1977: Ask Farnoosh: How Much Should We Pay for College? Plus: Her Investments Went Missing

“What happened was she got a customer alert that her email and phone number had been removed from her account. Okay. This is a major financial institution. I have the link to the New York Times article in the show notes. When she logged in, this woman discovered that her accounts showed a $0 balance and no records. Even her historical documents, like her statements, her tax forms, everything was missing. And so from her perspective, it looked like her money had been wiped out. Like, someone had hacked into her account and stolen all her money. Right? Like, what would you think? So she gets in full panic mode. She calls the company on her way to her job, and they told her that, well, she doesn't seem to have any accounts with them. They actually suggested that maybe she called the wrong bank.”

“So the basic question we all need to ask ourselves is, does the financial outcome justify the financial input? This is a very hard place for 19 year olds to live and think and breathe. It's hard for mature adults to, you know, think more about the money than the emotional ties to a decision. But does your financial make or break sugarcoat this? Deciding on where you go to school and how much you're gonna pay and how you're gonna pay for it can be a make or break financial decision, not just for the next four years, but for the rest of your life. The rest of your life. I can count on my hands the number of 40 year olds I know who are still paying back their undergrad and graduate student loans. They do not own a home. They hardly have any investments for their retirement. This has been a crippling decision for them.”

“If my kids were going to college right now and they were looking at a school school that was a $100,000 a year, it's kind of a nonstarter, I would say, in our household. But I would say, look. In lieu of going to that school, what if you chose a school that was 40% less? And I would give you the remaining 40% that we're not giving to this academic institution. I will invest this money for you. By the time you turn 30, you could probably buy a house. You could do whatever you want. You could start a business. You would have such a leg up in life. Again, really hard to have these conversations with teenagers, but you gotta have the conversation. It's hard. I I see parents, like, the kids are not happy with them. But it's a small price for you to pay for your kid's gain in the future. Let them be unhappy with you for now.”

“You know, I've come across this rule of thumb over the years in my work, and it's adjusted over the years too even this rule of thumb. I think as we're living longer, but it started as a rule of thumb where you take the number 100 and you subtract your age, and that number that you're left with, the percentage of that is the percentage of your portfolio that should be allocated to stocks. Well, now we're living longer. So many people, and I myself included, use 110 and subtract your age, and then that is the number you allocate to stocks. So for Lucia who's 35, 110 minus 35 is 75. So 75% stocks, that's called the age based rule. Then the remaining percentage, 25% for Lucia, would be allocated to bonds.”

“And, also, being in our forties, I was having this conversation with my husband last night at dinner. I was like, I'm really proud of us because we are taking a moment right now in our mid to late forties to say, okay. What do we need to do to be able to retire or to be able to arrive at retirement and not have anxiety over money? I'm gonna probably write about this because I don't think enough people talk about this. Maybe people are doing this, but I don't see the financial planning community saying, for example, hey, midlifers, here are the things that we want you to start checklisting because we now have the hindsight. We now know that for people who are turning 65, 70, 75, here are the big financial headwinds. Health care costs. Cost of living still is very high in your retirement age. Do we know what you're gonna be getting from Social Security? What are the gaps that we need to start filling and start filling incrementally today so that when you arrive in retirement, you're not shocked, surprised, feeling super behind.”