What the experts say
Selling a piece of your future
Some college students are electing to hand over a cut of their future earnings rather than take out a student loan, said Claire Boston in Bloomberg Businessweek. “A new kind of financial instrument called an income-sharing agreement, or ISA,” allows students to fund part of the cost of tuition. The loan is repaid with a set percentage of their salary after graduation; the terms vary by major. At Purdue University, an English major who borrowed $10,000 would pay 4.5 percent of income for an English degree for a little under 10 years. A grad with a degree in computer science would pay 2.57 percent for about seven years. “The last big ISA experiment—at Yale University in the 1970s—ended up as a cautionary tale” after many students defaulted and others were left on the hook for far more than they expected. But students will have “more protection under newer plans,” which are managed by investment firms, not schools.
What makes a ‘super saver’
Housing costs are the biggest difference maker for those who save a lot of money versus those who don’t, said Catey Hill in MarketWatch.com. According to new research from TD Ameritrade, “super savers spent just 14 percent of their incomes on housing, while regular folks dropped 23 percent.” It’s true that some people pay more for housing to get into a better school district or a safer area. “But there’s plenty of room to downsize”: New homes “on average have 1,000 more square feet than they did in the 1970s.” And you probably don’t need that extra space. One family in Colorado downsized from a three-story condo to an 845-square-foot apartment, saving $7,300 a year.
Investors avoid a Millennial fund
An investment fund that focuses specifically on companies that target Millennials has struggled to generate interest despite very strong returns, said Simon Constable in The Wall Street Journal. The Global X Millennials Thematic ETF has gained 60 percent since its launch in 2016. The theory is that Millennials’ purchasing power will increase over the next few decades, providing a lift for the “companies that cater to them.” But assets under management totaled just $35.2 million—“on Wall Street, that’s considered paltry”—and one analyst believes the use of the term “Millennial” has limited its appeal. “If we’d called it a ‘new consumer fund,’ the reaction would have been different,” the analyst said.