Since their founding, Schwab has been disrupting the industry by taking advantage of the semiconductor to reduce the cost of investing for everyone. This is a good thing. Independently, Schwab and Vanguard changed the industry more than any other two companies, and average investors are better for it.
No longer is it the norm for brokers to charge 1% (or more) of a transaction amount just to trade a stock. No longer is it standard for a mutual fund manager to charge in excess of 1% (or more) annually to attempt to beat the market, which they rarely do anyway.
Research and technology made things better, as did market competition.
Your stuff lies to you, and to me, and to everyone else.
We use our stuff to tell lies to others, and they believe them, because we typically don’t let people see our balance sheet or our cash flow.
Our houses tell lies, and so do our cars. Our clothes, our trips, even our Instagram accounts do too. We use them to tell the story of our own financial success, which we know gets translated into success in life (for some weird reason). Sometimes, the success is real, and sometimes it’s fake. But as long as it’s documented well for our neighbors and our family, it doesn’t really make a difference.
I’m in a position to get to peak behind the curtain a bit, and ascertain whether the perceived success has any underpinning in reality, or if it’s all a facade. I get to see the truth. I wish our stuff would tell the truth, too, so everyone could be more honest with themselves and others about their current financial status. It would probably help to provide some better perspective about how meaningless stuff can actually be.
Back at the 2008 Summer Olympic Games, Michael Phelps became known for more than just his historic gold medal accumulation: he also became known for his diet. During the training and the games, in order to keep up with the energy needed to perform at a world class level, he’d put down 12,000 calories a day.
Although he later admitted that the figure was somewhat exaggerated, the quantity of food he ate while training was still rather daunting:
Breakfast: Three fried-egg sandwiches with cheese, lettuce, tomatoes, fried onions and mayonnaise. Two cups of coffee. One five-egg omelette. One bowl of grain. Three slices of French toast topped. Three chocolate-chip pancakes.
Lunch: One pound of pasta. Two large ham and cheese sandwiches with mayonnaise on white bread, plus energy drinks.
Dinner: One pound of pasta, an entire pizza, and even more energy drinks.
Olympic level swimmers burn between 3,000 and 10,000 calories per day, so all that intake was put to good use.
Wouldn’t it be nice, though, to be able to eat whatever you want, not exercise, and still lose weight?
In addition to seeming like total fraudsters, lots of financial advisors must come off as boring putzes to most people who come in contact with them, like an effervescent nanny in a pin-striped suit firing off lists of do’s and don’ts to anyone who will listen.
What I try to encourage is a view of spending that lines up with what we know about the psychology of money, and what actually bring the most satisfaction. We’ll call it the High Value Splurge.
I’d like to consider myself a tightwad who understands value. Or, as the famous refrain goes: Price is what you pay. Value is what you get. I’m willing to spend on those things that will actually produce some long-term satisfaction, and unwilling to spend on things that won’t.
Over on Twitter, Anthony Isola of Ritholtz Wealth has been uncovering the vile world of teachers’ retirement plans, which are typically high-cost annuities being sold as appropriate investment options. His findings have been eye-opening for many, though unsurprising for me.
Most salespeople who hock this crap are decent people. They exist in a perverse system of conflicted interests that demeans both the employees and clients. We must do better than this. https://t.co/Isjah3DbNA
I’m not typically into New Year’s resolutions; I tend to think that if there are things we’d like to do differently, we shouldn’t wait until January to start. And anyway, 80% of resolutions fail by February, so really, what’s the point?
Just about everybody we meet with talks about travel being one of their most important financial goals; the ability to see and share a journey with loved ones is high on the priority list for most of our clients.
My kids are now 7 and 4 ½, and they’ve already been all over the U.S., and have traveled internationally to Europe and Africa. We’ve made travel a priority, and they’re starting to get old enough to appreciate it (although my daughter claimed her favorite part of our spring break trip to Italy was the “yummy Cheerios” [Froot Loops] at the airport hotel in Boston).
Every once in awhile, and sometimes more often than that, markets go nuts. Investors (over)react to some random news, in an attempt to predict an inherently unknowable future, and everyone pays.
We call the market gyrations “volatility,” especially when the market goes down. I’ve noticed that when the market goes up, we don’t call it anything; we just go on about our lives as if markets going up is normal and to be expected, like Mr. Market owes us something.