in the darker side of things.

The Post-American World: while not an investing book, Zakaria discusses where the world is moving. A wise man would be careful to evaluate the time he lives in and prepare accordingly; the sun of opportunity may have set on the United States, and I think most investors will find that good gains will be found outside our country. The best part of this book: the fact that while Zakaria is brilliant, he writes in a clear and concise way.

Google finance (or Yahoo Finance) can offer another resource for investors in terms of the ratios and financial details of companies or index funds. Good luck in the investing world, and once again, a huge congratulations on your accomplishments.

## Thursday, May 5, 2011

### "No Vehicles Please. We're Echo Boomers."

Do Echo Boomers Value Owning Their Own Car?

As Echo Boomers mature, some generational differences involving car ownership are beginning to emerge. While the article seems to imply that Echo Boomers avoid car ownership because of the environment, most of the avoidance comes from the costs of a car (important: what cars will Generation Y buy?).

Keep in mind that only 10% of Echo Boomers hold more than \$1,500 in their name, and anyone with a car can tell you stories about a time when their car needed repair. These repairs add up over time, and they reflect only the tip of the iceberg. A car owner also needs gasoline, regular oil changes, and decent insurance. With some of these prices rising, some Echo Boomers may find that using public transportation or living close to work provides them with more money.

Some other noteworthy trends:

1. Many Echo Boomers admit that if they could, they would drive less than they currently do. Notice the main reason: the high cost of owning a car, not the environment. The additional information about texting and posting to facebook provides some humor that many car companies won't appreciate.
2. From the same article, unlike former U.S. generations, Echo Boomers would like more transportation options. Based on the Echo Boomers I've spoken with, it seems that the Southern Millennials experience this problem with transportation options more than the Northern Millennials.
3. When it comes to environmental concerns, Echo Boomers drive less due to environmental reasons than other U.S. generations.

## Wednesday, May 4, 2011

### Are Older Echo Boomers Saving For Retirement?

"Who needs a 401(k) at 30 anyway? I have plenty of time."

I spoke with a young man who actually stated the above quote. Of course, I pondered for a bit if his statement reflected what other Echo Boomers thought as well. As I reviewed the data, I broke it down by age range, and two particular groups seemed to be of most interest. The first group (ages 29-31) and second group (25-31) should mostly be finished with college, though I realize that exceptions may exist. When I consider retirement at an age earlier than 30, I doubt that college students will have amassed a large amount of retirement assets since their main focus centers on what they want to do (not retiring from it). As far as those Echo Boomers graduated from college (and possibly graduate school), how have they managed so far?

Financially-pertinent details: within the 29-31 age range, the mean retirement balance is \$2,934.01 with a standard deviation of \$8,967,98. Within the 25-31 age range, the mean retirement balance is \$2,162.60 with a standard deviation of \$7,418.68.

The view expressed by the Echo Boomer in the above quote seems to reflect how older Echo Boomers think about retirement. Over half of Echo Boomers above 25 years of age have no retirement assets whatsoever. This does not mean that Echo Boomers don't save for retirement, as many of them have admitted that they cashed out of their retirement after leaving a job, but at this present time Echo Boomers are failing to prepare and keep their retirement at an early age. Of course, saving - in general - seems fairly uncommon in the United States (March numbers - 5.5% - were covered recently by Calculated Risk).

## Tuesday, May 3, 2011

### Where Do Echo Boomers Live?

And Where Will They Live In the Future?

Within the age range of 18-28, 54% of Echo Boomers live in the suburbs (32% live in the "central city"). Considering that fewer than 11% of Echo Boomers are homeowners, I see a few possibilities about Echo Boomers and homeownership.

If transportation costs can stay low, the suburbs might continue to offer the preferred place for Echo Boomers to live. However, in order for transportation costs to stay low, alternative transportation options must surface. I doubt the price of oil will ever return to below \$3 a gallon (though, anything is possible), and thus other transportation options, such as natural gas vehicles or electric vehicles, must become the norm. If Echo Boomers don't spend time worrying about how much higher the price of oil will go, some of them may place down roots and start buying homes.

However, if oil continues to be the preferred method of transportation, I would expect few Echo Boomers within the next decade to plan buying a home. Why? Because Echo Boomers can't bet that their standard of living will improve in the future, so throwing money down a home could become a major liability.

I'll add another trend I've noticed: From 2010 to 2011, fewer Echo Boomers have expressed interest in eventually buying a home. For instance, in 2010, about one third of Echo Boomers stated that they wanted to buy a home within the next five years. In 2011, only about 20% of Echo Boomers express interest in buying a home within the next five years. While the change may seem confusing, when we consider how much food and oil prices have changed within the last year - reducing Echo Boomers' purchasing power - we can see that Echo Boomers remain dubious about a positive financial future.

Nonetheless, with 54% of Echo Boomers currently in the suburbs, I'd expect that some of them will eventually settle down to buy homes.

Other Housing Articles:

Oph Topik: Has Housing Hit the Bottom?
Do Echo Boomers Just Own or Rent?
No Houses Please. We're Echo Boomers.
Will Low Marriage Rates Sap the Future Housing Demand?

## Monday, May 2, 2011

### Do Echo Boomers Lack Religion?

Echo Boomers appear less religious than former generations, according to a study on religion and Echo Boomers. There are a couple of built-in assumptions in this study, such as a lack in religious views would be reflected in (1) no religious affiliation, (2) less church attendance, and (3) religion is not as important in life when compared to former U.S. generations.

Obviously, those three assumptions may not reflect religious views in an accurate manner, but it would seem, for now, that Echo Boomers are not as religious as former U.S. generations. Some data points:

• 25% of Echo Boomers are unaffiliated with any specific religion.
• 33% of 18-29 year olds attend a religious service at least weekly.
• 48% of 18-29 year olds pray daily.
• 45% of 18-29 year olds see religion as important.
• 64% of 18-29 year olds are absolutely certain there is a higher power.
• 55% of 18-29 year olds accept evolution as an "explanation for human life" (this is Pew's definition, not mine). This final view does not indicate a lack of religion among Echo Boomers as evolution and religion are not mutually exclusive.

Keep in mind, that when I refer to Echo Boomers, I am referring to those between 18-31, so this study from Pew does not cover all the Echo Boomers I am referencing in my study. It does show some patterns we should expect overall from Echo Boomers.