Investing is an argument between what we think an investment is worth—and what the market says. It’s an argument the market usually wins.
SAVE SOME FOR YOUR FUTURE SELF. Looking to lose weight? At restaurants, transfer half your serving to a second plate and ask the waiter to box it up. If the food will make good leftovers, it’s easy to do, because you know you’ll have a treat tomorrow. Want to save more? Think about it the same way—and set aside some of today’s spending money for tomorrow.
BACK IN THE EARLY 1990s, Donna and I were raising a young family, buying our first home and running a small business. We didn’t have a dime in any proper investment vehicles, as there weren’t an awful lot of dimes to spare. Somewhere in the fire and smoke, I received a copy of the Sound Mind Investing Handbook by Austin Pryor.
The book was easy to read and put a number of basic investing concepts within my feeble grasp.
SOMETIMES WE DON’T GIVE KIDS enough credit. Last week, my first-grader reminded me of this fact. On a trip to CVS, he was looking through the drink cooler, when he asked, “What’s Smartwater?” Before I could answer, he started with his own commentary. Seeing the price tag—which was more than double that of the regular water next to it—he wondered, “Why’s it smart? It’s just water. Is it really going to make me smart?”
This made me realize something: As consumers,
WHEN WE MAKE FINANCIAL DECISIONS, we usually have a pretty good idea what we’re getting. But what are we giving up? That, I believe, is the crucial, unasked question.
Think about any financial choice, whether it’s the shoes we buy, the stock we purchase or the kids’ college degree we promise to pay for. All too often, these are snap decisions. Captivated by the bright shiny object in front of our eyes, we make an isolated choice—and fail to grapple with the bigger picture.
TRYING TO BEAT THE MARKET isn’t just a risky endeavor that will almost certainly end in failure. It’s also unnecessary and, arguably, an astonishing waste of money and time.
As I grow older, the clock ticks ever more loudly in my head. I hate to be kept waiting. I keep chores to a minimum. I try to eliminate activities from my day that bring little pleasure and have no purpose. I think hard before acquiring new possessions,
Jonathan Clements is the founder and editor of HumbleDollar. He spent almost two decades at The Wall Street Journal, where he was the personal finance columnist. His latest book: How to Think About Money.