NYT had a good article this morning (I thought) on the benefits of a buy and hold strategy. I just realized it was published 2 weeks ago, but in case you didn’t see it: Gift article: https://www.nytimes.com/2025/08/15/business/investing-fund-returns-interfere.html?unlocked_article_code=1.h08.7x59.0SCNXY3jVGSq&smid=url-share
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We make our kids take a personal finance class in high school. My older kid had a great teacher who gave him an excellent foundation. I teach him additional stuff, but he knows a lot already.
My younger kid is a senior and I asked how the class is going so far. He said “Uh, this is our teacher’s first time doing this class and I don’t think he knows much about finance.” I asked why and he said “I mentioned that I had most of my savings in a Roth IRA and he didn’t seem to know what that is. And he says it’s a bad idea for young people to live with their parents to save money on rent”.
So I guess that means I’ll be teaching this kid all the stuff about personal finance. Sigh. He does show an interest in it at least. Today he asked me what his credit score is lol.
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Someone teaching a personal finance class who doesn’t know what a Roth is? Wow.
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Sounds like the newbie who also has to teach drivers’ ed.
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For son’s freshman year, there was no room for him in the study hall class his open block. So he got put into the Business class, with an instructor who seemed to mainly be the football coach. Son perhaps learned some good life skills there. At the time we thought it was funny that his GPA would have been better with study hall, since Business class was unweighted.
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Has anyone found a tax calculator online for 2025 income taxes that takes into account the latest tax changes? I’ve found several 2025 calculators, but none that actually include the changes from the tax bill. Seems like someone would have figured that one out by now.
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I have not seen anything. It appears that the calculators still do not reflect all of the changes.
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Another thread, confirming the same.
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That’s funny. I was just on Bogleheads looking for that information, and got distracted by another thread. Thanks.
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I’ve been using Glenn Reeves’ tax forecaster spread sheet for a few years now, and he has a 2025 version available that seems to reflect what’s coming. A quick google search will find it.
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I am also concerned. I don’t understand why the market is still climbing to the sky when the fundamentals are poor. It appears obvious that we have stagflation on the way, so why does the market keep going up?
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Dont try to understand why or predict what will happen next. If you ever listen to economists, they cant predict anything. They just explain why something has already happened ex post facto.
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A crash will happen at some point. Who can predict that? No one knows. If one could predict where they might trip and fall in the future, they would put a nice pile of soft straw in that spot, to paraphrase my grandfather’s saying.
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Media often presents a different view than actual numbers or market expectations. For example, you mentioned stagflation. In every month of the past 2 years, CPI inflation has ranged from 2.3% to 3.0%. This is not high inflation. Many economists would say this is near optimal inflation. Market expectations can be calculated based on TIPS and other factors, which suggest the market as a whole expects relatively low inflation to continue for years – not stagflation.
It’s a similar idea for most other market fundamentals. Unemployment remains near 4%. It’s not as low as the 3.x% in portions of 2023, but it’s within 1% of the lowest unemployment ever recorded in past 75 years, so not high. While GDP had a blip towards the start of the year, GDP had the highest increase since 2023 in the most recent quarter. Again it’s not suggestive of stagflation.
Perhaps more importantly, the stock market and economy only have a loose correlation with each other. The stock market is largely driven by investor sentiment and expected/observed performance of large companies. GDP growth, inflation, unemployment rate, and similar measures of the US economy often only have a loose correlation.
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Because the #s are still good (it’s the anecdotes that aren’t) and rates are headed down and declining rates are typically bullish for stocks. The stock market is judging tomorrow, not today.
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I saw someone talking about the PE for the S&P hit like 30 which it has only done 3 other times in the last 25 years.
Right before the dot com bust, housing crisis, and Covid. The person was explaining it feels more like the dot com time.
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The market is hoping rate cuts will enhance demand.
I don’t see it and if Trump is able to fire Lisa Cook, they will raise too quickly and shock inflation to the upside.
This is a great time (for everyone) to make sure chosen asset allocation is one you’re comfortable with even assuming a big drop in equities as well as making sure you have an emergency fund appropriate to your personal risks (job, health, etc).
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Not “right before”. PE was <30 just before all of these events. Dot com bust began in 2000. PE peaked at 46 almost 2 years later near start of 2002, near time crash ended. Housing crash began in 2007. PE peaked at 122 almost 2 years later during 2009, near time crash ended. COVID crash began in early 2000. PE peaked at 38 near 2001, after crash had ended. PE often peaks near end of crash, not before. The crash is often primarily based on future expectations. The earnings portion of PE reaches minimum later, after the crash has already occurred.
Rather than direct PE, something like Shiller PE ratio (CAPE) often peaks just before crash, and it is quite high now, although well short of peak before dot com crash. Organizations that have more dire market predictions usually are well correlated with CAPE.
For example, Vanguard predicts the following average returns over next 10 and 30 years. This prediction was last updated based on returns from end of June. With the increased CAPE since June, the predictions will almost certainly be more dire in the new update for end of September, likely under 2%/year for US growth (tech), like their predictions predictions towards start of 2025 (before March decline).
It’s also worth noting that Vanguard has been making this type of dire prediction on US tech for over a decade, and Vanguard’s predictions for US tech and most other equities during this period have been worse than just guessing the average historical return. As noted earlier, their model is well correlated with CAPE, so speculative asset classes with high expected growth (high price in relation to current earnings) are often predicted to have low returns.
I suspect Vanguard sounding the alarm partially relates to marketing their advisor service. If Vanguard says there is an emergency and recommends switching to an allocation of 70% bonds and 5% US growth (see Stocks Vs. Bonds: Vanguard Says 70% Allocation to Fixed Income Is Smart - Business Insider and Bonds remain in favor in time-varying model portfolio | Vanguard ), it increases portion of persons who hire Vanguard’s advisor service to make drastic changes to their portfolio, to mitigate the perceived emergency.
Vanguard Market Predictions: Median Annualized 10 and 30 year Return
- US Value: 6.8%/year, 6.5%/year
- International-Developed: 6.7%/year, 7.1%/year
- International-Emerging: 6.1%/year, 5.9%/year
- Aggregate Bonds: 4.5%/year, 4.6% year
- US Growth (tech): 2.9%/year, 4.7%/year
- Inflation: 2.0%/year, 2.0%/year
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I wonder how the economic split is going to play out. I’ve noticed prices going up, people concerned about their jobs, housing and insurance costs going up. Good grief, our health insurance went up $270/ month per person for next year already.
On one side, you have people who purchased their homes long ago, either mortgage paid off or at low rates. Still spending the same, feeling secure because the market has gone up substantially. They’re doing just fine, and if their kids need help, no problem, the bank of Mom and Dad is wide open.
On the other side, you have those who are slammed by increased costs in every direction, debt overload and no end in sight. No help available from family and no good outlook for the future. The haves and the have nots. How is this going to end?
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