1 I'm assuming by risk you mean stock market volatility, and risk tolerance as the amount of your portfolio dedicated to stocks. For much of our investing life we maintained a fairly high stock market exposure. However, we are fairly risk averse. We managed this by understanding that financial risk is properly defined as anything that can prevent you from meeting your financial goals. As such investment time frame is an important component in identifying risk. Essentially, we internalized that inflation is a long-term investment risk and volatility is a short-term risk (If you're dollar cost averaging and adjusting your asset allocation properly during your accumulation phase, volatility is also a long-term opportunity). Knowing that and having an asset allocation that takes into account near term and long term financial needs makes things very easy with respect to risk tolerance. 2 Spending on experiences is what we most enjoy. 3 yes 4 N/A
5 While we would always take more, we are at a point in our lives where we are not willing to do what is necessary to get more. We have better things to do with our time than pursue more money. 6 My wife and I enjoy pursing goals we didn't have time to pursue during our working years. Glass blowing, getting that pilots license, volunteering, etc. 7&8 - we're relatively young and still sorting that stuff out.
This is a good state tax efficient fund that is 97% invested in TBills. TBills have been paying better than Bonds for the better part of two years now, so most of our bond portfolio has been sitting here and in individual TBills until the yield curve gets sorted out. The rest in in intermediate term (<7yr duration) bond ETFs. My thinking for what it is worth is that the current yield curve can't go on like this forever. Short term yields need to come down and/or intermediate and longer-term yields have to come up relatively speaking. How this happens is not clear. I suspect intermediate and long-term rates will likely stay high and short-term rates will decrease over time. However, whatever happens, it is safer to stay in short term obligations given their higher yields and low duration risk.
The key learning here is that there is no profession with a monopoly on virtue. Quite simply there are some in the medical profession that are not honest and take advantage of patients when they are at their most vulnerable. This can take different forms. One that I ran into recently was a referral to a specialist, who requested testing for my condition. While the testing was necessary, it wasn't urgent. The specialist I was seeing worked in a hospital associated practice, and their front office offered to set up an appointment with their associated testing facility next door. I accepted and set up an appointment a few weeks in the future. What I failed to understand is that since the testing facility was owned by a hospital, but nowhere near the hospital, it is allowed to bill hospital rates that are 10X what non-hospital facilities charge. What was particularly upsetting was that there was no indication that the facility was hospital owned. I knew that this practice was a problem in the medical industry, but since my primary care doctor was very good about recommending testing facilities that weren't owned by their associated hospital, I assumed my specialist would also be since they both work for the same hospital associated practice. Unfortunately, that wasn't the case. So the key learning is - if it's not urgent and it doesn't feel right get a second opinion. Also, be very careful about recommendations for testing facilities from medical practices associated with hospitals. Your insurance provider can help you find reputable facilities at more reasonable costs.
I think you answered your own question: it's human nature. We might learn more from answering the opposite question: Why do people save, and how do they become savers? Alot of folks in the responses below seem to be answering that question, which is not surprising given the makeup of HD readers. This really isn't original to me. Someone once pointed out to me that the question "Why does poverty exist" is the wrong question, because poverty is our natural state and has been for most of human existence. The real question is: How do people and societies become prosperous?
Another question under the "How he gets paid" question: Does he get sales commissions for the funds he directs you too? If you're looking to match the indices, then costs are everything - if he is incentivized through commissions to put you in higher cost funds then that's a problem.
I would agree, not normal and more importantly not equally exposed to the broader population. There is a reason people in certain professions have a more jaded view of other people - they are exposed to broader range of characteristics in the population.
Net worth numbers would be more indicative. This site has info based on Federal Reserve data. Average Net Worth by Age plus Median, Top 1%, and All Percentiles There are 2 sets of Net worth by age- with home equity and without. For 55-59 median net worth with equity is $321,074 and $131,460 without.
For 60-65 median net worth with equity is $392,860 and $143,640 without. This site gives some background on methodology. United States Net Worth Brackets, Percentiles, and Top One Percent - DQYDJ This net worth data does not include value of social security and defined benefit pensions. I think it's more representative than Vanguard's numbers as non-participants in 401(k)'s are included. All that said - Quinn's not wrong. Most of the median 55-65 year old's households net worth is tied up in their homes, and home equity assets are pretty paltry.
According to this website based on Federal Reserve data, $6.9M puts you in the top 3%. Net Worth Percentile Calculator – United States (and Average)The top 1% starts at $13.9M - I'll bet alot of folks at that level don't really consider themselves wealthy, but many folks below that level do.For most people I suspect a rich/wealthy person is someone who has more money than they do.Also, when the media talk about the wealthy - they usually mean billionaires. While we hear much about them, they really are outliers and distort most people's thinking. That said - I agree with your take the words don't really mean alot here. Rich and wealthy are synonymous to me. I will say that I think a sign of financial maturity is understanding that income does not equal wealth, and that wealth is relative. That said we do need some sort of objective measure - and net worth is probably the best.
Gotta agree - I can't hit the up button enough on this one. The combined business, regulatory, investing and legal environment in the US is the differentiator. If other countries had these same environments I would agree with Jonathan's view. However, in my experience with European, Asian and Middle Eastern countries that is just not the case. The US investing environment is far from perfect - but as one economist put it "it's the best looking horse in the glue factory"
Comments
1 I'm assuming by risk you mean stock market volatility, and risk tolerance as the amount of your portfolio dedicated to stocks. For much of our investing life we maintained a fairly high stock market exposure. However, we are fairly risk averse. We managed this by understanding that financial risk is properly defined as anything that can prevent you from meeting your financial goals. As such investment time frame is an important component in identifying risk. Essentially, we internalized that inflation is a long-term investment risk and volatility is a short-term risk (If you're dollar cost averaging and adjusting your asset allocation properly during your accumulation phase, volatility is also a long-term opportunity). Knowing that and having an asset allocation that takes into account near term and long term financial needs makes things very easy with respect to risk tolerance. 2 Spending on experiences is what we most enjoy. 3 yes 4 N/A 5 While we would always take more, we are at a point in our lives where we are not willing to do what is necessary to get more. We have better things to do with our time than pursue more money. 6 My wife and I enjoy pursing goals we didn't have time to pursue during our working years. Glass blowing, getting that pilots license, volunteering, etc. 7&8 - we're relatively young and still sorting that stuff out.
Post: Ask Me a Tough One by Jonathan Clements
Link to comment from April 20, 2025
This is a good state tax efficient fund that is 97% invested in TBills. TBills have been paying better than Bonds for the better part of two years now, so most of our bond portfolio has been sitting here and in individual TBills until the yield curve gets sorted out. The rest in in intermediate term (<7yr duration) bond ETFs. My thinking for what it is worth is that the current yield curve can't go on like this forever. Short term yields need to come down and/or intermediate and longer-term yields have to come up relatively speaking. How this happens is not clear. I suspect intermediate and long-term rates will likely stay high and short-term rates will decrease over time. However, whatever happens, it is safer to stay in short term obligations given their higher yields and low duration risk.
Post: Buying Treasury Bond ETFs vs. MM Funds in this Moment
Link to comment from April 20, 2025
The key learning here is that there is no profession with a monopoly on virtue. Quite simply there are some in the medical profession that are not honest and take advantage of patients when they are at their most vulnerable. This can take different forms. One that I ran into recently was a referral to a specialist, who requested testing for my condition. While the testing was necessary, it wasn't urgent. The specialist I was seeing worked in a hospital associated practice, and their front office offered to set up an appointment with their associated testing facility next door. I accepted and set up an appointment a few weeks in the future. What I failed to understand is that since the testing facility was owned by a hospital, but nowhere near the hospital, it is allowed to bill hospital rates that are 10X what non-hospital facilities charge. What was particularly upsetting was that there was no indication that the facility was hospital owned. I knew that this practice was a problem in the medical industry, but since my primary care doctor was very good about recommending testing facilities that weren't owned by their associated hospital, I assumed my specialist would also be since they both work for the same hospital associated practice. Unfortunately, that wasn't the case. So the key learning is - if it's not urgent and it doesn't feel right get a second opinion. Also, be very careful about recommendations for testing facilities from medical practices associated with hospitals. Your insurance provider can help you find reputable facilities at more reasonable costs.
Post: Hole Truth
Link to comment from February 25, 2025
I think you answered your own question: it's human nature. We might learn more from answering the opposite question: Why do people save, and how do they become savers? Alot of folks in the responses below seem to be answering that question, which is not surprising given the makeup of HD readers. This really isn't original to me. Someone once pointed out to me that the question "Why does poverty exist" is the wrong question, because poverty is our natural state and has been for most of human existence. The real question is: How do people and societies become prosperous?
Post: Why Don’t Folks Save? By Jonathan Clements
Link to comment from February 17, 2025
Another question under the "How he gets paid" question: Does he get sales commissions for the funds he directs you too? If you're looking to match the indices, then costs are everything - if he is incentivized through commissions to put you in higher cost funds then that's a problem.
Post: Benchmarks for our non-profit portfolio
Link to comment from January 26, 2025
I would agree, not normal and more importantly not equally exposed to the broader population. There is a reason people in certain professions have a more jaded view of other people - they are exposed to broader range of characteristics in the population.
Post: The Que sera, sera retirement planning strategy.
Link to comment from January 15, 2025
Net worth numbers would be more indicative. This site has info based on Federal Reserve data. Average Net Worth by Age plus Median, Top 1%, and All Percentiles There are 2 sets of Net worth by age- with home equity and without. For 55-59 median net worth with equity is $321,074 and $131,460 without. For 60-65 median net worth with equity is $392,860 and $143,640 without. This site gives some background on methodology. United States Net Worth Brackets, Percentiles, and Top One Percent - DQYDJ This net worth data does not include value of social security and defined benefit pensions. I think it's more representative than Vanguard's numbers as non-participants in 401(k)'s are included. All that said - Quinn's not wrong. Most of the median 55-65 year old's households net worth is tied up in their homes, and home equity assets are pretty paltry.
Post: The Que sera, sera retirement planning strategy.
Link to comment from January 15, 2025
According to this website based on Federal Reserve data, $6.9M puts you in the top 3%. Net Worth Percentile Calculator – United States (and Average) The top 1% starts at $13.9M - I'll bet alot of folks at that level don't really consider themselves wealthy, but many folks below that level do. For most people I suspect a rich/wealthy person is someone who has more money than they do. Also, when the media talk about the wealthy - they usually mean billionaires. While we hear much about them, they really are outliers and distort most people's thinking. That said - I agree with your take the words don't really mean alot here. Rich and wealthy are synonymous to me. I will say that I think a sign of financial maturity is understanding that income does not equal wealth, and that wealth is relative. That said we do need some sort of objective measure - and net worth is probably the best.
Post: Are you wealthy or just rich? By Dick Quinn
Link to comment from December 18, 2024
For those of us who aren’t bankers - nothing. :)
Post: Credit Card Debt.
Link to comment from November 24, 2024
Gotta agree - I can't hit the up button enough on this one. The combined business, regulatory, investing and legal environment in the US is the differentiator. If other countries had these same environments I would agree with Jonathan's view. However, in my experience with European, Asian and Middle Eastern countries that is just not the case. The US investing environment is far from perfect - but as one economist put it "it's the best looking horse in the glue factory"
Post: Stuck at Home
Link to comment from November 24, 2024