Weekly Links: On Fourth and Short, Throw the Ball

Articles

The Surging Packers Are Exploiting One of the NFL’s Biggest Inefficiencies

Big data has the promise to change work as we know it. The ability to analyze large sets of data is transforming audits, tax compliance, and even financial advising. But this isn’t news to the sports industry, particularly baseball. Written by Michael Lewis, Moneyball describes how the 2002 Oakland Athletics were able to use data analytics to build team with a $44 million payroll and successfully compete against teams with payrolls nearly triple the Athletics’ payroll. And while other sports teams, such as the Houston Rockets, have successfully taken up data analytics, football teams have been slow to adopt. The Green Bay Packers, however, are looking to change that.

Investment Fees? Some Investors Don't Think They Pay Any

Do you know how much you pay to hold your investments? If you don’t, you’re certainly not alone. According to this study, 17% of respondents state they don’t know how much they pay in fees. Another 14% of respondents don’t think they pay any kind of fee on their investments. And that’s a tragedy. While transparency on fees is increasing, investors’ knowledge is still lagging. Many investors don’t know their advisors may be compensated in a variety of manners: an asset under management fee, a fixed-fee charge, or commissions on sales. While a fixed-fee charge is the most salient fee structure, and an increasing number of advisors are opting for this model, large swaths of the advising industry still make their living off sales commissions, whether on life insurance, stock and bond sales, mutual funds, or annuities. Furthermore, even you don’t use a financial advisor and simply hold a 401(k), investors are still paying fees on their investments. Every investment has a cost.

Tax Withholding Estimator

As the year ends, many taxpayers are wondering what kind of refund they’ll receive in the coming months. Many of these taxpayers, however, may be in for a surprise. While the average tax bill may have gone down since tax reform, many Americans are receiving smaller refunds, and that’s because their withholdings are wrong. The old W-4 form was never perfect, but it’s certainly gotten worse since tax reform. Compounding the issue, few employees have recalculated their withholdings since tax reform. But this may change, as the IRS is releasing a new W-4 form. Unbeknownst to many employees, the IRS also has an online tax withholding estimator. With this calculator, you’ll be able to determine how much you’ll owe in less than 5 minutes. Just make sure you have your latest paystub on hand.

Climbing the Wealth Ladder

If you were to receive a certain sum of money, what amount would have a material impact on your life? $100? $1,000? $100,000? This amount all depends on your personal circumstances. Wealth and money are relative things. $100 for person A may not have as much impact on person B. Nick Maggiulli, Data Scientist at Ritholtz Wealth, reimagines Stewart Butterfield’s “Three Levels of Wealth” into six levels, ranging from Paycheck-to-paycheck to Philanthropic freedom. What level are you on? Personally, restaurant prices still matter.

Podcasts

Pulling the Oars as CIO of Wesleyan University

How does a person go about managing a $1 billion endowment? On this episode of Capital Allocators, Anne Martin, CIO for Wesleyan University, sites down with Ted Seides to discuss exactly that. After spending time in the technology world, Anne went on to spend roughly six years at Yale’s endowment, learning under legendary David Swensen. Tune in to hear how Anne has guided Wesleyan’s endowment fund from roughly $500 million to $1 billion a decade later.

You're Giving Your Boss A Loan

If someone came to you and asked to borrow a large amount of money for two weeks, without giving you any compensation in return, would you do it? You’d probably have to take some time to think about it. But that’s exactly what most of us do every pay period. We work for two weeks, without any compensation in between, get paid once, and then repeat the whole process. With the rise of payday loans, more and more employees are willing to pay a small fee to receive their salary that same day. Would you take this deal?

How to Hate Taxes a Little Bit Less

Individual federal income taxes make up the largest chunk of revenues for the U.S. government. Meaning any decrease could have huge impacts throughout the U.S. economy. Even so, Americans short the government nearly $500 billion every year. This may pose significant issues for the government, but economists love it. This short fall offers the chance to study human behavior and economic behavior. For instance, what if we allowed Americans the chance to allocate how their money is spent? Or, what if, similar to the UK, the I.R.S. used psychology to alert taxpayers of their underpayments? Perhaps most interesting, the average W-2 American isn’t the issue, it’s those whose income is largely derived from sources not easily tracked by the I.R.S. (think independent contractors, partnership income, or sole proprietorship income).