Jonathan Clements

WHAT DO YOU CONSIDER the most important financial ideas? No doubt we’d all come up with a different list—sometimes radically different—and what we deem important likely says a lot about how we handle our money.
For my own list, I think less about practical financial concepts—things like indexing and asset location—and more about the big ideas that should guide our financial decision-making. Here are seven of those ideas, all of which heavily influence how I manage my own money:
1.

A YEAR AGO, I WAS worried about the stock market. Today, I’m concerned about the job market.
In December 2017, I penned an article entitled Best Investment 2018, which turned out to be surprisingly prescient. That wasn’t really my goal. At the time, I was simply pondering rich stock market valuations, tiny bond yields and the new tax law, with its higher standard deduction and limits on itemized deductions. Putting it all together, it struck me that paying down debt—even mortgage debt—seemed like an awfully smart move.

DO CHILDREN BRING happiness? As someone who has invested heavily in small people over the years—I have two children and two stepchildren—I want to believe the answer is “yes.” But the evidence suggests otherwise.
This, I realize, is a touchy subject, so let me offer a few crucial caveats before you fire off that fiery email. The studies cited here offer conclusions based on broad averages. Your experience could be entirely different. Moreover, it may be that children give special meaning to our lives,

IF THE STOCK MARKET decline resumes, we’ll soon be reading articles about remorseful everyday investors bemoaning their earlier foolishness.
No doubt some folks have been foolish. Perhaps they’ve belatedly discovered that Amazon and Apple aren’t one-way tickets to wealth, that they aren’t the investment geniuses they imagined, or that they misjudged their courageousness and shouldn’t be 100% in stocks.
But mostly, I view these articles as patronizing garbage that propagate the myth that all amateur investors are clueless and all professionals are super-savvy.

HOW THINGS LOOK depend on where you stand. Trying to figure out how to respond to the market drop? After the initial slump, a brief rally and then another decline, the S&P 500 is down 10% from its September all-time closing high of 2930.75.
History suggests that, five years from now, share prices will be no lower than they are today, and 10 years from now they’ll be handsomely higher. But at times like this,

TODAY WAS PAINFUL. How painful? Think of the financial losses:

Homeowners who closed on their house sale might have lost as much as 6% of the proceeds to real-estate commissions.
Car buyers who picked up their new vehicle probably gave up more than 10% of the purchase price just by driving off the dealership lot.
Those who signed separation agreements with their soon-to-be-ex spouse likely surrendered 50%.
Investors who bought load funds might have been nicked for 5.75%.

ALLAN ROTH LIKES to describe himself as argumentative—and, on that score, it’s hard to argue with him. But it’s also hard to argue with the points he makes, because he has this nasty habit of being right.
Roth is the author of How a Second Grader Beats Wall Street, a financial planner who charges by the hour, and a contributor of financial articles to AARP.org, Financial-Planning.com, NextAvenue.org and other sites. I caught up with him last month at the Bogleheads’ conference in Philadelphia.

WHAT COULD POSSIBLY be wrong with saving like crazy, so you can retire early? That’s the notion behind the financial independence/retire early, or FIRE, movement. Yet lately, I’ve read a lot of carping about FIRE, both in articles and in the emails I receive.
Just last week, those complaints got yet another airing in The Wall Street Journal. Earlier, Suze Orman weighed in, arguing you need at least $5 million to retire early.

“I DON’T KNOW.” Those may be the three toughest words for an investor to utter—and yet perhaps also the most important.
Despite the robust rebound of recent days, the S&P 500 is still down 6.5% from its September all-time high. Indeed, U.S. stocks just suffered their worst monthly loss since 2011. What should we make of the craziness? Here are five crucial unanswered questions:
1. Where are stocks headed?
As the saying goes,

RECENT MARKET turbulence, including today’s sharp stock market drop, has been a wakeup call for many investors. Feeling queasy? It isn’t too late to make portfolio changes: The S&P 500 may be down 9% from its all-time high, but it’s still up an eye-popping 293% since March 2009.
Here are three quick calculations that might spur you to action—or help ease your mind:
1. How much cash do you need from your portfolio over the next five years?

IF THIS IS THE START of a bear market, share prices have a lot further to fall: The S&P 500 is down just 9.4% from its all-time high—and yet one of the most important lessons may have already been learned.
No, I’m not going to mock those who have lately proclaimed that stocks are the only investment worth owning. I don’t intend to belittle those who assume that U.S. shares can defy investment theory,

I HAVE SPENT 33 years writing and thinking about money. I’m not sure it’s the most uplifting way to spend one’s life, but it’s kept me busy and—for the most part—out of trouble.
Two years ago, I took some of the financial ideas that have especially intrigued me over the past three decades, and I brought them together in a slim volume called How to Think About Money. The book proved surprisingly popular,

THIS WEBSITE IS devoted to personal finance—and I try to keep it that way, avoiding partisan political pontificating. Still, as we’ve learned from the 2016 presidential election and its aftermath, the U.S. is a country divided between those prospering in today’s economy and those who feel shortchanged.
In reality, of course, it’s more of a spectrum than a sharp divide: Most folks neither live below the poverty level nor count themselves among the one-percenters.

IS THIS A MOMENT of cultural change? I see glimpses of a new way of thinking. The New York Times recently ran articles on both the cult of thrift and the financial independence/retire early—or FIRE—movement. Words like mindfulness, purpose and meaning have gained new currency. U.S. household debt is growing, but it’s still barely higher than a decade ago. The national savings rate even shows signs of improving.
Maybe this is yet another reverberation from the Great Recession.

ON WEDNESDAY, Vanguard Group’s 89-year-old founder John C. Bogle was in hospital to receive treatment for his latest health scare—an irregular rhythm in his transplanted heart. On Thursday and again today, he was at the Bogleheads’ 17th conference in Philadelphia, as feisty as ever.
The Bogleheads are, of course, the online community who congregate at Bogleheads.org. They’re renowned as fans of frugality—especially frugally priced index funds. And Jack Bogle—even though it’s been more than two decades since he was Vanguard’s Chief Executive Officer—remains their guiding light.