Rand Spero

Comments:

• Douglas, nice to read a significant inheritance story which does not revolve around the person becoming a spendthrift or stingy. People who develop sensible values which reflect their personality before receiving an inheritance or major gift, appear moving forward to be most content. Your parents most likely would be proud. Their financial gifts allowed you to continue your life on its chosen path in a personalized style.

  Post: Follow Those Values

  Link to comment from July 26, 2023

• William Bernstein remains my favorite personal finance author. I preordered and read his new superb edition of The Four Pillars of Investing which updates his 20 year old classic. His historic knowledge is wide ranging and he dramatizes the implications of hitting a bad sequence of returns for far longer than we typically can anticipate. Dr. Bernstein's quantitative background and instructional skills are impressive. In my opinion, no one better explains and demonstrates,(number geeks - read his The Intelligent Asset Allocator), the value and importance of diversification. He appreciates the clear benefits of stock ownership (reward) despite the risks, and he emphasizes why some stock ownership is essential in an inflationary world. But in his latest edition, he feels compelled to emphasize how the worst 2% scenarios can overturn an entire lifetime investment plan if not prepared. Bill Bernstein explains why those who are approaching or have taken retirement, face the additional hurdle of little or no human capital to buffer extended equity losses. He brilliantly summarizes our future investment challenge at various life stages: The main hazards on the “highway of riches,” the road that conveys wealth from your present self to your future self—you’ll need patience, cash and courage, and in that order.  Creating and sticking to an appropriate portfolio is his prescription, which he stresses can be easier said than done.

  Post: Courage Required

  Link to comment from July 22, 2023

• Great article. Remodeling is a perfect example of life's financial complexity.

  1. Investment? - If one could solely decide based on investment value, the decision is fairly simple. Skip it.
  2. Need? My very young kids used to say "I need this." Their boring father would admonish them with a correction, "you may want this, but it is not a need." But there are times when addressing wants are fine to fulfill, especially if they are personally affordable.
  3. Selfish? - Sometimes a remodeling project means more to one party in the house than another one. In our case, I felt our old kitchen was fine, and I was content devouring great meals. My wife, who spent hours doing creative cooking in that room, felt the outdated kitchen needed remodeling.
  4. Hassles? Simply writing a check for the contractors may be the least of your worries. We had a busy contractor who insisted on a plan which was far easier and quicker to implement, rather than what was needed given our space. Fortunately we fired them very early in the process.
  The end result in our kitchen remodeling project proved much better than I envisioned, especially given my initial financial management focus. Looking back, it was an adventure which involved adapting during the extended process. But it was well worth it.

  Post: Breaking My Rules

  Link to comment from May 13, 2023

• Edmund, good point. Desiring to be part of an impressive story which takes others breath away can be a life long issue. The stress of having to pay for such a journey regardless of affordability should be considered.

  Post: The Power to Adapt

  Link to comment from April 4, 2023

• Kenyon, nice article about taking your good enough approach. As Nobel prize winner Eugene Fama has pointed out, even a sound investment strategy based on historical evidence can potentially take up to a couple of decades to prove correct. I had a similar discussion about having a slight value tilt in a portfolio last year. It had been true that during the past 5 years growth stocks trounced value stocks, so this approach appeared outdated. However this year the tables have turned, and value equities have substantially outperformed growth stocks. If deviating from an index becomes too burdensome, a simpler option of sticking with a total world market index remains viable. With the onslaught of hysterical financial headlines, it remains challenging for an individual with a sound strategy to stay the course. Being grateful and avoiding wildly swinging for investment home runs has many benefits. If you had preferred to join the FOMO crowd last year, there could have been some enticing crypto options to add to your portfolio.

  Post: Good Enough

  Link to comment from November 16, 2022

• Terrific article about our limited resource! I love the time pursuit dichotomy you set out between important decisions such as active versus passive engagement and considering investing versus personal finance matters. These are internal time challenges I find worth examining. I would add two personal internal time pulls that are slight variations of your theme. The first is deep versus shallow thinking. Reading a layered novel or well thought out book takes effort to pursue, but the end result can feel expansive. Reviewing variations of the same news headline or watching a simplistic TV show can temporarily distract me, but leaves me feeling as if I over consumed junk food. The second dichotomy is a variation of the serenity prayer. Focusing on what I can control versus what I can not control remains a big time challenge. I am energized if my attention is directed on what I can control and feel empty reacting or worrying about things that could be simply accepted. Evaluating how we actually spend our time does not come with an easy to read score board like a financial statement. But considering the profound issues you point out is a meaningful exercise. Thank you for this much needed push.

  Post: Budgeting Time

  Link to comment from October 22, 2022

• You offer good advice about starting investing early, the value of passive investing, and not timing the market. It could be added that you and us older investors have benefited from having an investing tailwind. Dr. Antti Ilmanen has written a comprehensive review of the challenge investors face today after having four decades of increasing valuations due to falling interest rates. His latest book "Investing Amid Low Expected Returns" explains how in a low-return environment, a younger person may need to save even more (or work later) to reach the same level of financial independence.

  Post: Early Start Early End

  Link to comment from September 3, 2022

• You are correct that pre-approved checks seem like bad news. The possible high interest rate due and seemingly free money aspect of the pre-approved is a concerning issue. But even those who are careful can run into problems, when unrequested pre-approved checks are mailed out with personal info printed on the check. It means an unaware recipient can't be on the look out for these unwanted checks. Even complaining and insisting a company stop sending out unauthorized pre-approved checks does not always stop additional checks from being generated. A big concern is having these mailed checks land in the wrong hands without the consumer even knowing about their existence. This business process should not be allowed.

  Post: Traveling Money

  Link to comment from August 31, 2022

• Good insight on ignoring the financial risk of longevity. People can have a hard time imagining living as long in retirement as they spend on a full working career. I assist a 99 year old man who started working at age 25 (after law school.) He retired at age 64 after working hard for 39 years. We discussed on his last birthday that he had been retired for 35 years which nearly matched his entire career. His considerable savings plus social security and a small pension had been needed to support him far longer than he expected. We chatted about some of his unfortunate peers who were struggling to pay their bills.

  Post: What to Worry About

  Link to comment from August 8, 2022

• Sanjib, what a refreshing story about an expenditure that helped define and enhance an early life stage. It invites a prudent reader to suspend rigid judgment. Of course, following delayed gratification can provide financial benefits. But as you point out, this particular spending later in life would not have duplicated your musical experience, and you had no pending obligations. Your big stereo purchase seems to have provided lasting memories for you and your friends. What rounds out your pleasurable story is that this type of "go for it" spending sounds like a youthful exception that worked for you.

  Post: Grateful Debt

  Link to comment from July 18, 2022