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The Art of Spending

Sanjib Saha  |  April 17, 2021

I GREW UP IN a middle-class family in Kolkata, India. Like most folks, my relationship with money was shaped by my parents’ financial habits. They were on different sides of the saver-spender continuum. My homemaking mother strove to live beneath our family’s means and never seemed to feel deprived. By contrast, my father—even with a modest salary from his government job—was focused on the art of spending.
At my mother’s insistence, my father bought most of our household supplies from wholesalers and cooperative stores,

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Wooden Spoons

Jim Wasserman  |  April 16, 2021

WE ARE STARTING from scratch. After living in Spain for three years, Jiab and I have returned to Dallas to be closer to family. We still have a home here, but—when we left three years ago—we sold all our furniture, cars and many other possessions to reduce storage costs. Now we have to reacquire those things that make living possible.
Fortunately, Jiab and I share a similar outlook as we reaccumulate. That outlook is inspired by Thorstein Veblen,

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My Worst Investment

Michael Flack  |  April 15, 2021

WHILE READING the great books on investing, studying financial theory and reviewing our investment performance are essential to becoming a better investor, sometimes it can be useful to learn from the mistakes of others—because what not to do can be even more important than what to do. As Otto von Bismarck may have said, “Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.”
Which brings me to me.

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Five Lessons

Joe Kesler  |  April 14, 2021

COVID-19 WILL SOON, I hope, be in the rearview mirror. But as Winston Churchill said, “Never let a good crisis go to waste.” Here are five lessons I’m taking away from the pandemic:
1. Government spending. Some folks tell me they’re claiming Social Security retirement benefits as soon as they’re eligible because the system’s trust fund will be depleted within the next decade or so, at which point benefits could get cut.

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Two Words

Dennis Friedman  |  April 13, 2021

I’VE LATELY BEEN having a hard time sleeping—and I have a pretty good idea why. It has to do with two words that keep bouncing around inside my head. If you let them, those two words will also keep you up at night. They’re powerful because there’s no end to them. You ask, “What are the two terrible words?” The answer: what if.
What ifs are about what could happen in the future and,

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Go Figure

John Goodell  |  April 12, 2021

A LOT OF INVESTMENT math focuses on how money grows over time. But as an attorney who’s worked with many clients hoping to retire in comfort, I find myself thinking more about risk—and how the math can work against us. Consider five sets of numbers:
Inflation’s toll: 0.98
Got cash? If you multiply that sum by 0.98, you’ll see your money’s purchasing power a year from now. This assumes 2% inflation, which is the Federal Reserve’s stated target.

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It’s All in the Mix

Adam M. Grossman  |  April 11, 2021

IS THE STOCK MARKET too high? It’s a question I’ve heard a lot recently. Each time, I’ve offered this recommendation: It’s impossible to predict where the market will go next, so your best defense is to have an appropriate asset allocation. But how exactly can you determine an ideal allocation?
The textbook method originated in the 1950s, with the work of a PhD student named Harry Markowitz. Up until that point, investors had mostly picked stocks and bonds in a vacuum,

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Feel Better

Jonathan Clements  |  April 10, 2021

WARREN BUFFETT doesn’t have the best investment record over the past three decades. That accolade apparently belongs to Jim Simons. Buffett also isn’t the world’s richest person. In fact, he hasn’t held that title for the past dozen years and currently ranks No. 6, with barely half the wealth of today’s richest person, Jeff Bezos.
I doubt Buffett feels bad about this. Is your surname neither Simons nor Bezos? I don’t think you should feel bad,

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A Firm Foundation

Kristine Hayes  |  April 9, 2021

I WAS 24 YEARS OLD when I started working fulltime. My salary at that first job wasn’t great—I was making about $16,000 a year—but the retirement benefits were stellar. As a government employee, I was entitled to enroll in the state’s pension plan. Every month, the government contributed an amount equal to some 17% of my salary. The money was guaranteed to never earn less than 8% interest a year. Most years, the rate of return was much higher.

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Who Are You?

Mike Drak  |  April 8, 2021

THE PRODUCERS of retirement commercials would like us to believe that all retirees are the same. They aren’t. To be happy in retirement, we need a good handle on what our needs are—financially and otherwise—and then find ways to satisfy them each and every day.
That might sound difficult, but it isn’t. To help get you started, here are the three general types of retiree I discovered during my research on retirement:
1.

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Caring for Mom

Phil Dawson  |  April 7, 2021

IN NOVEMBER 2019, my 92-year-old widowed mother took an uncontrolled trip down a flight of wooden stairs in her home and got a helicopter ride to the regional trauma center.
Before her fall, we had a tenuous but semi-functional system of care in place. But the chaotic aftermath plunged us into unknown territory and claimed incalculable amounts of time, money and other resources from her caregivers. We spent months struggling with a new, impossibly complex set of rules and referees.

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Kick the Can

Tom Sedoric  |  April 6, 2021

MANY EYEBROWS were raised during a recent city budget meeting in Portsmouth, New Hampshire. According to the Portsmouth Herald, the city manager told city councilors that Portsmouth’s mandated contribution to the state retirement system would balloon from $290,000 to a whopping $1.9 million per year. Councilors called the development, which would cause a sizable increase in the city’s 2022 budget, “ugly” and “a kick in the shins.” Had anyone been paying attention,

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March’s Hits

Jonathan Clements  |  April 5, 2021

WHAT WERE FOLKS reading last month? These were the seven most widely read articles:

Planning a post-pandemic spending spree? So is Dennis Friedman—but, even though he’s retired, he’s not worried about running out of money.
“You don’t truly know someone until you’ve seen his or her tax return,” plus 11 other financial planning truths, courtesy of the always insightful Adam Grossman.
Confident that U.S. stocks are in a bubble? Next comes the hard part,

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Three Landmines

Adam M. Grossman  |  April 4, 2021

SCOTT ADAMS, the creator of Dilbert, has this to say about making forecasts: “There are many methods for predicting the future. For example, you can read horoscopes, tea leaves, tarot cards, or crystal balls. Collectively, these methods are known as ‘nutty methods.’ Or you can put well-researched facts into sophisticated computer models, more commonly referred to as a complete waste of time.”
This is funny but, for the most part,

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Risk Less Make More

Jonathan Clements  |  April 3, 2021

WHEN WE’RE YOUNGER, we tend to focus almost exclusively on our portfolio’s performance. But as we grow older, risk becomes a bigger concern. The irony: That greater focus on risk is often the key to better long-run investment results.
Want to make wiser portfolio choices? Keep these nine notions in mind:
1. Bad results happen to good investors. Let’s start with one of the most counterintuitive notions in investing: Just because we score spectacular short-term gains doesn’t mean we made smart decisions—and just because our portfolio struggles in the short run doesn’t mean we got it badly wrong.

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