Jonathan is the founder and editor of HumbleDollar. He also sits on the advisory board of Creative Planning, one of the country’s largest independent financial advisors, and is the author of nine personal finance books. Earlier in his career, Jonathan spent almost 20 years at The Wall Street Journal, where he was the newspaper's personal finance columnist, and six years at Citigroup, where he was director of financial education for the bank's U.S. wealth management arm. Born in England and educated at Cambridge University, Jonathan now lives in Philadelphia, just a few blocks from his daughter, son-in-law and grandson.
OUR LATEST MONTHLY list of the most popular articles and blog posts is a little lopsided—because half of September’s top 10 were penned by two HumbleDollar regulars, Adam Grossman and Greg Spears:
Want to stop hackers from emptying your bank account? The thieves are increasingly sophisticated, which means we all need to strengthen our defenses. Adam Grossman suggests 12 steps.
If you’re worried about federal and state estate taxes, Adam Grossman offers a handful of intriguing strategies—including some you may not have thought of.
AS WE GET OLDER, the financial hits often grow far larger, for two reasons. First, we’re typically wealthier, which means the potential dollar losses are bigger. Second, as we age, there’s greater risk of hefty health-care costs, notably long-term-care expenses.
Almost everybody endures at least a few big financial hits during their lifetime. Perhaps you lose your job, and it then takes many months to find work. Maybe your parents need nursing-home care and you end up footing part of the tab.
I’M DOING RELATIVELY well—and therein lies the problem. No, it isn’t the “doing well” part that’s the issue. Rather, the problem lies with that all-corrupting word “relatively.”
We’re constantly reminded of how we stack up against others. Early in life, that can be useful. If we aren’t cut out to be professional athletes, effective leaders, academic stars or market-beating investors—this last one would include almost all of us—it’s good to find that out, so we don’t spend countless years pursuing goals we’re unlikely to achieve.
WE ALL LIKE TO THINK we’re consistent in our views. I certainly do. Yet, as I recall how I thought about the financial world two decades ago and how I think about it today, I’m amazed at how much my views have changed.
Here are five pieces of advice that I give now—but which I wouldn’t have given two decades ago:
1. Don’t waste time on investing. In the early 2000s, I thought endlessly about how to structure a portfolio,
WHEN WE RETIRE, we win back control over our daily life. Gone is the boss, the expectation that we’ll be at work at a certain hour, the worry about what the next office email will bring. We have a degree of freedom that, in many cases, we last knew when we were students contemplating a long summer vacation.
But even as we gain that freedom, there’s also much that we lose. If we’re to be happy retirees,
THERE ARE ALL KINDS of financial talents that seem desirable. Who wouldn’t want a knack for finding undervalued stocks, identifying star fund managers, and figuring out which way the stock and bond markets are headed? The problem: While some folks may briefly appear to possess these talents, it usually turns out that their apparent prescience was nothing more than dumb luck.
Where does that leave us? Forget the obvious but elusive financial superpowers, and focus on those that—with a little work—are available to all of us.
DON’T CONFUSE THREATS to your happiness with financial threats.
For instance, it would be devastating if one of your children died at a young age, and no doubt that’s why some folks buy life insurance on their children’s lives. But while the death of a child is a threat to your happiness, is it a threat to your finances? It’s terrible to say it, but just the opposite is true: You’d probably be better off financially.
THERE ARE CERTAIN things I did right during my financial journey, notably saving like crazy, tilting heavily toward stocks and favoring index funds. But if only all my doing had stopped there.
Looking back over almost four decades of investing, what I see is far too much tinkering. At various times, I’ve owned funds devoted to precious metals, global real estate, commodities, emerging market bonds and more. I know this tinkering devoured precious time—and I strongly suspect it hurt my investment results.
AS SOMEONE WHO HAS marched through life—and made money along the way—by putting one word in front of another, maybe it’s no great surprise that I’m a big fan of writing things down.
My challenge to you: Follow the example of the 30 HumbleDollar writers who contributed essays to the book My Money Journey, and devote a few thousand words to detailing your financial journey, including your mistakes, triumphs and the lessons you learned along the way.
WANT TO DONATE TO charity? It usually makes sense to give now rather than upon death. You’ll get the pleasure of helping a cause you care about, and your generosity may also earn you an immediate tax deduction.
But what about giving money to your children or other heirs? This is a much trickier question, one I’ve thought about a lot ever since my first child was born almost 35 years ago.
Giving now.
THE STOCK MARKET offers limited downside and unlimited upside. That might not seem like a big deal. But this asymmetry has huge implications for how we manage our money—and, for prudent investors, it should be a great comfort. How so? Consider five key implications.
No. 1: The most a stock can lose is 100% of its value. Sound grim? There’s a silver lining. Assuming you own your stocks outright, your potential loss is limited to the sum you invested.
WE LIVE IN A WORLD rife with intolerance—and that intolerance, alas, has infected the once-civilized world of index-fund investors.
Back in the 1990s, we indexers were such a small minority that simply owning index funds was a common bond. But now that more than half the fund market is given over to index funds, internecine skirmishes regularly erupt, with folks debating what’s the right way to index and belittling those who take a different approach.
AS WE MANAGE OUR financial life, we’re compelled to cope with heaps of uncertainty—which way the stock and bond markets will head, what financial misfortunes will strike, how long we’ll live and so much more.
But there are also ways we can exert a measure of control: spend thoughtfully, save diligently, keep a close eye on risk, hold down investment costs and manage our annual tax bill. To this list, I’d add one other key way to reclaim the advantage: have a good handle on who we are.
MY PORTFOLIO HAS bounced back nicely from October 2022’s stock market low—and that’s a problem: I’ve learned over the decades that I’m not good at handling prosperity.
At issue is the question of when to rebalance my portfolio, in this case selling stocks and buying bonds to bring them back into line with my target percentages. Among experts, there’s no agreed-upon strategy, which is almost an invitation to bad behavior. We investors do better with hard-and-fast rules.
AS FOLKS HURTLE toward retirement, they often wonder whether they’ve saved enough, debate when to claim Social Security and fret about how they’d pay for long-term care. Make no mistake: Such issues are hugely important.
But amid these financial musings, we should also spare a thought for four other questions:
How can I transform myself from a diligent saver to a happy spender? This sounds so easy, and yet many struggle with it,
