Dividing US households into groups based on annual gross income is less revealing than basing it on net income, after all taxes and transfers. This shows the shrinking difference between those in the lower 3 quintiles (See "The Myth of American Inequality", by Gramm, Ekelund and Early). Michael Green wrote about the similarity between the poor and the working poor, and traps when the latter try to move up the ladder. Current discussions about governmental subsidies for purchase of healthcare insurance center around the ratio of household income to poverty line. Of course, some of these households with the same income incur childcare expenses which may consume a large amount of income. And comparing one's income to the poverty line would be more useful if it were better defined. An updated definition of the poverty line is overdue. I have no recommendation as to how much or little the government ought to give or take, but I would prefer they base it on more meaningful measures and definitions that we can all understand. Thank you for posting the link to this interesting article. It does illustrate and helps explain the disconnect between charts and graphs depicting the economic progress of our nation, and too many families and individuals who have not done so well. Food for thought.
None of us can predict the future of course, so we make reasonable projections, and make financial decisions based in part on the rules. It is frustrating when the government later changes those rules.
I think the market is overvalued, but the question is whether there is anything we can, or even ought to do about it. If my retirement was far off in the future, I'd continue investing mostly in stocks. However, I am now retired and have enough so my priority is to keep it that way. Jonathan wrote that he prefers to do his risk taking in the stock market, while favoring safety with bonds, so he invested in short term treasurys. I followed this approach. As stock valuations have risen in recent years, I have gradually downshifted from 75/25 to about 50/50. If stocks continue rising, I will earn a piece of that. If they plummet, it will be unpleasant for me to watch, but knowing I have a secure pile of cash to fund annual distributions, I can resist the emotionally driven urge to "do something". I've already done something. Nothing else to do, except maybe rebalance when warranted.
The Easterlin paradox and the observation that each of us appears to have a unique, inborn happiness "set-point" help explain much of what I have read in the so called "happiness literature". When interest rates were at historic lows until recently, many financial writers favored holding very little cash. As though our cash allocation should be based on the interest it will earn. If one remembers the purpose cash, bonds and stocks in his or her portfolio serve, a sensible allocation decision can be determined. Great post, Adam!
Most of us have learned from mistakes we have made in the past. We would be pleased if only others, especially our children would learn some of those lessons from us, without the need to make similar mistakes themselves and then learn them the hard way.
Comments
Dividing US households into groups based on annual gross income is less revealing than basing it on net income, after all taxes and transfers. This shows the shrinking difference between those in the lower 3 quintiles (See "The Myth of American Inequality", by Gramm, Ekelund and Early). Michael Green wrote about the similarity between the poor and the working poor, and traps when the latter try to move up the ladder. Current discussions about governmental subsidies for purchase of healthcare insurance center around the ratio of household income to poverty line. Of course, some of these households with the same income incur childcare expenses which may consume a large amount of income. And comparing one's income to the poverty line would be more useful if it were better defined. An updated definition of the poverty line is overdue. I have no recommendation as to how much or little the government ought to give or take, but I would prefer they base it on more meaningful measures and definitions that we can all understand. Thank you for posting the link to this interesting article. It does illustrate and helps explain the disconnect between charts and graphs depicting the economic progress of our nation, and too many families and individuals who have not done so well. Food for thought.
Post: What’s Really on My Mind These Days
Link to comment from November 28, 2025
None of us can predict the future of course, so we make reasonable projections, and make financial decisions based in part on the rules. It is frustrating when the government later changes those rules.
Post: HSA Proposal
Link to comment from November 27, 2025
Happy Thanksgiving!
Post: Thanksgiving: The Keeping Story
Link to comment from November 27, 2025
I think the market is overvalued, but the question is whether there is anything we can, or even ought to do about it. If my retirement was far off in the future, I'd continue investing mostly in stocks. However, I am now retired and have enough so my priority is to keep it that way. Jonathan wrote that he prefers to do his risk taking in the stock market, while favoring safety with bonds, so he invested in short term treasurys. I followed this approach. As stock valuations have risen in recent years, I have gradually downshifted from 75/25 to about 50/50. If stocks continue rising, I will earn a piece of that. If they plummet, it will be unpleasant for me to watch, but knowing I have a secure pile of cash to fund annual distributions, I can resist the emotionally driven urge to "do something". I've already done something. Nothing else to do, except maybe rebalance when warranted.
Post: Is the current stock market anything to be concerned about?
Link to comment from November 23, 2025
Logical and wise, Mark.
Post: Is the current stock market anything to be concerned about?
Link to comment from November 23, 2025
Well spoken, Elaine.
Post: Letter from Elaine
Link to comment from November 23, 2025
I'm sure they will!
Post: The Kids Are Alright
Link to comment from November 23, 2025
Same here!
Post: The Kids Are Alright
Link to comment from November 23, 2025
The Easterlin paradox and the observation that each of us appears to have a unique, inborn happiness "set-point" help explain much of what I have read in the so called "happiness literature". When interest rates were at historic lows until recently, many financial writers favored holding very little cash. As though our cash allocation should be based on the interest it will earn. If one remembers the purpose cash, bonds and stocks in his or her portfolio serve, a sensible allocation decision can be determined. Great post, Adam!
Post: Money, Happiness, and Choice
Link to comment from November 22, 2025
Most of us have learned from mistakes we have made in the past. We would be pleased if only others, especially our children would learn some of those lessons from us, without the need to make similar mistakes themselves and then learn them the hard way.
Post: The Kids Are Alright
Link to comment from November 22, 2025