Sanjib Saha

I WAS FORTUNATE to find enough time during my working years to pursue various hobbies and other personal interests. My part-time work arrangement allowed me to have four-day weekends. I’d hoped that, after retirement, I would have even more time to take on personal projects.
But surprisingly, I found myself with less free time. Not only was I failing to start new projects, such as writing software for the website of the nonprofit I cofounded,

I LOVE TO TRAVEL—and it runs in the family. My parents were avid travelers, with my father receiving a generous travel allowance from his work every four years.
In addition, my father always managed his time and budget for numerous other trips. After his passing, my brother and I took turns maintaining the travel tradition with our mom, until plans were disrupted by the pandemic.
After retiring this year, I eagerly anticipated visiting my mother in India and taking her on a grand tour.

I’VE BEEN MARRIED TWICE, yet neither time could I take my newlywed wife on a proper honeymoon, let alone a lavish one. Hearing the honeymoon stories of others always left me feeling wistful, tinged with a hint of envy.
My first marriage was a bit rushed. My first wife—now my ex—and I wanted a no-frills civil marriage followed by a simple reception. But my parents insisted on a traditional Bengali wedding with its array of rituals,

AS I’VE TRIED TO HELP folks understand financial issues, I’ve come across numerous money misconceptions. I wasn’t surprised—because, before I learned better, I too misunderstood some of these issues.
Here are the top eight misconceptions I’ve encountered:
Misconception No. 8: Consumer prices drop when inflation falls. Inflation measures the pace of price increases. Declining inflation simply means that prices aren’t rising as fast, but they’re still going up, albeit at a slower rate.

SIX YEARS AGO, I MADE a big life decision: I opted to scale back my work week with an eye to easing into early retirement.
I stayed in the same role, but reduced my hours and responsibilities, took a proportional pay cut, and bid farewell to potential future promotions. Essentially, my human capital shifted from a growth investment to an immediate-fixed annuity for the remainder of my part-time employment.
The change turned out to be far more fulfilling than I’d anticipated.

AN UNPLEASANT PRICE shock awaits those who grew up in a low-cost-of-living nation and then relocate to a high-cost country. Coming from India, I experienced it firsthand, as I routinely converted prices into Indian rupees and compared them to the cost of similar items back home. In my initial years abroad, this made it challenging to open my wallet. Everything appeared overpriced.
It took time to come to terms with the fact that, despite higher living costs,

WHETHER MONEY BUYS happiness is a matter of debate, but a recent incident reinforced my conviction that financial security does indeed help. The incident would’ve caused me considerable distress a few years ago, when I was earning more but was still dependent on my fulltime job’s paycheck. My newfound financial security, however, transformed the situation into a truly memorable experience.
My wife, Bonny, and I both enjoy attending Indian music and dance performances. We make it a point to see the live shows put on by local groups and,

WHEN I SET OUT TO improve my financial knowledge, sites like HumbleDollar didn’t exist. Instead, I garnered insights from books, investment seminars and like-minded people. Still, my greatest lessons came from my own financial mistakes.
I’ve made many, and I still occasionally stumble. A few missteps were costly and had lasting repercussions, but the rest were less damaging, especially considering the lessons I learned from them. Here are six of what I call my “affordable mistakes.”
1.

LIKE MANY IMMIGRANTS living in the U.S., I regularly return to my hometown to visit family and friends. My trips to Kolkata are usually short and jam-packed, seeing not just contemporaries, but also the older generation, including aunts and uncles, my parents’ friends and my friends’ parents.
My two recent visits—one last fall and the other this spring—were no exception, but I had mixed feelings this time. Most of the older generation are now in their 70s and early 80s,

BACK IN 1989, AS I was finishing the final semester of my undergraduate degree in India, I managed to bag two decent job offers. The first was from a government organization in my hometown, and the second was from an out-of-state private company in western India. I had a few weeks to make up my mind.
I was leaning toward the second offer. Not only did the idea of living on my own in a faraway town sound adventurous,

HOW WE SPEND DEPENDS on how we feel about money.
To be sure, we’re supposed to spend according to our financial situation and needs. But life experiences can so badly distort our attitude toward money that our financial decisions end up being ruled by fear and insecurity rather than questions of affordability. Such is the case with an acquaintance—let’s call her Satee—whose money habits are at odds with her financial standing.
Satee grew up in a typical Indian family of four.

I’M A BIT EMBARRASSED to admit that, until I started toying with the idea of early retirement a few years ago, I was pretty ignorant about how Social Security worked. I didn’t even pay much attention to the FICA payroll taxes that were deducted from my paycheck.
As I looked into it some more, the prospect of receiving lifelong monthly checks from the government came as a pleasant surprise. I started researching how much I might get.

WHEN RESTRICTIONS ON travel eased this year, I visited Kolkata, India, where I grew up and my mother still lives. The airline ticket and other travel costs were almost 75% higher than my last visit four years ago.
This year, I’ve grown used to price shocks at every turn, from groceries to gas, so the steep ticket price didn’t shock me. What did surprise me was my feeling of affluence once I arrived.
Traveling to a low-cost country as a tourist doesn’t necessarily feel like a bargain because most items still have an international price tag.

INFLATION CROPS UP in almost every conversation I have with friends and acquaintances. Everyone’s getting squeezed by higher prices. Folks complain not only about where prices are today, but also about how quickly they rose.
Prices today seem shocking compared to last year or the year before that. But how do they compare to prices from 10 years ago? To find out, I calculated the average annual inflation rate over trailing 10-year periods using the Consumer Price Index for All Urban Consumers (CPI-U).

I ENVY THOSE WHO can remain patient and calm in almost any situation. Thanks to my neurotic personality, I find it hard to wait for an outcome over which I have little control. This year, I narrowly escaped that sort of agonizing experience. What happened? We found ourselves selling our home during 2022’s suddenly cooling real estate market.
I was surprised last year when the red-hot property market pushed our modest home past the $1 million mark.

THE AGE-OLD DEBATE about not borrowing to buy depreciating assets came up again in a recent HumbleDollar article. Despite being a big proponent of debt-free living, I could relate to the story of borrowing to buy a car. In fact, I’m guilty of having gone deeply into debt in my younger days to feed my passion for music—and I don’t regret it.
I grew up listening to Indian music of various genres,

DO YOU INVEST IN options? Think twice before saying that you’d rather go to Vegas. My bold claim: Options investing has a lot in common with investing in stocks and corporate bonds.
Intrigued? Let’s recap a European style call option. It’s a discretionary contract that allows someone to buy an underlying asset at a set strike price at a future date. Let’s say the buyer of the call, Bob, has an option on a stock with a strike price of $100.

I WAS PLEASANTLY surprised recently when a lump-sum dividend payment showed up in my brokerage account. It was from a preferred stock I bought a few years ago to boost my investment income. The windfall reminded me of the three criteria I’d used to screen preferred shares:

Taxation. Unlike bond payments, which are taxed as ordinary income, the income payments from most—but not all—preferred stocks enjoy the favorable tax treatment given to qualified dividends.

MY TAXES ROSE 50% in 2021. I’ve never paid so much before, not even during my peak earning years. I’m not upset about having to pay my fair share, but the extent of the increase puzzled me. After examining my tax return, I came away with a handful of insights.
To be sure, I wasn’t expecting a large refund. The reason: I suspected that a onetime employment windfall would cause me to owe money,

I RECENTLY WROTE about missing the chance to harvest tax losses. A reader decried this as market timing, which I found surprising. But on second thought, I can see where the reader was coming from.
Suppose we define market timing as any buy or sell decision that’s taken only when the time is right. Using this definition, I’m guilty as charged.
But if that’s the case, is all market timing bad? I’d argue it depends on the intent behind the action.

I’VE BEEN WAITING since late last year for a stock market correction. No, I’m not sitting on a pile of cash and looking to time the market. Instead, I’m simply hoping to trim my tax bill.
Last October, I sold the recently vested shares of my company stock and used the proceeds to buy Vanguard Total Stock Market ETF (symbol: VTI). This sell-high-buy-high exchange was meant for diversification, but I also hoped that the market would drop later.

I GREW UP IN INDIA. There, it’s quite common to have outside help for household chores. Most middle-class families hire someone to help with washing, dishes and cleaning. Affluent households typically have a cook, driver and housekeeper.
After coming to the U.S., I noticed that most households weren’t dependent on domestic help, thanks to appliances like a dishwasher, vacuum cleaner and washer-dryer. A few coworkers went as far as building their own cabinets and decks,

I DEVOTE A GOOD amount of time to learning, not because I worry about cognitive decline—though that’s a worthy reason—but because I enjoy sampling a host of subjects, everything from meditation to music theories.
Before online courses became popular, my self-directed learning involved watching lecture DVDs. I later discovered many free online offerings from reputed universities, including Stanford, Harvard, Yale, MIT and Princeton.
When the pandemic forced me to spend more time at home,

EARLIER THIS YEAR, I swapped the Vanguard Short-Term Bond Index Fund (symbol: VBIPX) in my 401(k) for an inflation-indexed Treasury ETF (VTIP). The trade worked out well: The replacement fund has since fared better, thanks to this year’s accelerating inflation.
To buy the inflation-indexed ETF, I had to open a brokerage subaccount within my company’s retirement plan—a feature some 401(k)s offer, though these “brokerage windows” typically aren’t heavily promoted for fear employees will end up trading too much.

READERS MAY RECALL Laura, my acquaintance who didn’t need life insurance but was sold a policy anyway. Alarmed by her ignorance, she vowed to manage her own money. As a first step, she parted ways with her financial advisor.
The advisor had her invested in 35 funds. She never fully understood what these funds owned or why she needed them. She had previously thought that investing had to be complicated and was best left to the professionals.

FINANCIAL PLANNERS often ask new clients about their first money memory. Mine was about an early encounter with inflation. It involved a favorite childhood snack named fuchka, a popular street food in Kolkata, where I grew up.
The snack is a ball-shaped flatbread, filled with spicy potato mash and topped with tamarind water. As you crunch its crispy shell, the magical flavors burst in your mouth and take your tastebuds on a rollercoaster ride.

WHEN I MOVED to the U.S. for work, a friend graciously helped me settle in. He shared many useful tips, one of which was to become a Costco member. I’m glad I heeded my friend’s advice. I’ve saved thousands of dollars over the years and found the store’s service to be exceptional.
In recent years, my Costco shopping has expanded to include not just everyday purchases, but also luxury items, gas, tires, electronics and vacations.

A RECENT ARTICLE from Morningstar suggested that the 4% rule for sustainable retirement withdrawals should be revised downward to 3.3%. This lower rate, the researchers argued, is safer given today’s rich stock market valuations and low bond yields.
The article also recommended being flexible with withdrawals, by taking larger amounts in good markets and smaller withdrawals during down periods. This strategy could provide more lifetime income than fixing a withdrawal amount in the first year and then automatically increasing that sum each year with inflation.

I THANK MURTHY, a friend at college, for teaching me guitar. Instead of theories, he taught me five easy chords. I could soon play a few songs and that fueled my motivation to learn more.
The same strategy can help beginner investors. Novices often find the stock market intimidating and mysterious. Result? Inaction and opportunity cost. Solution? Simple steps.
A former coworker comes to my mind. He was uninterested in stocks, including the company shares he received as part of his pay.

AS A CHILD GROWING up in India, I was taught about the six seasons of Bengal: summer, monsoons, autumn, late autumn, winter and spring. From my recollection, some seasons felt distinct, while others were subtle and transitory. Still, each season had unique characteristics, making it different from the others.
A HumbleDollar Voices question—if you could live your financial life again, what would you do differently?—reminded me of the six seasons. How so?

A CRUCIAL STEP WHEN buying a preowned car is to scrutinize its Carfax report. A single-owner car with a regular maintenance history and which was driven solely for personal use should be a safe bet, while an accident record gives most people pause. All things being equal, a car that was in an accident, however minor, ought to cost less than a similar one with a clean history.
Some bargain hunters don’t mind taking a chance on a car with an accident history as long as it drives well.

WOULD YOU ADVISE someone—who doesn’t drive, doesn’t need a car and doesn’t plan to get one in the foreseeable future—to buy car insurance? I wouldn’t. But it seems some financial advisors think otherwise. That, at least, is the impression I got when an acquaintance, whom I’ll call Laura, mentioned her variable universal life insurance policy to me.
A single woman in her mid-40s, Laura has a decent income and lives on her own. She has no one other than herself to support financially.

WHEN I TOLD MY WIFE a few years ago that I wanted to retire by age 50, she was supportive from the get-go. The memories of her dad passing away soon after his 52nd birthday played a role in her snap approval. But it took us a while to sort through the full financial implications.
I figured that our lifestyle, including our foreign travels and occasional splurges, would be the same even if my paychecks stopped prematurely.

LIVING IN THE PACIFIC Northwest, my favorite time of year is summer. I love the extra daylight and relief from the nagging rain. In recent years, there’s been an additional reason to look forward to summer: I get to see my paycheck again.
Some background: A few years ago, in an online investment forum, another participant—I’ll call him Dave—gave me a tip for early retirement. He suggested that I practice living off my investment portfolio even while working.

MY EMPLOYER’S 401(K) plan is great, with a generous matching contribution and lots of investment options. Those looking for even more choice can open a brokerage subaccount within the 401(k), allowing them to buy thousands of securities.
I’ve stayed away from the brokerage option, in part because I feared the extra choice might affect my investment discipline. But my growing anxiety about inflation forced me to reconsider.
I want a predictable cash reserve to cover my expenses for the next 10 years,

MY SPRING CLEANING this year was less eventful than last year’s, except I found my fanny pack. I bought it in the early 1990s but misplaced it some years ago. It was so handy for air travel, especially international trips, that I ignored all fashion worries.
I forgot what I paid for the fanny pack, but it was certainly one of my best buys. Frankly, only a few such purchases stand out. Here’s my list of half-a-dozen similar items.

I GREW UP IN a middle-class family in Kolkata, India. Like most folks, my relationship with money was shaped by my parents’ financial habits. They were on different sides of the saver-spender continuum. My homemaking mother strove to live beneath our family’s means and never seemed to feel deprived. By contrast, my father—even with a modest salary from his government job—was focused on the art of spending.
At my mother’s insistence, my father bought most of our household supplies from wholesalers and cooperative stores,

DURING MY SCHOOL days growing up in India, my exposure to English literature was confined to textbooks that reprinted essays and short stories, or portions thereof. One of them was a humorous piece by Stephen Leacock from his book Winnowed Wisdom.
The excerpt was titled “Old Proverbs Made New” and it seemed funny even to a middle-schooler with a limited grasp of the English language. It argued, with examples, that proverbs get outdated and need to be rewritten.

I SPEND WAY TOO much time analyzing what went wrong and how to do better. Instead, I should probably focus more on what went right and how to do it again.
This tip came from a close friend, when I told him about my money mistakes. My friend’s logic? Despite my missteps, I must have done a few things right to offset the damage.
He had a good point. There are three things I did that paved my path to financial freedom.

BEING A BOOKWORM, I’ve read countless tomes on investing and personal finance. Many were helpful, but my favorite isn’t even about finance. Instead, my vote goes to Stephen Covey’s masterpiece, The Seven Habits of Highly Effective People.
Surprised? What does a self-improvement book about character development have to do with finance? The connection between the two didn’t occur to me until I recently listened to a podcast on personal finance books.

ARE JUNK BONDS RISKY? That was the question from a friend in his late 20s, whom I’ll call Josh. I answered that they were probably risky for him, but quite safe for me. Josh looked puzzled—until I explained that risk is in the eye of the beholder.
Josh has a stable career that pays well, but he doesn’t plan to stick with it forever. Instead, he wants a job that relates to his passion for outdoor activities.

IF YOU OWN AN actively managed mutual fund, you expect the fund’s managers to buy and sell stocks and bonds as they see fit—and yet all that trading isn’t necessarily driven by their investment decisions.
Why not? Imagine the fund has had a few years of underperformance. That might prompt impatient investors to take their money elsewhere. This exodus can create headaches for the shareholders who still have faith in the fund. How so?

I GREW UP IN INDIA, where I worked for a few years before venturing overseas and finally emigrating to the U.S. In our culture, most parents feel responsible for their children until their offspring are fully settled in their career and their life, which is often well into adulthood. In turn, the children feel dutybound to support their parents in old age, financially and otherwise.
This cultural tradition is mutually beneficial when both parents and children can fulfill their respective responsibilities.

HOW WOULD YOU FEEL about a stock market strategy that routinely invests more after prices go up and sells when prices drop? As someone who invests for the long haul, I’m skeptical—which is why the increasing popularity of leveraged exchange-traded funds (ETFs) puzzles me.
A leveraged ETF aims to amplify the daily return of its stated benchmark. The fund’s benchmark might be a widely followed stock or bond index, a particular market sector, a single industry or one country.

MAY 18, 2020, STARTED as an ordinary Monday. I was busy with office work. An email from our human resources department hit my inbox. It said something about fraudulent unemployment benefits. I couldn’t pay attention right away, so I saved it to read later.
That evening, I found five letters from our state’s unemployment claims department in the mail. I’d never heard of such a department, but it reminded me about the email I got earlier.

I’VE BEEN MANAGING my own finances for a long time. Along the way, I did some things right that served me well and some things that didn’t—including three big blunders.
My money-management journey started when I got into a new middle school that was 12 miles from home. The daily commute involved a short bus ride to the nearest railroad station, a 20-minute trip on a suburban train and then a quick walk. To save money,

EARLY RETIREMENT isn’t a common goal among my friends. When I talk about my semi-retirement, many assume I either made a quick buck in the stock market or benefitted from some sort of financial windfall. I counter this misconception by narrating the magic formula: Financial freedom is frugality, multiplied by simplicity, compounded by patience.
My response often seems mysterious until I explain the two basic math concepts behind it. We learn them in school,

I’VE BEEN WORKING from home for nearly two months. Many friends and coworkers are tired of the lockdown. I seem to be an oddball: I feel happier and less stressed.
I’m not oblivious to the reality of today’s pandemic. As I write this, my uncle abroad is facing a hard time getting urgent medical care. Millions of others across the globe are also suffering.
Against such a gloomy backdrop, I feel almost guilty in seeing a positive side to the lockdown.

THE PAST FEW WEEKS have brought back memories of the 2008 financial crisis. Back then, stocks were at bargain prices, but I had little money to invest. Today, my financial house is much stronger—and I want to be ready to buy if stocks get dirt cheap.
I’ve already made some portfolio adjustments. But from here, my plan is to keep an eye on stock market valuations. A large percentage drop by the market averages might—by itself—create the false impression that stocks are cheap,

AS THE STOCK MARKET repeatedly hit new highs in recent years, my net worth reached levels I hadn’t expected. But instead of feeling good about it, I was getting annoyed. Most of my retirement dollars had been invested over the past decade at high stock market valuations. I could use a good bear market so that, in my few remaining years in the workforce, I bought stocks cheap.
I also worried that a prolonged downturn at the worst possible time might derail my early retirement plans.

I’VE DEVELOPED a series of what I call “Geico talks,” named after the ubiquitous insurance company commercials. They’re 15-minute talks that, I joke, are aimed at boosting financial knowledge by 15% or more.
The talks are for friends and acquaintances who work at the same company as me or at companies with similar employee benefits. These firms typically have great retirement plans and many employees own company stock. I figured the topics I’d researched for my own finances would help these folks.

YEARS AGO, I SPENT a few days in Bangkok touring the city. A highlight of my short stopover was the temple of Wat Traimit, which houses a five-and-a-half metric ton Golden Buddha, made of approximately $250 million of gold.
Cast more than 700 years ago, the statue symbolized the prosperity and cultural heritage of Sukhothai, the first Thai kingdom. Sometime in the 18th century, the statue was completely plastered over to conceal its value from Burmese invaders.

AS A KID, MY MOST revered manmade invention was not a train or a record player, but rather the Swiss Army pocketknife. When I saw it for the first time at a friend’s home, I was fascinated that it could cut paper, open bottles, file nails and more. I marveled at the engineering beauty and wished I had one of my own.
Years later, I was in Switzerland for a short business trip and had some free time for souvenir shopping.

AFTER TAKING THE Series 65 exam in February, I set a goal for 2019: Help 10 friends and family members with their finances. Instead of giving specific investment advice, I wanted to educate them on money matters. I knew that they would benefit from one-on-one discussions, well-regarded books, educational videos and credible websites. But I also suspected that some might hesitate to talk to me about their finances. Nonetheless, I gave it a try.

IN OCTOBER, WHILE I was visiting family in California, I got a text from an old friend, Tass. He had lost his job.
Tass and I were close buddies in college, but we lost touch. After completing our undergraduate degrees in computer science, I started working, while Tass pursued a business degree. We soon ended up in different parts of the globe. Many years later, we bumped into each other at an airport. I learned that Tass had moved abroad to start his own offshore business.

FOR MANY YEARS, I didn’t own bonds or anything similar, except some bank certificates of deposit. Frankly, I was clueless.
My first dilemma: Should I invest in bonds if I have a mortgage? It didn’t make sense to me to borrow from the bank and, at the same time, lend out my money at a lower interest rate to a bond issuer. I felt I should pay off my mortgage first. A few friends and even a financial advisor recommended otherwise.

IT BAFFLES ME that people often favor stock-picking over index funds—and yet they fail to measure their portfolio’s performance against a proper benchmark. I’m not talking about those who buy a few individual stocks for entertainment or education. For them, it’s a worthwhile pastime and the stakes are low.
But there are others who ignore the evidence and arguments against active management, and devote serious money to picking stocks and timing the market in hopes they’ll earn market-beating returns.

IT’S IRONIC THAT WE often shortchange retirement savings during the first half of our working lives, because that’s when we can buy future retirement dollars at a huge discount—thanks to investment compounding.
How can we hammer home this point? My proposal: We should adopt a simple mental math rule that allows us to weigh today’s spending against future retirement dollars. That brings me to my ”6 to 2 times 200” rule. The rule covers five age groups: early 20s,

MY FRIEND JIT learned the hard way that you can never be too careful when dealing with a financial advisor. Despite being a cautious and responsible investor, he made one small oversight—and ended up with his money trapped in an unsuitable product.
I’ve known Jit for more than 15 years. He’s smart and financially savvy. He saves diligently and manages his own investments. He funds his son’s 529 plan, maxes out his 401(k), uses the backdoor Roth and so on.

I’M FRUGAL AND FEEL fortunate to be so. Indeed, among all the financial skills I’ve learned, frugality stands out as the most powerful. But at the same time, I also feel affluent. This might seem like a contradiction, but the mindset of frugality and the feeling of affluence strike me as two sides of the same coin.
Frugality is often associated with being cheap. Frequently, “affluent” is used interchangeably with “wealthy.” I beg to differ.

I TUTOR MY 10-year-old niece once a week in math and science. After the study sessions, we often talk about other things—mostly kid stuff. Recently, her treasured piggybank got a nice boost on her birthday and we discussed what she might do with the money.
That’s when my niece asked, “How much money will I need when I grow up?” I guess she was trying to figure out if she did indeed have to study hard and get a job—or whether her current savings would be enough.