Financial danger sign: You save on eating out by attending free financial seminars.
NO. 14: WE SHOULD avoid impulse spending and investment decisions. Our instincts often lead us astray, but we can usually figure out the prudent choice—if we pause and ponder.
NO. 39: WE LATCH on to information that confirms what we already believe. Instead of dispassionately reviewing the evidence, bullish investors spot reasons for optimism wherever they look, while naysayers see just the opposite. The risk: Such confirmation bias convinces folks they know the market’s direction, prompting them to make big bets they later regret.
BETA AND ALPHA. Beta measures an investment’s volatility relative to a benchmark index. If the investment has a positive alpha, it means it beat the index on a risk-adjusted basis, with that risk measured by beta. For instance, a mutual fund could trail the market averages, but still have a positive alpha if its performance wasn’t especially volatile.
MAKE SURE SPENDING money is out of stocks. Calculate how much cash you’ll need from your portfolio over the next five years. That money should be out of stocks and invested in nothing more volatile than high-quality short-term bonds. You don’t want to be forced to sell shares at depressed prices—and that could happen if your time horizon is less than five years.
NO. 14: WE SHOULD avoid impulse spending and investment decisions. Our instincts often lead us astray, but we can usually figure out the prudent choice—if we pause and ponder.
I WROTE RECENTLY about my wife’s lifelong love of traveling, and of my resolve to get in step with her as she resumes her rambles. To that end, earlier this summer, I drove our family to Charleston, South Carolina, to attend the retirement ceremony for my cousin Chris, and to see a bit of the city, to boot.
As our departure time approached, we learned that the original schedule for retirement day had been altered.
THE OTHER DAY, WHILE walking to my mailbox, I noticed a summer class schedule for a private gifted youth academy lying on the ground. I assumed it belonged to one of my neighbors, who has elementary-aged children.
Their interest in extra academics didn’t surprise me. Many families move to this area because of its excellent schools. Parents here clearly value education. On any given day, it’s common to hear children practicing the piano or violin as you walk through the neighborhood.
I WAS WORRIED ABOUT what we’d be giving up when, a few years ago, we moved to a 55-plus community in Atlanta. We downsized from a large home to a small apartment, plus all our neighbors were considerably older. It was obvious we had to adjust and start enjoying our unfamiliar environment or we’d end up miserable.
My wife and I made a conscious decision to slow down, and make every effort to get to know other residents and their life stories.
WE’RE ALWAYS STRIVING—the next pay raise, the next consumer purchase, the next self-improvement goal. But to what end?
Our time on this earth is fleeting, our impact minimal and our legacy quickly forgotten. A decade after we’re gone, we might be remembered by family and close friends, but not by many others. And yet we keep pushing forward.
Does death’s approach shed any light on this curious behavior? Far from it. If anything,
EACH OF US TAKES our monthly income and then makes countless decisions—some big, some small—about how to use those dollars. How can we get the most from the money that flows through our hands? I find it helpful to look at this “income allocation” through three prisms.
Divvying it up. We can use our income for three main purposes: spending it today, saving it for tomorrow or giving it to others. Our instinct is to spend today,
I’VE RECENTLY BEEN reading and listening to health experts who study the brain chemical known as dopamine. I’m no health expert and I don’t claim any specialized knowledge on the subject, but I’ve learned dopamine is widely considered to be the “pleasure chemical.”
Think about the feeling in between bites of chocolate cake, when we know just how good that next bite is going to be. As we anticipate our reward, our dopamine spikes,
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