WHEN I WORKED FOR a personal finance magazine in the mid-1990s, I wrote a story about conmen who met their marks in internet chat rooms devoted to stock investing. One of the slickest tricksters went by the name of Josef von Habsburg. He told people he was descended from Austrian royalty. In researching the story, I called the police in von Habsburg’s hometown of Birmingham, Michigan, a suburb of Detroit. The local police knew him as Josef Meyers and said he was about as royal as you or me. He was a gifted storyteller, however, who maintained an elaborate false identity for more than 20 years, including speaking English with a vaguely European accent. In investment chat rooms, he’d identify himself as a foreign exchange trader and heir to an Austrian royal fortune. A 61-year-old Texan who met von Habsburg was among those taken in. He sent him $10,000 to invest in a hedge fund that von Habsburg claimed to run. “Very early on I asked him if he was licensed as a broker,” the man told me. “He said, ‘Oh, you have to be.’ I took his word for it.” After the spell of Habsburg’s stories wore off, “I was terribly embarrassed,” the retired IBM executive said. “I knew I’d been screwed.” The types of scams people pull have changed over the years. Cryptocurrency thefts and computer hacking now predominate. What hasn’t changed is human nature, including the desire by some to profit through deception. I thought von Habsburg’s grift was finished once my story was published in February 1995. By then, he’d been charged with securities fraud by the Securities and Exchange Commission in the fake hedge fund case, and been publicly identified as a conman in a national magazine. I went on to other stories and never realized his career was only starting to blossom. A gifted conman doesn’t stop spinning yarns just because he’s been charged. He just trains all his skills on the officials trying to put him behind bars. In this case, von Habsburg was able to maintain his false identity while he worked as a confidential informant for the FBI in New York for many years. Von Habsburg would ingratiate himself with shadowy figures operating on the margins of Wall Street, and then introduce them to his handler, an undercover FBI agent named Michael Grimm. Over lavish lunches at places like the Waldorf Astoria, the mark, the conman and the FBI agent would discuss possible financial frauds, such as international money laundering—all while their conversations were secretly recorded. When the net was sprung, the mark got arrested, charged and typically pled guilty. Von Habsburg was free to reel in another mark for law enforcement. He also ran cons of his own on the side, like allegedly forging a $100,000 check. If he got caught, his FBI handler would talk to the judge and prosecutor privately. The charges would get dismissed and von Habsburg would walk away a free man. I only learned about the second half of von Habsburg’s career years later from a writer at The New Yorker. How had I found out about von Habsburg, the writer asked me? I told him I’d gone to the Securities and Exchange Commission and came across his name in the files of enforcement actions. [xyz-ihs snippet="Mobile-Subscribe"] The writer, Evan Ratliff, said he’d looked through the SEC’s files, too, but found nothing under von Habsburg’s name. I told him I’d be happy to run my search again and call him back. I hopped online and went to the SEC’s Edgar database. I ran my search a dozen ways using several different names. Von Habsburg never came up. It was like a scene in a spy movie—the undercover agent’s identity had been scrubbed from the federal database. Giving von Habsburg a “get out of jail free” card was like turning an arsonist loose in a match factory. He eventually became friendly with Barbara “Bobo” Rockefeller, the elderly ex-wife of Standard Oil heir Winthrop Rockefeller. After he talked his way into living in her Upper East Side mansion, her children noticed that a valuable French antique had disappeared. Von Habsburg said he’d removed it for safekeeping. It later reappeared—for sale at a Sotheby’s auction. A Detroit News article identified him as both an FBI undercover witness and one of Michigan’s biggest deadbeat dads. Years before, he’d abandoned a wife and children in Michigan, who were owed a large sum in child support. When the FBI didn’t step in to protect him in the highly publicized case, he was sentenced to three-and-a-half years in prison. What became of his FBI handler, Agent Michael Grimm? He parlayed his law-and-order experience into a seat in Congress, representing Staten Island. After losing re-election, he kept two sets of books at a Manhattan restaurant he’d opened. He was convicted of wage fraud and underreporting his income, and was sentenced to eight months in prison. Is there a lesson to this story? I know HumbleDollar readers are too smart to buy securities based solely on internet discussions, especially when they’re portrayed as an inside tip or the score of a lifetime. Still, one thing I learned from my reporting was that conmen target marks who live far away. It’s unlikely the police in Texas will fly to New York to investigate a white-collar crime if no victim was physically harmed. Today, grifters often pursue their con over the computer while living in foreign countries. Back then, marks might be asked to invest by overnighting a check by FedEx. The conmen wanted to avoid U.S. mail or bank transfers, which trip off mail and wire fraud charges that are policed by national law enforcement agencies. Today, criminals manage money transfers online, and bounce the funds around through overseas accounts to make them impossible to track. The good news: It’s a snap to see if someone’s a registered broker by looking them up on Finra’s BrokerCheck, which contains a wealth of information. As a favor to a friend, I once looked up her broker and found that he was facing Ponzi charges in Massachusetts. She said she was disappointed because he was so friendly and always seemed to call with such good investment suggestions. It just goes to show that it pays to be skeptical—especially when someone seems like a real prince. Greg Spears is HumbleDollar's deputy editor. Earlier in his career, he worked as a reporter for the Knight Ridder Washington Bureau and Kiplinger’s Personal Finance magazine. After leaving journalism, Greg spent 23 years as a senior editor at Vanguard Group on the 401(k) side, where he implored people to save more for retirement. He currently teaches behavioral economics at St. Joseph’s University in Philadelphia as an adjunct professor. The subject helps shed light on why so many Americans save less than they might. Greg is also a Certified Financial Planner certificate holder. Check out his earlier articles. [xyz-ihs snippet="Donate"]

LET’S NOT CALL THEM resolutions because that imposes a sense of obligation. Rather, think of these as adjustments that could give you—and maybe your kids—a smoother ride in 2022: Check the beneficiaries on your employer’s retirement plan, IRAs and life insurance policies. Sometimes money winds up with an ex-spouse or maybe a younger child gets left off the list. This is an easy fix—while you’re alive. After that, it’s a mess. How much do you pay for your investments—in dollars, not percentages? If it isn't clear from your annual statement, why not give the investment company a call? If the answer seems large, ask how it might be reduced. As Vanguard Group founder Jack Bogle liked to say, “In investing, you get what you don’t pay for”—because lower costs leave more money for the investor. If you have a young adult home for the holidays, one who has a job with a 401(k), ask if he or she knows the match. If that draws a blank, explain that matching contributions are “free money.” A third of retirement plan savers miss the full match—even when they’re automatically enrolled in the plan. The 401(k) contribution limit is increasing by $1,000 to $20,500 in 2022. If you get a year-end raise or bonus, this could be a great time to boost your contribution rate without feeling any loss in income. The contribution limit is $27,000 if you’re age 50 or older and your plan allows catch-up contributions. Many experts advise rebalancing back to your target asset allocation once a year or so. This controls your portfolio’s risk level, while pushing you to sell a sliver of your winners and add money to lagging investments. This year, it would likely mean selling stocks to buy bonds. If that sounds terrible, think of it this way: Sell high and buy low. There are no taxes for rebalancing within a 401(k), IRA or other tax-deferred accounts. But in a taxable account, make sure you understand the tax cost before making any investment sales. Look up the performance of your actively managed mutual funds. If they’ve consistently earned less than their benchmark, maybe it’s time to join the exodus to indexing. Again, there are no taxes owed if you switch funds within a 401(k) or IRA, but you’ll want to know the tax costs before making any changes in your taxable account.

I CAN’T CALL THE BOOKS I buy “beach reads” because, honestly, they can get dense. Still, if—like me—you enjoy learning about investing, economics or even the religious overtones of capitalism, here are five books that might make for insightful summer reading or, perhaps, induce napping in the hammock. The Physics of Wall Street by James Owen Weatherall. This book begins with the assertion that “Warren Buffett isn’t the best money manager in the world” and then spends the next 224 pages introducing us to genius PhDs who’ve whipped the S&P 500 by anticipating the prices of securities. Doyne Farmer was working on chaos theory at Los Alamos National Laboratory when he realized his understanding of complex systems could be applied to options. With a stake from a Swiss bank, he opens his confidently named Prediction Company. “Over the firm’s first fifteen years, its risk-adjusted return was almost one hundred times larger than the S&P 500 return over the same period,” Weatherall writes. This book explains why so many physicists have quit academia for huge-paying jobs at hedge funds. Using black-box programs, high-speed trading and scientific breakthroughs hardly anyone else understands, they arbitrage securities in complex trading strategies. When it works, they make billions. When it fails, it sometimes takes a government bailout to prevent widespread economic collapse. Lights Out: Pride, Delusion, and the Fall of General Electric by Thomas Gryta and Ted Mann. GE went from having the largest stock market value in the world to struggling to make payroll in less than 10 years. In Act One, star CEO Jack Welch massages quarterly earnings so perfectly that GE’s stock rises 40-fold between 1980 and 2000. In Act Two, Welch’s successor Jeffrey Immelt steers a deflating balloon. He tries to spin the industrial giant as a digital company still worthy of a lofty stock multiple. The Great Recession of 2008 pulls the curtain back on that fiction, with GE Capital requiring a $139 billion government bailout. At the same time, demand stopped for GE’s heavy-industry mainstays: locomotives, CT scanners, jet engines and power turbines. Act Three, still underway, is the biggest yard sale of all time. The company is selling off everything it can to live another day. Its latest plan—not covered in the book—is to split into three separate companies. GE will slim down to a single division—the aircraft engine manufacturer. All companies have a lifespan. This is what happens when the biggest one enters the nursing home. The Economists’ Hour by Binyamin Appelbaum. As presidents realize their job renewal depends on delivering prosperity, economic professors are summoned from Chicago or Cambridge to try out their pet theories, often to startling effect. The biggest trend, championed by the late Milton Friedman of the University of Chicago, was to replace government regulation with free markets. The dollar is taken off the gold standard and allowed to float. Millions more people can afford to fly nowadays because the price of airline tickets was deregulated. In a lesser-known episode, a blind economist from the University of Rochester, Walter Oi, helps persuade Richard Nixon to end the draft. Oi, accompanied to the Oval Office by his guide dog, argues the draft wastefully interferes with young men’s career choices—at a cost to the economy of $5 billion a year. He recommends raising soldiers’ pay so the Army can compete for volunteers in the job market. [xyz-ihs snippet="Mobile-Subscribe"] At a hearing, U.S. Army General William Westmoreland objected, saying, “I do not relish the prospect of commanding an army of mercenaries.” Milton Friedman fired right back: “General, would you rather command an army of slaves?” Religion and the Rise of Capitalism by Benjamin M. Friedman. The former chair of Harvard’s economics department has written a theological tome showing how religious belief, and Protestantism in particular, is woven through American capitalism. Under John Calvin’s strict interpretation, who gets into heaven is predestined from birth. No amount of good work can change it. So how might a pious Puritan in Massachusetts signal that he’s in God’s good graces? Simple: Work hard and get wealthy. Over time, Calvin’s cheerless faith has faded. But personal traits like diligence and thrift became secularized, lending a powerful force to capitalism. Friedman traces the development of Christian thought, and its influence on economic belief, through to the end of the 20th century. A surprising recurring theme is a belief in millennialism—that the end is near. Like Charlie Brown and the football, these end-timers always seem doomed to disappointment. Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou. This is the story of the Theranos blood testing company told by the reporter who revealed—on the front page of The Wall Street Journal—that its machines didn’t work. The company soon collapsed, and its two cofounders were convicted of fraud. How did a Potemkin company get so large? Credit Silicon Valley mythmaking—plus iron-clad nondisclosure agreements. CEO Elizabeth Holmes dropped out of Stanford University and modeled herself after Steve Jobs. Her mesmerizing speeches of a world transformed by health technology fooled even Henry Kissinger and George Schultz, two former secretaries of state who served on the board. Anyone who had a contrary view of the company came under heavy legal attack. Schultz’s grandson, Tyler, working a summer internship at the company, realized something was rotten. But when he told his grandfather about the problems, they became estranged. Holmes attended Schultz’s 95th birthday party. Tyler wasn’t invited. Theranos’s largest individual investor at $125 million was Rupert Murdoch, whose News Corporation owns The Wall Street Journal. Four times Holmes asked Murdoch to muzzle the reporter who pulled down the whole rotten façade. Murdoch told Holmes he had trust in the paper’s editors—and lost his investment. Greg Spears is HumbleDollar's deputy editor. Earlier in his career, he worked as a reporter for the Knight Ridder Washington Bureau and Kiplinger’s Personal Finance magazine. After leaving journalism, Greg spent 23 years as a senior editor at Vanguard Group on the 401(k) side, where he implored people to save more for retirement. He currently teaches behavioral economics at St. Joseph’s University in Philadelphia as an adjunct professor. The subject helps shed light on why so many Americans save less than they might. Greg is also a Certified Financial Planner certificate holder. Check out his earlier articles. [xyz-ihs snippet="Donate"]

LESS THAN HALF of Americans—46%—have tried to calculate how much they need to save to live comfortably in retirement, according to a 2022 survey by the Employee Benefit Research Institute. I often meet extremely bright people—doctors, residents, PhD students and professors—who say with a sheepish smile that they don’t understand the intricacies of their retirement plans. For some, this lack of understanding is a choice. People who sense they haven’t saved enough, or any money at all, may not want to know where they stand financially. But arguably these and most other Americans have also been shortchanged. Personal finance is not a standard offering in the general education curriculum in the U.S. Last year, when I asked the students in my college economics class how many had previously taken a personal finance course, only one student out of 21 raised a hand. This vacuum is worrying because so much rides on successfully budgeting, saving, investing and other financial decisions. Next Gen Personal Finance is a nonprofit group trying to fill that void. Its goal is to make sure every student who graduates high school has completed at least one personal finance class. Thanks partly to the group’s lobbying, six states added a personal finance requirement for high school graduation in 2022. That brings to 18 the number of states that mandate personal finance study. Only 24% of U.S. public high school students currently receive finance education. That’s projected to rise to 40% thanks to the six additional states that just mandated a state-wide personal finance curriculum—Florida, Georgia, Kansas, Michigan, New Hampshire and South Carolina. In the 32 states and the District of Columbia that lack a mandate, an average of just one student in 10 will take a personal finance class before graduating. In some cases, the local school district mandates a personal finance course. Most of the time, however, a money class is offered as an elective, folded into another subject like math—or it’s simply not offered at all. To help build a personal finance curriculum, Next Gen provides school districts with free course materials and teacher training. Some 77,000 educators have been trained to teach a money curriculum, and around 20,000 more join annually, according to Tim Ranzetta, an entrepreneur from Palo Alto, California, who is Next Gen’s co-founder and chief financial backer. [xyz-ihs snippet="Mobile-Subscribe"] Next Gen’s financial education curriculum is comprehensive. How to use credit cards. How to invest. Budgeting, taxes and insurance. And, perhaps most pertinent to high schoolers, how to afford college without sinking into a pit of debt. “It’s about behavior change,” Ranzetta said in a telephone interview from California. After taking the class, he said, students “open up savings accounts. Set up Roth IRAs. Make better decisions on student loans.” Their knowledge can also be passed on to parents in a ripple effect. “Kids are taking this home to their families. Parents are signing up for IRAs after their son comes home” from class, Ranzetta added. The absence of financial education is particularly acute among lower-income students. In school districts where 75% of students or more qualify for free or reduced-cost lunch, less than 5% of children are required to take a personal finance class to graduate, according to Next Gen’s research. These districts often lack the resources to add a new subject, Ranzetta said. To assist these students, Next Gen is making three-year grants to 15 such districts to allow them to hire a personal finance expert to “be the evangelist” for adding financial education classes. Basketball great and businessman Michael Jordan and his Nike brand have endowed six of these grants, placing financial education advocates in school districts, including in New York City, Detroit and Jordan’s home state of North Carolina. Ranzetta said he became interested in this work when he was asked to speak at a school about personal finance. He said he discovered students had a natural affinity for the topic because they sense how important it could be to their future. “One hundred percent of kids,” he said, “are going to have to learn to manage their own money.” Greg Spears is HumbleDollar's deputy editor. Earlier in his career, he worked as a reporter for the Knight Ridder Washington Bureau and Kiplinger’s Personal Finance magazine. After leaving journalism, Greg spent 23 years as a senior editor at Vanguard Group on the 401(k) side, where he implored people to save more for retirement. He currently teaches behavioral economics at St. Joseph’s University in Philadelphia as an adjunct professor. The subject helps shed light on why so many Americans save less than they might. Greg is also a Certified Financial Planner certificate holder. Check out his earlier articles. [xyz-ihs snippet="Donate"]

The best financial advice I know is “live on less than you earn and save the difference.” For too many, though, there’s nothing left over to save after paying the bills. Basic living costs seem much higher these days. Housing can take an outsized bite of family income as rents and housing prices have risen. Factor in other big expenses like health insurance, childcare, and student loan repayment, and there may not be any money left to save at month’s end. I propose a new chapter in the financial planning curriculum—ways to make more money. That wasn’t a core subject in my Certified Financial Planner program. The unstated assumption, I think, is that clients who consult with a CFP are already well-fixed. To get started, I’ll pitch six ideas. It does feel like I’m stating the obvious, however. You probably have good ideas from your life. Please add them in comments—I look forward to reading them. Here are mine: If still in school, know what your college major pays before you—or your child or grandchild—graduates. You can look up the average first-year earnings of many majors at specific colleges at a site called CollegeSimply. I learned from this site that at Purdue University, biology graduates earn $33,500 a year, on average, versus $69,200 for mechanical engineers. Try to major in something that pays. If you’re already in the workforce, continue your education by earning a professional designation or advanced degree. Many employers, like mine, will pay the full tuition for a job-related degree, including an MBA or CFP. For white collar workers, these degrees are the equivalent of belonging to a union. Job hop for a pay bump. I wrote about this once during the pandemic, when job seekers briefly held the upper hand in salary negotiations. A reader commented that this seemed disloyal to employers. If you agree, then ask your boss what it would take to be promoted. Teach what you know. Nearly half of all college faculty are adjuncts these days. The hours can be long, and the pay is so-so, but if you teach, you will be perceived as an authority in your field. You might gain job security in addition to a part-time paycheck. The world of side hustles is enormous. I’ve done freelance reporting and found it slightly rewarding, but every dollar counted at that moment. My sister contributed her pay from teaching exercise classes to her IRA. If you go this route, just try not to wear out your car delivering pizzas. Become a landlord. Rental income paid roughly half my mortgage from the time I bought a property with two houses on it in 1997. Yet it doesn’t take a second home to earn rental income. In October, I rented an Airbnb on the first floor of a charming artist’s home on Deer Island, Maine. In the summertime, she also rents out her barn and allows glamping—bougie camping—in her wooded backyard.  

THE WAVES AND WEATHER are always changing on the coast of Maine. Last summer, I paddled my canoe to a nearby island in the sun, and two hours later had to feel my way back through a fog that hid the mainland. There are longer-term forces at play here, too. The black mussel beds I steered around as a child are all gone now. So is the sea grass that made a good hiding place for crabs. These disappearances, I’m told, are due to climate change. The Gulf of Maine has warmed faster than virtually any other ocean surface in the world. Tides are higher now, and a January storm knocked a nearby house off its foundations. The waves battered down brick walls at the bell tower at nearby Pemaquid Point Lighthouse. Sensing the trend, I raised the property insurance on my cottage last year. I was receptive, then, when the rector of my church recommended a new book about climate change with a surprisingly hopeful title: Not the End of the World. Its author, Dr. Hannah Ritchie, is a senior researcher in the Programme on Global Development at the University of Oxford. Ritchie subjects climate claims to rigorous factual analysis and finds more hope for our future than most. Yet hers is not a climate denial book. With the current carbon reduction policies we have in place, she estimates that the planet may warm by 2.5 to 2.9 degrees Celsius. This is far more than the 1.5 degrees sought in 2015’s Paris Climate Accord. Yet, in Ritchie’s thinking, we’re halfway toward solving our problem of excess carbon in the atmosphere. If no policies had changed, the climate would be warming by much more—by 4.1 to 4.8 degrees Celsius, she calculates. Yes, total carbon emissions are rising, she notes, but emissions per person peaked in 2012 and have fallen since. To cite just one spot of progress, electricity from solar panels, which was the most expensive form of power generation 10 years ago, is the least expensive source today. Are solar panels popping up on the roofs and garages of your neighborhood? They are in Maine, too. Meanwhile, coal is dying. Thirty years ago, the U.S. generated 55% of its electricity by burning coal. It now accounts for less than 20%. See if you can guess the correct answer to this quiz question. What has happened to carbon emissions in the U.S. over the last 15 years? Have they: a) Increased by more than 20% b) Increased by 10% c) Stayed the same d) Fallen by 20% The correct answer is d), but it was only chosen by 19% of respondents in a recent survey. Two-thirds chose either a) or b). “No wonder people think we’re screwed,” Ritchie observes. A defeatist outlook can leave people feeling hopeless. Ritchie recommends that instead we adopt a philosophy of “urgent optimism,” as she calls it. “Optimism is seeing challenges as opportunities to make progress,” she writes. “It’s having the confidence that there are things we can do to make a difference.” Okay, but what can we do specifically? The biggest of Ritchie’s recommendations would be to trade an SUV for an electric vehicle. It does take more energy to manufacture an electric car, Ritchie notes. But after 12 years, an EV would be responsible for one-third of the CO2 emissions of a typical gas-fired car. The next biggest step would be to adopt a vegan diet. Livestock creates about 20% of the world’s carbon. If buying an EV or going vegan feels like too big a leap, here are other, incremental steps Ritchie recommends:   Eat less lamb and beef. Substituting chicken for beef can reduce our dinner plate’s carbon load by 88%. Fish are an even lower-carbon source of protein. Wheat, peas, beans, cereals and nuts are better still. Wash your clothes in cold water. My washing machine has a water temperature dial that’s easy to change. If you can afford it and have the option, buy your electricity from a green energy provider that obtains electricity from wind, solar or hydropower sources. Ritchie says she always uses the microwave when cooking. It cooks food fast and is more carbon-efficient than the cooktop or oven. Buy more Tupperware. About 20% of our food goes into the garbage bin. And don’t think that the “best by” date means throw it out after. It simply means the food is at its peak, not that it’s gone bad afterward. People are inherently good and want to do right by the earth. Yet there are many steps people think will reduce their carbon footprint that have little effect, Richie writes. Here are some things she says we can “stress less about” because they make little difference to our carbon footprint: Using a dishwasher or hand washing your dishes doesn’t matter in the grand scheme of things. Recycling our plastic bottles has a negligible effect on the world's temperature. Leaving a computer or TV on standby power mode isn’t going to make much difference to the climate problem. Leaving a phone charger plugged in when not in use also isn’t a game changer. Eating organic food can be worse for the climate if more resources are used to produce it. Choosing paper bags over plastic at the checkout doesn’t affect the world’s climate, though it may reduce the number of plastic bags flapping in trees. Eating local foods doesn’t matter much because transport is just 5% of food’s carbon cost, on average. Ritchie herself eats avocados from Mexico. Greg Spears is HumbleDollar's deputy editor. Earlier in his career, he worked as a reporter for the Knight Ridder Washington Bureau and Kiplinger’s Personal Finance magazine. After leaving journalism, Greg spent 23 years as a senior editor at Vanguard Group on the 401(k) side, where he implored people to save more for retirement. He currently teaches behavioral economics at St. Joseph’s University in Philadelphia as an adjunct professor. The subject helps shed light on why so many Americans save less than they might. Greg is also a Certified Financial Planner certificate holder. Check out his earlier articles. [xyz-ihs snippet="Donate"]