Jonathan Clements

SHOULD YOU MOVE when you retire? The numbers can be compelling—especially if you’re like my wife and me, and you live in New York City or one of its surrounding suburbs, where living costs are absurdly high. This was hammered home by the cost-of-living calculator cited by Kristine Hayes in her article yesterday.
I discovered that, by leaving New York, we could cut our living expenses by almost 60% if we moved to Bismarck,

FINANCIAL ASSETS can seem like mere numbers on an account statement, especially at times of stock and bond market turmoil. But hard assets feel more substantial: Your home, artwork and gold coins have a comforting physical presence.
But are they good investments? I’ve been perusing Financial Market History, a collection of essays edited by David Chambers and Elroy Dimson. The paperback costs $38.95 from Amazon, but the Kindle edition is available for free.

EVEN BAD FINANCIAL products and strategies turn out okay for some investors. If that wasn’t the case, they probably wouldn’t attract enough customers to survive, no matter how aggressively they’re peddled. Still, some are so risky or so costly that the chances of a happy outcome are slim. Want to improve your odds of financial success? Here’s how I would categorize the products and strategies on offer today:
Dangerous

Buying stocks on margin
Leveraged exchange-traded index funds
Day trading
Short selling
Writing naked call options

Dubious

Cash value life insurance
Variable annuities
Equity-indexed annuities
Hedge funds
Market timing
Options trading
Technical analysis
Structured products
Load funds
Unit investment trusts
Closed-end funds bought at the initial public offering
Non-traded REITs
Brokers on commission
Carrying a credit card balance

Proceed with Caution

Actively managed funds
Individual stocks
Bonds bought in the secondary market
Closed-end funds at a discount
Rental properties
Vacation homes
Interest-only mortgages
Reverse mortgages
Long-term-care insurance
Claiming Social Security early

Promising

Index mutual funds
Exchange-traded index funds
High-yield savings accounts
Certificates of deposit
Treasury bonds
401(k) plans
IRAs
Health savings accounts
Term life insurance
Rewards credit cards
Owning your primary residence
Conventional mortgages
Home-equity lines of credit
Immediate fixed annuities
Deferred income annuities
Claiming Social Security late

The bottom line: With so many products in the promising category,

AS A YOUNG REPORTER in the late 1980s, trying to learn about investing, I read a slim 81-page volume with an unassuming title: Investment Policy. It remains one of the best investment books I’ve ever read.
Investment Policy was later reissued with a somewhat catchier title, Winning the Loser’s Game, and it’s now widely considered to be an investment classic. Over the years, the book has also been greatly expanded and the 2017 edition runs to 286 pages.

TO BE PRUDENT managers of our own money, we need to read the small print—but we also need to keep an eye on the big picture.
To that end, whenever we make a financial decision, we should ponder three key questions: What’s the tradeoff, does the choice make sense given our broader financial life, and will we feel as good about the decision tomorrow as we do today?
Trading Off. Suppose we remodel the bathroom,

IT’S LONG BEEN an idea that’s captured my imagination: Get a child invested in the stock market at a young age and then leave compounding to work its magic. If stocks notch four percentage points a year more than inflation—which many would consider a conservative estimate—$10,000 invested at birth would be worth $230,500 at age 80. That sort of success would, I suspect, give a significant boost to parental popularity.
When my kids were born,

IT’S ONE OF WALL Street’s more galling rituals: its regular dismissal of everyday investors as stupid. They’re the “dumb money” you should watch so you know what not to buy—the sheep that the “smart money” regularly fleeces.
This narrative was bolstered by early behavioral finance research, which detailed our many mental mistakes: In our overconfidence, we trade too much and make large investment bets. We’re overly influenced by recent returns. We assume our investments perform better than they really do.

IF YOU WANT TO BEAT the market, you need to pick stocks that perform well enough to overcome the investment costs you incur. That task is made harder not only by the market’s efficiency, but also by another hurdle: skewness.
What’s that? The most a stock can lose is 100% of its value, but the possible gain is far greater than 100% and potentially infinite (though no stock has got there yet). In any given year,

IS “SMART BETA” truly smarter and better?
The world of smart beta, sometimes called factor investing, used to be fairly easy to grasp. In 1981, academic Rolf Banz noted that small-company stocks didn’t just outperform their larger brethren. Rather, they outperformed by more than could be explained by their extra risk, as reflected in greater share price volatility. Similarly, in 1992, finance professors Eugene Fama and Kenneth French documented the strong performance of bargain-priced value stocks—and noted that this couldn’t be explained by volatility,

OTHERS ARE LUCKY. But we deserve every penny we have, right? The distinction between “just deserts” and “just plain lucky” strikes me as far messier than we might initially assume. Consider just seven of the ways that we can be financially lucky or unlucky:
1. Birthplace. If we were born in the U.S. or another part of the developed world, we’re pretty much starting the 100-meter sprint within a few strides of the finish line,

IMAGINE YOU HAD ONE shot at offering financial advice to a high school or college graduate. Your mission: Come up with 10 rules that’ll help your graduate succeed financially in the years ahead. What would you recommend? Here’s my list:
1. Question yourself. No doubt you’re entering the adult world with a slew of strong opinions—about what you want from life, what will make you happy, what you’re good at, what constitutes success and how to achieve it.

NO DOUBT YOU WOULD draw up a somewhat different list. But here’s what I consider life’s greatest pleasures:

Talking to loved ones over a glass of wine at the end of the day
Losing myself for a few hours in an interesting piece of work
Walking in nature
Spending time with my kids
French fries
Waking up after a great night’s sleep
Knowing I did the right thing
Wrapping up work on a Friday
Making love
A raucous dinner party
Feeling physically spent after a good workout
Finally sorting out a long-simmering problem
People watching
Taking a nap
Ending the day with a sense of accomplishment

To me,

YOU CAN BUILD a great portfolio with just three index funds: a U.S. total stock market fund, an international fund that buys both developed and emerging stock markets, and a high-quality U.S. bond fund. Thanks to the ongoing price war among major index-fund providers, all three funds are now on offer at extraordinarily low annual expenses.
Below are some of the funds available, with their expenses listed in parentheses. These figures come from fund company websites or a fund’s latest annual report:
Total U.S.

MOST OF US WILL never be fabulously wealthy and we’ll never earn huge incomes. Self-help authors, get-rich-quick seminars and motivational speakers might try to convince us otherwise. But if we turn to these folks for assistance, they’re the ones who typically make heaps of money—at our expense.
Such hucksterism doesn’t just carry a short-term cost, however. It also causes us to think about our lives in the wrong way, leaving us with an unwarranted sense of failure and distracting us from the right path forward.

OUR STANDARD OF living has more than doubled over the past four decades. Has all that extra money bought happiness? Not a chance. In 1972, 30% of Americans described themselves as “very happy.” As of 2016, we’re still at 30%, according to the latest General Social Survey.
Over the 44 years, there was a slight uptick in those describing themselves as “pretty happy” and a tiny decline in those who said they were “not too happy,”