Eating Their Own Cooking

Jonathan Clements  |  April 17, 2015

I JUST PURCHASED a 2013 Honda CRV. I told the “sales consultant” that I was paying cash. He tried to convince me to take out an auto loan, but I explained that borrowing at 3.4% didn’t make sense when I had cash in a savings account earning 0.25%.
Next, he asked whether I had ever considered leasing. I replied that leasing can make sense if you want to drive a new car every three years—but getting a new vehicle every three years was an expensive habit and I planned on keeping the car far longer.

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Fees vs. Commissions

Jonathan Clements  |  April 13, 2015

YESTERDAY, I RECEIVED AN EMAIL from a broker in Texas with the subject line: “Why do you want to put good honest advisors out of business?” The broker argued that I was being unfair in favoring advisors who charge fees over brokers who charge commissions.
My response: “You’ve convinced me that you do a fine job for your clients. But there’s plenty of evidence that many advisors don’t. Their clients—to use your phrase—need to get ‘a fair shake.’ How can we improve the odds that,

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Apple Pie, Anyone?

Jonathan Clements  |  April 8, 2015

WHEN WE WANT TO DESCRIBE something as wholesome, we say “it’s as American as motherhood and apple pie.” Parenting may indeed be virtuous. But does it make us happier? The research is mixed.
On average, people with kids say they’re happier. But if you dig into the data, it turns out that having children neither helps nor hurts happiness, and instead the big boost to happiness comes from being married. Indeed, folks who are single—both those raising children and those who aren’t—report being distinctly less happy than those who are married.

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Pascal’s Wager

Jonathan Clements  |  April 5, 2015

RISK IS PERHAPS THE MOST IMPORTANT notion in finance—and yet one that receives too little attention from most folks. Like investment costs, and unlike future investment returns, we have a fair amount of control over risk, so it’s worth spending serious time thinking about what risks we face and which ones we want to limit.
I discuss risk in my latest column, which looks at some of the major financial dangers we face. In writing the column,

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Breaking Even on Social Security

Jonathan Clements  |  March 17, 2015

IT’S THE NEVER-ENDING DEBATE: When should retirees claim Social Security? This piece, I hope, will at least serve to clarify the basic math involved.
Let’s dispense with a few preliminaries. If you have young children, it may be worth claiming at age 62, so your kids can receive family benefits. Meanwhile, if you’re married and you were the main breadwinner, it’s probably worth delaying benefits to age 70 to get the larger monthly check.

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Money and Happiness

Jonathan Clements  |  March 13, 2015

RESEARCH ON MONEY AND HAPPINESS has had a profound impact on my thinking. It isn’t that the insights are so startling. With a little reflection, you quickly realize the validity of the research findings—that friends and family are crucial to happiness, that we quickly adapt to material improvements in our lives, that commuting is a wretched activity, that it’s better to spend money on experiences rather than things, that engaging in work we’re passionate about can be among our happiest times.

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It Pays to Delay

Jonathan Clements  |  March 9, 2015

AMONG EXPERTS ON SOCIAL SECURITY, there’s a broad consensus that most folks should delay Social Security to get a larger monthly check—and yet roughly half of retirees claim benefits at 62, the earliest possible age.
Many of these retirees, I suspect, take benefits right away because they need the money or they haven’t given the issue much thought. What about those who have wrestled with the topic and still insist that claiming at 62 is the right strategy?

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Farewell, Tom Stanley

Jonathan Clements  |  March 4, 2015

BESTSELLING AUTHOR Thomas J. Stanley died in a car accident over the weekend at age 71. His death has received scant publicity—which is surprising, given the popularity of his books and his impact on the way we think about money.
With co-author William Danko, Stanley wrote the 1996 blockbuster, The Millionaire Next Door. Who are the rich? It isn’t the folks with the flashy cars and designer clothes. Those aren’t signs of wealth.

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What’s the Point?

Jonathan Clements  |  March 2, 2015

IF THERE’S MONEY TO BE MADE, Wall Street is relentless. What if it’s time-consuming, with no extra payoff? Don’t expect a whole lot of help.
That brings me to the obvious starting point for every financial decision: What’s the goal? Many financial advisors are happy if you just tick the appropriate boxes: retirement, college, house down payment, insurance, whatever.
But to make the right financial decisions—and create the motivation to save diligently—you need to dig deeper,

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A Walk on the Wild Side

Jonathan Clements  |  February 25, 2015

BONDS SHOULD BE BORING—and that’s how I usually manage my portfolio. My taste typically runs to low-cost short-term corporate-bond funds, supplemented with occasional purchases of certificates of deposit.
But there’s one major exception: I have roughly 3% of my overall portfolio in a low-cost emerging-market debt fund. This is not a low-risk investment. According to Morningstar, emerging-market bond funds lost an average 18% in 2008, before bouncing back 32% in 2009. Clearly, owning emerging-market debt is more akin to investing in stocks.

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On Further Thought

Jonathan Clements  |  February 20, 2015

“HOW TO THINK ABOUT MONEY.” That’s the tentative title for a new book I’m working on. It probably won’t see the light of day until early next year, after I get the 2016 edition of the Jonathan Clements Money Guide out the door.
What’s the new book about? My goal is to pull together five strands that define my financial philosophy. First, the connection between money and happiness is surprisingly tenuous. That means we need to think carefully about how we spend and what goals we pursue.

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Take the Long View

Jonathan Clements  |  February 14, 2015

MOST OF US will enjoy wonderfully long lives. For those born in 2000, the average life expectancy at birth was age 80 for men and 84 for women. That’s a vast improvement since 1900, when life expectancy was age 52 for men and 58 for women.
The bad news: While men can now expect to live 28 years longer and women 26 years longer, the bulk of the improvement—20 years—came in the first half of the 20th century.

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Where There’s a Will

Jonathan Clements  |  February 11, 2015

ESTATE PLANNING IS EASY for most folks—but many don’t bother. Surveys regularly find that half of all adults don’t have a will. Yet a will, the right beneficiaries listed on retirement accounts and life insurance, and correct titling on property (such as the house you own jointly with your spouse with right of survivorship) are all most of us need.
Sure, there are other niceties, like drawing up durable powers of attorney for financial and health-care matters,

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A Death in the Family

Jonathan Clements  |  February 7, 2015

TOMORROW IS THE 805th weekly edition of The Wall Street Journal Sunday, a publication carried in 67 newspapers with a combined circulation of 6.2 million—and, I’m sad to report, also the last. I wrote columns for 423 of those editions, including both the inaugural publication, which appeared Sept. 12, 1999, and tomorrow’s final paper.
You can get an early look at my last column on In that column, I discuss five notions that—I believe—are indispensable to a happier financial life.

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I Can’t Get No (Satisfaction)

Jonathan Clements  |  February 4, 2015

STAT OF THE DAY: In 2012, 27% of Americans said they were satisfied with their financial situation, versus 32.2% in 1972, according to the General Social Survey. That 27% was the third lowest reading ever for the survey, which has typically been conducted every two years, though sometimes more often. Meanwhile, over that same 40-year stretch, inflation-adjusted per-capita disposable income grew 108%.

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