WHEN I GIVE presentations on retirement, I ask folks about their worries. For pre-retirees, their biggest concern is not having enough money. That’s no surprise. Financial firms spend millions pushing the importance of saving for retirement.
But when I pose the same question to recent retirees, I get a completely different answer. Overwhelmingly, their biggest concern is finding purpose in retirement. Similar results emerge from a recent survey by Age Wave and Edward Jones,
FEAR GETS A BAD RAP. From the old No Fear apparel line to mantras such as “only bad decisions come from fear,” our society seems to say that fear is always the creator of regrettable decisions.
I disagree. I think we need to distinguish between irrational and rational fear. Irrational fear is worrying that all strangers are a threat or believing that stepping out of your comfort zone is too fraught with peril to make it worthwhile.
AS I MENTIONED in an article back in June, my wife and I funded a custodial account for our son three years ago. He used the $1,000 we gave him to buy shares of Nike and Exxon.
We figured what’s good for our oldest child would also be good for No. 2. Our daughter recently completed fifth grade and is now age 11. Earlier this summer, we set up an account for her and added $1,000.
MONEY MANAGER GMO recently noted that, “There are no bad assets just bad prices.” The occasion was the S&P 500’s price outrunning earnings by 70% over the seven years through March. GMO’s punchline: The same thing happened in the seven years that ended with the dot-com peak in March 2000. This, of course, did not end well.
Two decades ago, I remember a friend telling me of steep losses in his retirement savings, the result of moving his entire 401(k) into aggressive,
AS MY TWINS DEPART for college, they leave behind a home base where they find food in the refrigerator, get new clothes and shoes when needed, have bills paid and extra-curriculars funded, and receive a small weekly allowance to save or spend.
Now, they’re headed far from familiar security. They gain instead independence and the opportunity to explore other ways of living and spending, all part of their higher education. Cold cereal for supper?
IN THE PAST THREE years, Jim and I have moved five times—three times in Spain and twice in Dallas. We sold almost all our possessions when we moved to Spain, taking just four suitcases and two cats. When we returned to Dallas, we didn’t bring home much more—five suitcases and two cats.
Fortunately, I’ve discovered that I prefer living in a smaller home. I love the design of Spanish houses, which are—on average—just half the size of equivalent U.S.
REAL ESTATE PRICES in California are through the roof. The price of a smaller home in our neighborhood just sold for $80,000 above the list price. Not only is housing expensive for retirees like us, but also the cost of living in California is very high. Gas, food and taxes are a lot higher here than in other places favored by retirees, such as the Sunbelt.
When I was going to school, I was never good at math.
WHEN YOU’VE BEEN saving and investing for a long time, you have a long list of things you wish you could do over. Like hanging on to Apple, instead of selling at $85 a share. Like buying an index fund, instead of that hot mutual fund that quickly turned cold. My wife calls these “what ifs.” We have a rule not to talk about them because they almost always lead to arguments about who was wrong.
THE AMERICAN DREAM. Rags to riches. The self-made man—or woman.
Everyone growing up in the U.S. is told of these ideals. We are sharks who must keep moving to survive. The only acceptable direction is up. We do it for ourselves, believing happiness is just over the next hill of “more.” We do it for our family because providing is an act of caring.
If there’s a least-debated rule in economics, however, it’s that everything comes at a cost.
LIKE MOST READERS of this site, I’m committed to index fund investing. Still, even though I know I’d have little chance of beating the market as a stock-picker, I’m periodically tempted to buy individual stocks. When a former mentor who’s a brilliant strategist joined Moderna in May 2020, I strongly considered buying shares. Given where the economy was at the time, I passed on buying the company’s shares (symbol: MRNA) and stuck to my standard S&P 500-index fund investing.
FINANCE NERD THAT I am, I gleefully dug into the 2021 Capital Markets Fact Book that was just published by SIFMA. I was particularly humbled by a chart showing the breakdown of the global stock and bond markets. Why humbled? The data show just how great we U.S. investors have had it in the past decade.
The Fact Book first displays the $58 trillion global stock market’s composition in 2010.
I’VE LONG STRUGGLED with the fact that, despite living in one of the world’s richest nations and having the best medical care in the world, Americans have a shorter average life expectancy than the citizens of 30 other developed nations.
I believe it all comes down to the high level of stress that Americans carry, much of it caused by economic hardship. Far too many Americans, both young and old, live paycheck to paycheck.
WHEN I WAS A KID in the late 1950s, if a toy was stamped “Made in Japan,” it meant it was cheap and poorly made. A decade or so later, that label began to mean something entirely different: If you wanted a top-notch TV, you were considering a Sony. If you were shopping for the most reliable car, Toyota, Datsun (later renamed Nissan) and Honda were on your list.
There’s a parallel today with China,
EARNINGS SEASON is wrapping up on Wall Street. Analysts’ predictions and companies’ profit guidance is a bit of a dog-and-pony show, as HumbleDollar contributor Kyle Mcintosh recently described. Still, there’s some useful information to be gleaned from second-quarter results and from executives’ comments.
In particular, I look forward to the FactSet weekly earnings season update to see which pockets of the stock market have the best and worst figures. According to last Friday’s report,
I SUGGESTED a thought experiment in my last blog post—one in which the stock market shut down for six months at the start of the pandemic. I believe it helps explain why financial markets recovered with such a vengeance.
Today, I take a different tack, one based on financial theory. It’s easy to forget that stocks are not pieces of paper (remember stock certificates?) or ticker symbols on a computer screen. Rather, they represent a claim on company profits,