I feel that money in bonds is like sand on the beach gradually eroding into the sea. The return on bonds usually trails inflation, especially after taxes. And even when you are standing still in today's world, it seems like you are falling behind where you should be. I understand the need for some short term safety in the event of a major downturn, and that drives my allocations more than anything else. But my presumption is that I should be in stocks as much as I can bear it.
I pay attention to a couple of things on an ongoing basis, but without usually putting pencil to paper. They include: (1) my basic feel for the ongoing flow from my spending, the core of my discipline; (2) my anticipation of one-time (for example, a vacation, a reunion gift to my college or buying a new car) or known periodic (for example quarterly income tax payments, property taxes, insurance costs and Christmas spending) spending events; (3) atypical increases in basic costs (like groceries, gasoline or cable television); and (4) my occasional spending weaknesses (buying something I like but don't need, like a piece of art, or an unusually expensive dinner with my significant other). I also pay attention to unusual receipts, like a devise from a will or a long-awaited tax refund, though those are fewer and farther between. My gut usually tells me when I'm a little out of balance and that I need to be thrifty. I throttle down my spending appropriately to balance out the expected deficit. I don't do a detailed calculation. I do it by feel. It works for me. But I do engage in periodic detailed assessments of spending, too, to make sure I am not deluding myself. Perhaps twice a year, I go through my spending more carefully, so I can catch anything odd or unusual that slipped through without my notice earlier. And at the same time, I carefully balance my checkbook and calculate the changes in my investment portfolio. The gains in investments over the past few years have been significant, and I think that is partly why I don't micromanage my finances as much as I used to.
Best of luck to you. You have big shoes to fill, but your past work gives me confidence that Jonathan's legacy is secure and will continue as a valuable resource for individual investors and others seeking useful financial information.
I appreciate the commitment to this forum. Jonathan will live on in the hearts and minds of all participants. Know that there are many of us out here who feel deeply for you both. I hope that you are able to weather this sorrowful time and the immediate future will at least be free of any added complications and difficulties for you.
Don't forget that this problem really requires that the difference between what you have available to spend and what you actually spend should be greater than zero, and the higher the better. So, a good part of the analysis requires an assessment of the spending side. One needs to know where he or she can trim spending, and reduce charges that can't be avoided. The biggest expenses in retirement tend to be taxes (mainly income and property) and for many, health care. If you own a house, those expenses can be sneaky high. Insurance is usually a burden. After that, almost everything else is negotiable.
I learned in business that understanding an Excel spreadsheet actually requires one to know a separate language, because there are always a number of individual cells that are uniquely subject to question and can't be explained by the number alone. These cells demand explanation, invite dissent, trigger discussion, and convey nuance. Executives will debate for long periods about what information should be considered and what should be given priority in filling in the blanks. The discussion of one cell can result in a change of strategy and make or break a quarterly financial report. The same types of analysis go into everyday financial decisions. You may keep a kind of spreadsheet in your head, but you also keep it in your gut.
Excellent article. One of the key considerations for me with any asset before buying, whether house, car, boat or financial investment, is "How easy can I get out when I want to?" These new funds build in some ominous exit hurdles, and they won't exactly have buyers knocking down the doors when I want to sell. That means I would likely have to take a bath to sell my shares. No thanks.
I couldn't help thinking about that old "less filling/tastes great" beer commercial when reading this post. There is a broad spectrum of options in that, and in financial comfort. If you care about your significant other, you should want them to be very comfortable with your joint finances, and make sure they know as much as they want to know in order to achieve that level of comfort. And you should expect a reciprocal commitment from them. When two people disagree on the risk-reward equation, compromise is the obvious solution, and each person may have to be willing to risk a little more or accept a little lower return. They may need to compromise on the nature of the investments. That compromise may involve conditions as well as the decisions themselves.
Having money that you have to withdraw is a good problem to have. I've always been pretty thrifty, but I have found that as I realize I can't outlive my nest egg, I am a bit more willing to spend money in my later years. But that situation should also come with a warning. Or really, two warnings. First, don't lower the core financial guardrails you've lived with all your life. Deciding to give more money to your alma mater is a lot different than letting yourself agree to put in a swimming pool you really won't be using much. Second, there are lots of other people out there who also recognize that you have a pot of money that is not being used. Your financial status is probably pretty widely known. Thus, you will get lots of nice invitations from people to help you spend it (including on them). Worse, there are people who will try to take it from you. Always be on your guard with people you don't know who want to talk about your money with you.
I recall a corporate strategy course in the 1990s where one of the assignments was to compare the competitive strategy of American giant General Electric with that of Swedish conglomerate ABB, and to predict which one would meet with more success going forward. At the time, GE was firing on all cylinders and was among the top firms in the United States, so very few MBA students favored ABB. But GE fell on hard times within only a few years, and it almost failed. It had to shed units and it went through a handful of CEOs. Meanwhile, while ABB has had its share of fluctuations, it is still chugging along, with a share price close to its 20-year peak, if not longer (20 years was as far back as I could check). The moral of the story: Nothing is forever, and the marketplace will constantly surprise investors.
Comments
I feel that money in bonds is like sand on the beach gradually eroding into the sea. The return on bonds usually trails inflation, especially after taxes. And even when you are standing still in today's world, it seems like you are falling behind where you should be. I understand the need for some short term safety in the event of a major downturn, and that drives my allocations more than anything else. But my presumption is that I should be in stocks as much as I can bear it.
Post: Not Staying the Course
Link to comment from September 20, 2025
I pay attention to a couple of things on an ongoing basis, but without usually putting pencil to paper. They include: (1) my basic feel for the ongoing flow from my spending, the core of my discipline; (2) my anticipation of one-time (for example, a vacation, a reunion gift to my college or buying a new car) or known periodic (for example quarterly income tax payments, property taxes, insurance costs and Christmas spending) spending events; (3) atypical increases in basic costs (like groceries, gasoline or cable television); and (4) my occasional spending weaknesses (buying something I like but don't need, like a piece of art, or an unusually expensive dinner with my significant other). I also pay attention to unusual receipts, like a devise from a will or a long-awaited tax refund, though those are fewer and farther between. My gut usually tells me when I'm a little out of balance and that I need to be thrifty. I throttle down my spending appropriately to balance out the expected deficit. I don't do a detailed calculation. I do it by feel. It works for me. But I do engage in periodic detailed assessments of spending, too, to make sure I am not deluding myself. Perhaps twice a year, I go through my spending more carefully, so I can catch anything odd or unusual that slipped through without my notice earlier. And at the same time, I carefully balance my checkbook and calculate the changes in my investment portfolio. The gains in investments over the past few years have been significant, and I think that is partly why I don't micromanage my finances as much as I used to.
Post: Budget, What Budget? (Know Thyself)
Link to comment from September 20, 2025
Best of luck to you. You have big shoes to fill, but your past work gives me confidence that Jonathan's legacy is secure and will continue as a valuable resource for individual investors and others seeking useful financial information.
Post: Quick Intro
Link to comment from September 20, 2025
I appreciate the commitment to this forum. Jonathan will live on in the hearts and minds of all participants. Know that there are many of us out here who feel deeply for you both. I hope that you are able to weather this sorrowful time and the immediate future will at least be free of any added complications and difficulties for you.
Post: Jonathan and website update
Link to comment from September 20, 2025
Don't forget that this problem really requires that the difference between what you have available to spend and what you actually spend should be greater than zero, and the higher the better. So, a good part of the analysis requires an assessment of the spending side. One needs to know where he or she can trim spending, and reduce charges that can't be avoided. The biggest expenses in retirement tend to be taxes (mainly income and property) and for many, health care. If you own a house, those expenses can be sneaky high. Insurance is usually a burden. After that, almost everything else is negotiable.
Post: There is no magic number – and it sure isn’t $1 million
Link to comment from September 14, 2025
I learned in business that understanding an Excel spreadsheet actually requires one to know a separate language, because there are always a number of individual cells that are uniquely subject to question and can't be explained by the number alone. These cells demand explanation, invite dissent, trigger discussion, and convey nuance. Executives will debate for long periods about what information should be considered and what should be given priority in filling in the blanks. The discussion of one cell can result in a change of strategy and make or break a quarterly financial report. The same types of analysis go into everyday financial decisions. You may keep a kind of spreadsheet in your head, but you also keep it in your gut.
Post: Navigating the Unknowns of Financial Decisions
Link to comment from September 14, 2025
Excellent article. One of the key considerations for me with any asset before buying, whether house, car, boat or financial investment, is "How easy can I get out when I want to?" These new funds build in some ominous exit hurdles, and they won't exactly have buyers knocking down the doors when I want to sell. That means I would likely have to take a bath to sell my shares. No thanks.
Post: Inventing Problems
Link to comment from September 6, 2025
I couldn't help thinking about that old "less filling/tastes great" beer commercial when reading this post. There is a broad spectrum of options in that, and in financial comfort. If you care about your significant other, you should want them to be very comfortable with your joint finances, and make sure they know as much as they want to know in order to achieve that level of comfort. And you should expect a reciprocal commitment from them. When two people disagree on the risk-reward equation, compromise is the obvious solution, and each person may have to be willing to risk a little more or accept a little lower return. They may need to compromise on the nature of the investments. That compromise may involve conditions as well as the decisions themselves.
Post: Love, Money, and a 44-Year Compromise
Link to comment from August 30, 2025
Having money that you have to withdraw is a good problem to have. I've always been pretty thrifty, but I have found that as I realize I can't outlive my nest egg, I am a bit more willing to spend money in my later years. But that situation should also come with a warning. Or really, two warnings. First, don't lower the core financial guardrails you've lived with all your life. Deciding to give more money to your alma mater is a lot different than letting yourself agree to put in a swimming pool you really won't be using much. Second, there are lots of other people out there who also recognize that you have a pot of money that is not being used. Your financial status is probably pretty widely known. Thus, you will get lots of nice invitations from people to help you spend it (including on them). Worse, there are people who will try to take it from you. Always be on your guard with people you don't know who want to talk about your money with you.
Post: On the Downslope of Life?
Link to comment from August 30, 2025
I recall a corporate strategy course in the 1990s where one of the assignments was to compare the competitive strategy of American giant General Electric with that of Swedish conglomerate ABB, and to predict which one would meet with more success going forward. At the time, GE was firing on all cylinders and was among the top firms in the United States, so very few MBA students favored ABB. But GE fell on hard times within only a few years, and it almost failed. It had to shed units and it went through a handful of CEOs. Meanwhile, while ABB has had its share of fluctuations, it is still chugging along, with a share price close to its 20-year peak, if not longer (20 years was as far back as I could check). The moral of the story: Nothing is forever, and the marketplace will constantly surprise investors.
Post: Harder Than It Looks
Link to comment from August 18, 2025