TWO MORE REVIEWS of my new book appeared last week: “How to Let Your Money Buy You Happiness” by MarketWatch’s Paul Merriman and “Money and Happiness” by the Chicago Tribune’s Elliot Raphaelson. Not in a mood to read? Instead, try watching “Insurance is a great invention, but is it a great investment?” This is a two-minute video I made for Creative Planning, where I sit on the advisory board.
WE’RE IN A WORLD of low investment returns. Bond yields are tiny—and bond investors can’t reasonably expect to earn anything more than those yields. Money market funds, savings accounts and other cash investments are even worse.
Meanwhile, economic growth is muted and stock valuations are rich, suggesting lackluster stock returns. My best guess: Over the next decade, a globally diversified stock portfolio might return 5% to 6% a year and a mix of high-quality corporate and government bonds could clock 2% to 2½%,
RISING LIFE EXPECTANCIES, coupled with slower population growth, have a huge impact on how we should manage our money. Indeed, I devote an entire chapter to the topic in my new book. Here are seven key financial implications of today’s momentous demographic shift:
1. Economic growth will be slower. Over the past 50 years, half of the economy’s 2.9% annual growth has come from increasing the number of workers and half from increasing the productivity of all workers.
MONEY MAGAZINE just posted an excerpt from How to Think About Money to its website. Also check out the accompanying video, which is located halfway down the article. Meanwhile, Vanguard Group has a Q&A with me on its website.
MANY OF US ENGAGE IN MENTAL ACCOUNTING, thinking of our mortgage as separate from our savings account and our job as unrelated to our portfolio. But these are all pieces of our sprawling financial life—and, as I discuss in my new book, it’s important to understand how everything fits together. Here are 12 examples:
1. If you have plenty of cash in the bank, you can probably raise the deductibles on your auto and homeowner’s insurance.
HOW SHOULD YOU think about money? Check out three articles that have appeared in the wake of my new book’s publication. StableInvestor.com ran an extensive Q&A with me. NextAvenue.com reviewed How to Think About Money. The review also appeared on Forbes.com. Finally, MarketWatch.com picked up the main article from my latest newsletter.
MANY PARTS of our financial life look like bonds, with their steady stream of income. For instance, you can think of receiving a regular paycheck as similar to collecting interest from a bond portfolio. Ditto for the income you might collect from Social Security, a traditional pension plan or an immediate fixed annuity. If you receive a lot of income from these bond lookalikes, that can free you up to invest more heavily in stocks.
LOOKING TO GET MORE HAPPINESS from your dollars? That’s a subject I tackle in my new book, How to Think About Money. Here are nine super-simple strategies that you can put into practice today:
1. Buy a gift for somebody else. Research says we get more pleasure from spending on others than spending on ourselves. Want extra credit? Give a gift when it isn’t expected. The recipient will be especially happy—which means you’ll be,
MY NEW BOOK is now on sale—and my latest newsletter was just published. The newsletter, which is free and appears bimonthly, includes nine ways to think differently about money, plus five key insights from happiness research.
Those articles are drawn from ideas in my new book, How to Think About Money. Folks who have read it say it’s the best thing I have ever written (though that may reflect their dim view of my earlier writing).
WE’RE SPENDING the final two weeks before Labor Day on Cape Cod, staying with my in-laws. Everywhere we turn, there’s another delightful home with a wonderful water view. “Wouldn’t it be great to live there?” my wife and I muse, as we imagine how much happier we’d be if we lived in this place of apparently permanent vacation.
We are, of course, completely delusional.
Being in a beautiful spot can be a great joy for a week or two.
STOCK INVESTORS this year are fretting over Brexit, tighter monetary policy and lackluster economic growth. But every year, there’s another compelling reason to bail out of the stock market. Think about the past half-century: We’ve had wars, political crises, financial crises, double-digit inflation, a double-dip recession, terrorist attacks and more. And yet, if you had stashed $10,000 in a global stock portfolio at year-end 1969 and sat tight through all the subsequent turmoil, you would have more than $450,000 today.
TEN YEARS AGO, the real estate market peaked. Today, prices remain 2.1% below their mid-2006 high—though they’re also 34.8% above their 2012 low, as measured by the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.
As property prices have recovered, homes have become less affordable. The impact, however, has been softened somewhat by modestly rising incomes and slightly lower mortgage rates, according to data from the National Association of Realtors. The upshot: If you have the U.S.
1. That new toy you desperately want? Wait a week, and you’ll be desperate for something else.
2. Folks who appear rich often aren’t.
3. Just because you aren’t paying doesn’t mean it’s free.
4. Mom and Dad might earn lots of money. But financial obligations probably devour 90 cents out of every dollar.
5. If you were paying the electricity bill, you wouldn’t leave the lights on.
6. Those lottery tickets that get folks so excited?
HOW LONG WILL YOU LIVE? A recent study from Boston College’s Center for Retirement Research noted that, “A healthy 65-year old man in an employer pension plan has a 25% chance of dying by age 78, or of living to age 91 or beyond.”
Think about the dilemma this creates if you’re retiring at age 65. Even if you are in the middle 50% of the male population—neither among the 25% who die early in retirement nor among the 25% who live well into their 90s—your retirement could last just 13 years or it could be double that,
WHEN I WAS IN MY 20s, with two young children to provide for, I had neither an emergency fund nor nearly enough life insurance. I knew both were important—but I simply didn’t have the money to spare.
Make no mistake: Launching a financial life is daunting. Most twentysomethings have modest incomes, and yet they’re supposed to save for retirement, buy a car, build up an emergency reserve and put aside money for a house down payment,