Bad Influence

Jonathan Clements

Jonathan founded HumbleDollar at year-end 2016. 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 with his wife Elaine in Philadelphia, just a few blocks from his daughter, son-in-law and two grandsons.

Bad Influence

Jonathan Clements  |  Nov 21, 2020

KEEP AN EYE ON THE neighbors. They could be the reason you’re poor and unhappy.
We all like to think we’re independent thinkers who weigh the evidence and reach our own conclusions—and yet there’s ample evidence that our views are heavily influenced by those around us, whether we’re choosing presidential candidates, bottled water or mayonnaise. This extends to financial matters, sometimes with grim consequences.
Stocking up. Studies have found that those who live near one another tend to invest in a similar fashion.

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Never Assume

Jonathan Clements  |  Nov 14, 2020

THROUGHOUT THE DAY, we make countless snap judgments, often without realizing it. Think about navigating the grocery store. This involves a blizzard of decisions—which brand, what size, whether it’s good value, will it stay fresh—and yet we do so almost effortlessly.
Most of the time, this is a good thing. If we carefully pondered the assumptions behind every judgment we make, life would become painfully unproductive. Still, it’s helpful occasionally to question whether we’re misjudging the world,

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Future Shock

Jonathan Clements  |  Nov 7, 2020

WHY DO WE MAKE spending decisions that we later regret? Yes, we tend to live for today and give scant thought to tomorrow. But it’s more complicated than that—which brings me to four insights from psychology.
I find the insights below fascinating, in part because they describe how I behave with uncanny accuracy. Many readers, I suspect, will also catch a glimpse of their own behavior:
Moral licensing. If we do something good—exercise,

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Scary Stuff

Jonathan Clements  |  Oct 31, 2020

IT’S HALLOWEEN, but not much frightens me—at least financially. My portfolio is broadly diversified, I have the insurance I need, and I have enough set aside for retirement. The highly improbable could happen, but I’m not going to lose sleep over that.
Still, even for those of us in decent financial shape, I see two key reasons for concern. We have no control over either—which is why they might seem scary—but we can take steps to limit the potential fallout.

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Irksome Adversaries

Jonathan Clements  |  Oct 24, 2020

WE FIGHT ABOUT MONEY all the time. Politicians argue over how to spend the stuff and who should pay. Couples argue about why there isn’t enough and who’s to blame. And nerdy folks—that would include me—bicker over which investments to buy, when to claim Social Security, the virtues of homeownership and countless other topics.
These debates may amuse others, but I often find them frustrating—because they’re never just about facts and logic. Instead, far too many people come to these arguments with baggage that borders on cargo.

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Where We Stand

Jonathan Clements  |  Oct 17, 2020

THIS YEAR’S PANDEMIC has unleashed financial turmoil for many American families, so data from last year might seem irrelevant. Still, there’s one set of 2019 data that deserves our attention—the Federal Reserve’s latest Survey of Consumer Finances, which was released last month.
Conducted every three years, the survey is perhaps the most in-depth look we get at the state of America’s personal finances. For the 2019 survey, 5,783 families (who may be individuals living alone) were interviewed at length about their income,

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Game Over

Jonathan Clements  |  Oct 10, 2020

LET’S START WITH the obvious: If you buy high-quality bonds today, you’ll collect very little yield—and there’s an excellent chance you’ll lose money once inflation and taxes are figured in.
Take Vanguard Total Bond Market ETF, which aims to track U.S. high-quality taxable bonds. It yields some 1.2%, which is below the 1.7% expected annual inflation rate for the next 10 years, and the amount you pocket will be even less after deducting taxes.

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Pay It Forward

Jonathan Clements  |  Oct 3, 2020

MINDFUL. INTENTIONAL. Purposeful. These are the buzzwords of our time—and they make me slightly queasy, with their whiff of self-centered, self-satisfied self-indulgence.
Yet it seems those are my goals.
On Monday, a moving van will arrive to take my worldly possessions to a house in Philadelphia that, I hope, will be my last. All this has made me ponder what I want from the years that remain. Three items top my wish list:
Do good work.

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Not Exactly True

Jonathan Clements  |  Sep 30, 2020

THERE ARE FINANCIAL issues on which reasonable people can disagree. This article is not about those issues. Instead, it’s about issues where people disagree—because one side has a fundamental misunderstanding.
These misunderstandings, I fear, are leading folks to shortchange themselves financially—and we’re talking here about some of the most important money decisions we make. Examples? Based on the comments I’ve received, here are three widespread misconceptions:
1. Commissions equal trading costs. If you think it’s free to trade stocks because you aren’t paying a brokerage commission,

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Seems So Easy

Jonathan Clements  |  Sep 26, 2020

MANAGING MONEY is ridiculously simple—and unbelievably hard.
Figuring out what we should do with our dollars is typically straightforward: We should save regularly, diversify broadly, rebalance occasionally and so on. Instead, the tough part is getting ourselves to do what we intellectually know is right.
Take the notion of buying low and selling high. Every investor knows that’s the goal—and yet, when the S&P 500 slumped 34% earlier this year, many folks just couldn’t bring themselves to buy stocks.

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My Regrets

Jonathan Clements  |  Sep 19, 2020

EVERY SO OFTEN, I’m asked about my biggest investment mistakes—and I really don’t have much to say. Yes, like many others, I dabbled in individual stocks and actively managed mutual funds early in my investing career. Yes, like everybody who’s truly diversified, there are always parts of my portfolio that are generating disappointing short-term results. But such things don’t cause me any regrets.
Instead, as I look back, my big financial regrets fall into four buckets:
Pound foolish.

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Playing Dumb

Jonathan Clements  |  Sep 12, 2020

TO MANAGE OUR MONEY better, often we don’t need to know more. Instead, we need to unlearn what we think we already know.
Here are just some of the things that, at various points in my 35-year investing career, I’ve thought I’ve known:

Which fund managers will outperform.
Which way the economy is headed.
What’s next for interest rates and share prices.
Whether the overall stock market is overvalued or not.
Which individual stocks will beat the market.

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Small Pleasures

Jonathan Clements  |  Sep 5, 2020

TODAY, I SING THE praises of spending—on the little things in life.
We fiercely resist the suggestion that money doesn’t buy happiness. Commentators will often trot out the quote—which has been attributed to all kinds of folks—that, “I’ve been poor and I’ve been rich. Rich is better!”
I think that’s true. But it isn’t proportionally true. If you went from earning $100,000 a year to earning $200,000, or your portfolio grew from $500,000 to $1 million,

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Brain Candy

Jonathan Clements  |  Aug 29, 2020

IT SEEMS QUAINT NOW, but a quarter century ago conversations would often degenerate into arguments over facts. How much do homes typically appreciate? How much does the average American have saved by retirement? What does a nursing home cost? Such questions would trigger tedious debates built on anecdotal evidence and half-remembered newspaper articles.
But as my father—who died in 2009—often remarked during the final decade of his life, there’s no point anymore in arguing over facts.

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Think Like Eeyore

Jonathan Clements  |  Aug 22, 2020

FOR THOSE WHO KNOW their A.A. Milne, they’ll recall Eeyore as Winnie the Pooh’s perennially gloomy donkey friend. Which brings me to my inner Eeyore—and a thought provoked by the stock market’s astonishing recovery.
Now that the S&P 500 is once again hitting new highs, it’s time to prepare for the next bear market. No, I haven’t reduced my stock holdings as share prices have bounced back and, no, I’m not predicting that another crash is imminent.

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