Fast Or Slow?

Jonathan Clements  |  December 7, 2016

I HAD AN EMAIL from a reader today, asking whether—”with the markets a bit overvalued lately”—he should invest his cash in the stock market as a lump sum or average in over time. It’s a question that almost compels you to start guessing the market’s direction—something none of us can do. What’s the alternative? Think about risk.
My response: “It depends on how much you currently have saved vs. how much more you expect to save between now and retirement.

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Selling Shovels

Jonathan Clements  |  December 3, 2016

REAL ESTATE seminars. Initial public stock offerings. International lotteries. Hedge funds. Franchising opportunities. Penny stocks. Multi-level marketing companies.
This is the American lexicon of easy wealth—and yet the only people who seem to end up rich are those who peddle this nonsense. It’s the story of the California gold rush: Riches accrued not to the miners, but to those who sold them shovels, picks, pans and other supplies.
To be sure, hollow promises and empty hype are rife in other areas of our life.

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Stuck In The Middle With You

Jonathan Clements  |  November 28, 2016

SINCE EARLY OCTOBER, I’ve been selling signed copies of my new book. As the orders have rolled into my P.O. box, I have noticed an interesting pattern: While there’s some representation from the two Coasts and the South, probably a majority of the orders have come from the middle of the country.
I don’t believe this is happenstance. I hew to a no-nonsense financial philosophy–spend thoughtfully, save diligently, diversify broadly, hold down investment costs,

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Roughly Speaking

Jonathan Clements  |  November 26, 2016

PORTFOLIO MANAGERS and financial advisors are apt to depict money management as rigorously analytical, and sometimes even as a science. Maybe that’s inevitable in an endeavor where almost every decision ends up with a number, whether it’s the amount of life insurance to buy, the percentage allocation to emerging markets or the age at which you should claim Social Security.
But just because the answer has precision doesn’t mean this is a precise business.

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Don’t Read This

Jonathan Clements  |  November 18, 2016

THE MARKET for intelligent financial writing is, alas, surprisingly small. Why? I believe there are three culprits.
First, many of us don’t care enough about our future selves. Sure, we care somewhat—but not so much that we’ll spend less today, let alone educate ourselves about how to prepare for retirement and other distant goals. Just check out the most popular personal-finance blogs. They focus on topics like coupons, credit cards and juggling debt. Most of us,

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Lemons Into Lemonade

Jonathan Clements  |  November 16, 2016

AROUND THIS TIME OF YEAR, financial advisors and the media start talking about taking tax losses. The notion: You sell underwater investments in your taxable account, and then use those realized capital losses to offset realized capital gains and up to $3,000 in ordinary income.
There’s nothing wrong with taking tax losses, though I think the notion is oversold. Unless you’re an active trader or a really bad investor, you probably won’t have any losses to take.

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Two Numbers

Jonathan Clements  |  November 12, 2016

WHAT’S THE STATE of your financial health? Forget your credit score, the past year’s handsome increase in your home’s value or how your salary compares to your brother-in-law’s. In the end, financial fitness comes down to two key numbers.
First, there’s your net worth, which is the value of your assets minus your debts. There’s some debate about what should be included. The easy answer: Don’t delude yourself by counting the value of your car,

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This Is a Test, This Is Only a Test

Jonathan Clements  |  November 9, 2016

The article below appeared in my Oct. 28 newsletter. But after the overnight global market volatility and today’s expected steep drop in U.S. share prices, I figured it was worth reposting.
THE CURRENT GRUDGING ECONOMIC RECOVERY is in its seventh year and the stock market rally is in its eighth year. Here I earn nobody’s admiration by stating the obvious: These things don’t go on forever—but nobody knows when the music will stop.

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Keep the Faith

Jonathan Clements  |  November 5, 2016

FOREIGN STOCKS have become the investment that folks love to hate—and it’s easy to understand why. In the current decade’s first six full calendar years, foreign shares trailed the S&P 500 by almost nine percentage points a year—and they’re on track to lag behind the U.S. again in 2016.
But is this recent performance a good guide to the future? Almost certainly not. Foreign stocks are far less expensive than U.S. shares, as you’ll discover at

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Reflect Pause Focus

Jonathan Clements  |  October 28, 2016

WANT TO GET more out of your money? Whether you’re spending or investing, try this three-pronged strategy:
1. Reflect
There’s ample evidence that most of us aren’t good at investing or figuring out what will make us happy. Looking to improve? Spend a little time pondering the past.
When during your life were you happiest—and what were you doing? This may help you figure out whether you should change careers and what you might do with your spare time or with your retirement.

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A Better Financial Life—With Three Verbs

Jonathan Clements  |  October 28, 2016

REFLECT. PAUSE. FOCUS. That’s my three-pronged strategy for getting more out of your money, whether you’re investing it or spending it. Want to learn more? Check out my latest newsletter.
Meanwhile, with the economic recovery in its seventh year and the stock market rally in its eighth year, this is a good time to hold a financial fire drill. How would you cope if the stock market dropped 30% next week or you lost your job because of an economic downturn?

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Don’t Be Yourself

Jonathan Clements  |  October 22, 2016

WE’RE OFTEN encouraged to follow our instincts. But if we did that, many of us would sit on the couch drinking margaritas, eating Cheez Doodles and cruising online shopping sites, when we should be eating less, saving more and heading to the gym. Often, the key to a better life—financially and otherwise—is to get ourselves to take action we instinctively resist.
This is obvious advice if we’re overweight, rarely exercise, panic when the stock market declines and find our credit-card balances balloon with every passing month.

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Sobering Thoughts

Jonathan Clements  |  October 15, 2016

IF YOU DROVE drunk but got home unscathed, you wouldn’t wake up the next morning and think, “I guess it’s okay to get behind the wheel after 13 beers.” Yet, when handling our finances, we do that all the time.
“Markets generate a lot of data, but they don’t generate a lot of clear feedback,” writes academic Terrance Odean in his foreword to Michael Ervolini’s thoughtful book, Managing Equity Portfolios. “Outcomes are noisy.

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A Distinction Without Merit

Jonathan Clements  |  October 7, 2016

MY HOPE: THE DISTINCTION between work and retirement–between being productive and suddenly being unproductive–gets a whole lot murkier. I make that argument in How to Think About Money and also in a new Money magazine article, which was posted online this morning. Want a happier retirement? Forget days of endless relaxation, and instead think about what will give a sense of purpose to your final decades. You might find that sense of purpose in part-time work,

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Not So Wise

Jonathan Clements  |  October 1, 2016

“PRACTICAL MEN, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist,” wrote John Maynard Keynes in his 1936 classic, The General Theory of Employment, Interest and Money.
The same can be said of U.S. investors. We grow up repeatedly hearing the same standard financial advice—and often we never question it. Yet, as I argue in How to Think About Money,

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