Jonathan Clements's Blog, page 303
December 23, 2020
Ode to a Civic
CONVENTIONAL wisdom posits that a car is a poor investment, at least from a financial standpoint. It’s extraordinarily difficult to turn a profit, especially over the long term.
According to Carfax, the owner of a new car can expect the vehicle to lose 20% of its value in the first year and 10% annually thereafter. Beyond depreciation, owning a car involves fuel and maintenance costs, insurance premiums, parking fees, registration fees, tolls, sales tax, opportunity cost and—for most people—paying loan interest.
By virtue of its negative expected return, a car is a poor investment. But it is, alas, also a necessity for many people who live outside of major urban centers. The upshot: My philosophy is to make this investment as infrequently as possible and in a dollar amount that’s as small as practical.
Enter my beautiful 2003 Honda Civic LX. Boasting a 1.7-liter engine and a five-speed manual transmission, this lovely old car has served me well for more than a dozen years. I purchased it in 2008 for $8,000, only 40% of its original sticker price. In doing so, I escaped more than half of the depreciation. It was a bit of a high mileage car when I bought it, with nearly 90,000 miles on the odometer.
In the years since, I’ve added another 150,000 miles, burning a gallon of regular unleaded gas every 36 miles or so. Given the vehicle’s low retail value, I dropped comprehensive coverage years ago, making the insurance premiums very affordable. I’ve taken road trips all over North America in the Civic, took my wife on our first date in it, brought home each of my newborn children from the hospital in it and personally performed all the maintenance on it.
Clearly, I have an emotional attachment to what ought to be nothing more than a utilitarian tool. As such, it’s with heavy heart that I’ve confronted a sad reality: It is time to bid farewell to the Civic. I recently received a new long-term work assignment overseas and can take only one vehicle. In the years since I purchased the Honda, my family has grown beyond the car’s capacity. It seems the responsible thing is to take my larger vehicle, a Toyota Highlander, so that I have enough seatbelts for the entire family.
Given that the Civic is now worth only a tiny fraction of what I paid for it, I can’t say that it was a good investment, at least not in the conventional sense. Assuming the vehicle’s fair market resale value is $1,000, it has lost almost 88% of my purchase price. While this is an annualized loss of around 16%, we’re only talking about $583 a year of depreciation. Here’s how that stacks up against the alternatives:
Under Carfax’s assumptions, a $30,000 new car would be worth just $7,531 after 12 years, a depreciation rate of $1,833 a year.
Using those same assumptions, but repeating the purchase of a $30,000 vehicle every four years, would result in an annual depreciation of $3,126, plus all the transaction costs associated with multiple purchases.
What if I’d leased? In that scenario, a worst-case depreciation amount would have been built into the payment, along with financing costs and taxes.
Where I really lucked out: My period of ownership coincided with an incredible bull market. From the lows of the 2009 market crash—about nine months after I bought the car—the annualized return of the S&P 500 has been more than 17%. Relative to the most favorable alternative listed above, which was a new car purchased for $30,000 and held for 12 years, the Civic saved me $1,250 a year, which I have consequently been able to invest for a gain of more than $48,000. Compared to the more “normal” example of purchasing a new vehicle every four years, my annual savings have been $2,543. Investing those savings has resulted in around $98,000 extra. This market performance is perhaps once in a lifetime, and I can’t help but attribute some of my luck to the old car.
A more holistic examination of the Civic’s total cost would certainly bolster its standing as an excellent, cost-effective means of safe, reliable transportation, especially when compared to most alternatives. Yes, as I've already admitted, I’m perhaps overly attached to the car. That’s usually a handicap to sound investment decision-making. But in this particular case, it’s served me well.
Isaac Cathey is a public sector employee and professional pilot. The bulk of his financial knowledge comes from books by the likes of John Bogle and JL Collins. He spends his free time running, swimming, hiking, camping, biking with his children and doing DIY projects. His previous articles were Debtors' Prison and Crash Test.
According to Carfax, the owner of a new car can expect the vehicle to lose 20% of its value in the first year and 10% annually thereafter. Beyond depreciation, owning a car involves fuel and maintenance costs, insurance premiums, parking fees, registration fees, tolls, sales tax, opportunity cost and—for most people—paying loan interest.
By virtue of its negative expected return, a car is a poor investment. But it is, alas, also a necessity for many people who live outside of major urban centers. The upshot: My philosophy is to make this investment as infrequently as possible and in a dollar amount that’s as small as practical.
Enter my beautiful 2003 Honda Civic LX. Boasting a 1.7-liter engine and a five-speed manual transmission, this lovely old car has served me well for more than a dozen years. I purchased it in 2008 for $8,000, only 40% of its original sticker price. In doing so, I escaped more than half of the depreciation. It was a bit of a high mileage car when I bought it, with nearly 90,000 miles on the odometer.
In the years since, I’ve added another 150,000 miles, burning a gallon of regular unleaded gas every 36 miles or so. Given the vehicle’s low retail value, I dropped comprehensive coverage years ago, making the insurance premiums very affordable. I’ve taken road trips all over North America in the Civic, took my wife on our first date in it, brought home each of my newborn children from the hospital in it and personally performed all the maintenance on it.
Clearly, I have an emotional attachment to what ought to be nothing more than a utilitarian tool. As such, it’s with heavy heart that I’ve confronted a sad reality: It is time to bid farewell to the Civic. I recently received a new long-term work assignment overseas and can take only one vehicle. In the years since I purchased the Honda, my family has grown beyond the car’s capacity. It seems the responsible thing is to take my larger vehicle, a Toyota Highlander, so that I have enough seatbelts for the entire family.Given that the Civic is now worth only a tiny fraction of what I paid for it, I can’t say that it was a good investment, at least not in the conventional sense. Assuming the vehicle’s fair market resale value is $1,000, it has lost almost 88% of my purchase price. While this is an annualized loss of around 16%, we’re only talking about $583 a year of depreciation. Here’s how that stacks up against the alternatives:
Under Carfax’s assumptions, a $30,000 new car would be worth just $7,531 after 12 years, a depreciation rate of $1,833 a year.
Using those same assumptions, but repeating the purchase of a $30,000 vehicle every four years, would result in an annual depreciation of $3,126, plus all the transaction costs associated with multiple purchases.
What if I’d leased? In that scenario, a worst-case depreciation amount would have been built into the payment, along with financing costs and taxes.
Where I really lucked out: My period of ownership coincided with an incredible bull market. From the lows of the 2009 market crash—about nine months after I bought the car—the annualized return of the S&P 500 has been more than 17%. Relative to the most favorable alternative listed above, which was a new car purchased for $30,000 and held for 12 years, the Civic saved me $1,250 a year, which I have consequently been able to invest for a gain of more than $48,000. Compared to the more “normal” example of purchasing a new vehicle every four years, my annual savings have been $2,543. Investing those savings has resulted in around $98,000 extra. This market performance is perhaps once in a lifetime, and I can’t help but attribute some of my luck to the old car.
A more holistic examination of the Civic’s total cost would certainly bolster its standing as an excellent, cost-effective means of safe, reliable transportation, especially when compared to most alternatives. Yes, as I've already admitted, I’m perhaps overly attached to the car. That’s usually a handicap to sound investment decision-making. But in this particular case, it’s served me well.
Isaac Cathey is a public sector employee and professional pilot. The bulk of his financial knowledge comes from books by the likes of John Bogle and JL Collins. He spends his free time running, swimming, hiking, camping, biking with his children and doing DIY projects. His previous articles were Debtors' Prison and Crash Test.The post Ode to a Civic appeared first on HumbleDollar.
December 22, 2020
Finding My Balance
BEFORE THE PANDEMIC, my father and I would go out for coffee every Saturday morning. I would order a venti mocha Frappuccino with soymilk, which would cost $6, while he would opt for a tall dark roast, black, price $2.50.
As I ordered, my dad would joke, “You millennials and your avocado toast.” In fact, my dad had the same reaction to many of my spending habits. “You spent $50 on a shirt?” he’d ask me, wide-eyed and clutching his chest for dramatic effect.
I often dismissed his banter, chalking it up to his inability to stay abreast of ever-rising consumer prices. I assumed he was out of touch and, in some ways, he was. After paying off his house and retiring several years ago, he held the belief that it was still possible to find a good starter home in Colorado for under $100,000.
Now that I’m a bit older, however, I realize he wasn’t quite so out of touch.
I recently started a career in data analytics. The sudden influx of money, coupled with the expense of living on my own, were a shock to the system. After sticking to a relatively disciplined budget in college—one built on scholarships and part-time jobs—I started my new career by spending as if I were making up for lost time.
I had moved for the job and decided that I was in the market for some new home furnishings, along with a new iPhone, laptop upgrade and new clothes—all bought within a few short months. I blame this spending spree partly on online shopping, which makes it easier to dissociate the items purchased from the money being spent. But I also blame myself.
I went through everything I had in savings. Even worse, I started paying for purchases with credit. I had been approved for a second credit card, an American Express Gold charge card with virtually no spending limit. My first payment on the card almost made me nauseous.
Beyond my dad’s occasional chiding, personal finance wasn’t a topic that was much discussed when I was growing up. Even as an economics major in college, I never took a personal finance class. I believe this is one of the greatest failings of our education system. I was quickly falling into the trap of credit-induced opulence. I was well aware that living beyond my means was unsustainable and yet, at the same time, I was enjoying spending my newfound wealth.
Clearly, I needed an education. I started reading personal finance blogs and watching YouTube videos. The more I learned, the more interested I became. I read The Little Book of Common Sense Investing by John C. Bogle and A Random Walk Down Wall Street by Burton Malkiel. I absorbed personal finance books and podcasts like a sponge, and I reached out to former professors for personal financial advice.
I also posted questions on internet forums about increasing my credit limit—apparently a charge card was a mistake—and would solicit advice from anyone who’d talk to me about personal finance. I had been raised to believe money wasn’t a suitable topic for polite conversation, but people appeared eager to discuss it. My research led me to four key ideas:
Spend far less than you earn, so you can save.
Open a savings account for emergency expenses.
The earlier you start investing, the better.
Invest in index funds, ideally in a tax-smart way, such as funding a Roth IRA.
All this, however, is easier said than done. The trap of lifestyle inflation is real. Even after consciously deciding that I’d make smart decisions that would pave the way to financial freedom, I found it hard to give up the luxuries I’d already started awarding myself. After enjoying several months of takeout, cooking at home felt time-consuming and my food tasted a little bland.
I’m not a natural saver. Spending makes me happy. I still find myself purchasing little luxuries that I wouldn’t have even entertained while in college. Paying $40 for a delivery from Uber Eats? Sure, that sounds reasonable.
Some days, I question whether I was simply born without the self-control needed for delayed gratification. I think that’s one of my greatest hurdles. But as I continue to work at this, I also find I’m becoming more disciplined. As I write this, my credit cards are paid off, I’ve created a loose budget, my savings account is slowly growing and I’ve opened a Roth IRA.
Still, it’s a balancing act. I want to enjoy life. I don’t want to penny-pinch in a way that leaves me with an uncomfortable lifestyle. At the same time, coffee made at home tastes just fine. I’m consciously forgoing the avocado toast delivery in hopes that, one day, I’ll be able to afford the whole enchilada.
Mariah Davis is a recent economics graduate beginning a career in data analytics. She enjoys sailing and is eager to learn more about personal finance. Mariah is working to expand her financial knowledge with dreams of retiring early, preferably to life on a sailboat.
As I ordered, my dad would joke, “You millennials and your avocado toast.” In fact, my dad had the same reaction to many of my spending habits. “You spent $50 on a shirt?” he’d ask me, wide-eyed and clutching his chest for dramatic effect.
I often dismissed his banter, chalking it up to his inability to stay abreast of ever-rising consumer prices. I assumed he was out of touch and, in some ways, he was. After paying off his house and retiring several years ago, he held the belief that it was still possible to find a good starter home in Colorado for under $100,000.
Now that I’m a bit older, however, I realize he wasn’t quite so out of touch.
I recently started a career in data analytics. The sudden influx of money, coupled with the expense of living on my own, were a shock to the system. After sticking to a relatively disciplined budget in college—one built on scholarships and part-time jobs—I started my new career by spending as if I were making up for lost time.
I had moved for the job and decided that I was in the market for some new home furnishings, along with a new iPhone, laptop upgrade and new clothes—all bought within a few short months. I blame this spending spree partly on online shopping, which makes it easier to dissociate the items purchased from the money being spent. But I also blame myself.
I went through everything I had in savings. Even worse, I started paying for purchases with credit. I had been approved for a second credit card, an American Express Gold charge card with virtually no spending limit. My first payment on the card almost made me nauseous.
Beyond my dad’s occasional chiding, personal finance wasn’t a topic that was much discussed when I was growing up. Even as an economics major in college, I never took a personal finance class. I believe this is one of the greatest failings of our education system. I was quickly falling into the trap of credit-induced opulence. I was well aware that living beyond my means was unsustainable and yet, at the same time, I was enjoying spending my newfound wealth.
Clearly, I needed an education. I started reading personal finance blogs and watching YouTube videos. The more I learned, the more interested I became. I read The Little Book of Common Sense Investing by John C. Bogle and A Random Walk Down Wall Street by Burton Malkiel. I absorbed personal finance books and podcasts like a sponge, and I reached out to former professors for personal financial advice.
I also posted questions on internet forums about increasing my credit limit—apparently a charge card was a mistake—and would solicit advice from anyone who’d talk to me about personal finance. I had been raised to believe money wasn’t a suitable topic for polite conversation, but people appeared eager to discuss it. My research led me to four key ideas:
Spend far less than you earn, so you can save.
Open a savings account for emergency expenses.
The earlier you start investing, the better.
Invest in index funds, ideally in a tax-smart way, such as funding a Roth IRA.
All this, however, is easier said than done. The trap of lifestyle inflation is real. Even after consciously deciding that I’d make smart decisions that would pave the way to financial freedom, I found it hard to give up the luxuries I’d already started awarding myself. After enjoying several months of takeout, cooking at home felt time-consuming and my food tasted a little bland.
I’m not a natural saver. Spending makes me happy. I still find myself purchasing little luxuries that I wouldn’t have even entertained while in college. Paying $40 for a delivery from Uber Eats? Sure, that sounds reasonable.
Some days, I question whether I was simply born without the self-control needed for delayed gratification. I think that’s one of my greatest hurdles. But as I continue to work at this, I also find I’m becoming more disciplined. As I write this, my credit cards are paid off, I’ve created a loose budget, my savings account is slowly growing and I’ve opened a Roth IRA.
Still, it’s a balancing act. I want to enjoy life. I don’t want to penny-pinch in a way that leaves me with an uncomfortable lifestyle. At the same time, coffee made at home tastes just fine. I’m consciously forgoing the avocado toast delivery in hopes that, one day, I’ll be able to afford the whole enchilada.
Mariah Davis is a recent economics graduate beginning a career in data analytics. She enjoys sailing and is eager to learn more about personal finance. Mariah is working to expand her financial knowledge with dreams of retiring early, preferably to life on a sailboat.The post Finding My Balance appeared first on HumbleDollar.
December 21, 2020
Mother Knows Best
DURING THE BULL RUN of the 1990s, when the S&P 500 soared 417%, I had a brilliant idea: Why not start an investment club? I invited my father and sister to participate. My mother declined. It turned out she was the smart one in the family. We met periodically, usually on a Sunday, to decide which companies to invest in.
I was serious about this endeavor and determined to make it successful. I even gave our new investment club a name: DSD. It was the starting initial of our first names, Diane, Sam and Dennis. We opened a brokerage account at TD Waterhouse to execute our trades. I was so excited. Why not? It seemed like everyone was forming investment clubs. The famous Beardstown Women's Investment Club book was published during this time. If a group of septuagenarian amateurs could be successful, or so they claimed, why couldn’t we?
It didn’t take long to realize this was going to be more difficult than I thought. Our biggest problem was a lack of good investment ideas. Most of them came from an investment newsletter, newspapers, word of mouth, and talking heads on television and radio. No, we didn’t buy Amazon. We bought AMC and Marriott. No, we didn’t buy tech behemoths Microsoft or Intel. We bought Ultratech Stepper instead.
After a while, we realized this was a bad idea and we disbanded. I believe we made a few dollars. Of course, we badly underperformed the market. In the end, I realized we would have been far better off just investing in an S&P 500-index fund.
In fact, I probably learned more from my mother about money than from that ill-conceived investment club. After my father passed away, she asked me to go with her to Wells Fargo, where she had a safe-deposit box. She thought it would be a good idea for me to have access to it, should something happen to her.
As we went through my mother’s safe-deposit box, she pulled out a little cloth bag containing some of her most cherished jewelry. Most of the items were rings she bought over the years. She also had a number of coins that she’d collected. None had real value, but she held onto them for other reasons. What really caught my attention was the wad of bills that was shoved in the back of the safe-deposit box.
I asked my mother how much money was there. She said she didn’t know. I counted almost $18,000. I asked her, “Where did all this money come from?” She said it was from the money that my sister and I gave her for Christmas and birthday gifts, so she would have more spending money in retirement. Also, my father would give her the monthly dividend check from a bond fund they owned. This was usually only about $50.
I was astonished by my mother’s financial discipline and persistence. When I look back, I wonder why my mother chose to keep her money in a safe-deposit box. Why not a bank account, where she could have earned a little interest on all that money?
I think my mother wanted her own money that was separate from my parents’ joint accounts. She wanted some financial independence, so she could spend money on her own terms.
When she retired, her paycheck went away and some of her financial independence went away, too. This was her way to recapture what she had lost. Of course, she had her Social Security check, but that was automatically deposited in my parents’ joint checking account.
In her thinking, my mother was no different from my wife and me. We both have our own money, including separate checking accounts and credit cards. But we also find a way to share expenses, including paying for things out of a joint checking account.
What we like about this arrangement is that we have the financial independence to buy the things we each enjoy the most. But at the same, we can still work together as a team, paying for expenses and paying off any debt we might have accumulated.
What about teaming up to pick stocks? Something tells me that wouldn’t be a good idea.
Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor's degree in history and an MBA. A self-described "humble investor," he likes reading historical novels and about personal finance. His previous articles include Live It Up, Don't Delay and Try Not to Slip. Follow Dennis on Twitter @DMFrie.
I was serious about this endeavor and determined to make it successful. I even gave our new investment club a name: DSD. It was the starting initial of our first names, Diane, Sam and Dennis. We opened a brokerage account at TD Waterhouse to execute our trades. I was so excited. Why not? It seemed like everyone was forming investment clubs. The famous Beardstown Women's Investment Club book was published during this time. If a group of septuagenarian amateurs could be successful, or so they claimed, why couldn’t we?
It didn’t take long to realize this was going to be more difficult than I thought. Our biggest problem was a lack of good investment ideas. Most of them came from an investment newsletter, newspapers, word of mouth, and talking heads on television and radio. No, we didn’t buy Amazon. We bought AMC and Marriott. No, we didn’t buy tech behemoths Microsoft or Intel. We bought Ultratech Stepper instead.
After a while, we realized this was a bad idea and we disbanded. I believe we made a few dollars. Of course, we badly underperformed the market. In the end, I realized we would have been far better off just investing in an S&P 500-index fund.
In fact, I probably learned more from my mother about money than from that ill-conceived investment club. After my father passed away, she asked me to go with her to Wells Fargo, where she had a safe-deposit box. She thought it would be a good idea for me to have access to it, should something happen to her.
As we went through my mother’s safe-deposit box, she pulled out a little cloth bag containing some of her most cherished jewelry. Most of the items were rings she bought over the years. She also had a number of coins that she’d collected. None had real value, but she held onto them for other reasons. What really caught my attention was the wad of bills that was shoved in the back of the safe-deposit box.
I asked my mother how much money was there. She said she didn’t know. I counted almost $18,000. I asked her, “Where did all this money come from?” She said it was from the money that my sister and I gave her for Christmas and birthday gifts, so she would have more spending money in retirement. Also, my father would give her the monthly dividend check from a bond fund they owned. This was usually only about $50.
I was astonished by my mother’s financial discipline and persistence. When I look back, I wonder why my mother chose to keep her money in a safe-deposit box. Why not a bank account, where she could have earned a little interest on all that money?
I think my mother wanted her own money that was separate from my parents’ joint accounts. She wanted some financial independence, so she could spend money on her own terms.
When she retired, her paycheck went away and some of her financial independence went away, too. This was her way to recapture what she had lost. Of course, she had her Social Security check, but that was automatically deposited in my parents’ joint checking account.
In her thinking, my mother was no different from my wife and me. We both have our own money, including separate checking accounts and credit cards. But we also find a way to share expenses, including paying for things out of a joint checking account.
What we like about this arrangement is that we have the financial independence to buy the things we each enjoy the most. But at the same, we can still work together as a team, paying for expenses and paying off any debt we might have accumulated.
What about teaming up to pick stocks? Something tells me that wouldn’t be a good idea.
Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor's degree in history and an MBA. A self-described "humble investor," he likes reading historical novels and about personal finance. His previous articles include Live It Up, Don't Delay and Try Not to Slip. Follow Dennis on Twitter @DMFrie.The post Mother Knows Best appeared first on HumbleDollar.
December 20, 2020
Unhelpful Advice
YOU’RE DRIVING DOWN the highway when, all of a sudden, a maniac goes speeding by, weaving in and out of lanes. Most of us have experienced this—and most of us have the same reaction. “That guy is crazy,” we think to ourselves. “If he doesn’t slow down, someone’s going to get hurt.”
But suppose that an observer instead responded, “That fellow’s speed is perfectly appropriate. Nothing at all wrong with it.” Now, you might think it’s the observer who’s the crazy one.
That, in a nutshell, describes the viewpoint of Eugene Fama, a finance professor who won the Nobel Memorial Prize in Economics for his work developing a concept known as the efficient market hypothesis (EMH). If you aren’t familiar with EMH, it postulates that stock prices are rational because they reflect all publicly available information about the underlying company.
Supporters of EMH like to point to the case of the Challenger Space Shuttle. In 1986, it suffered a catastrophic failure shortly after launch that killed all seven crew members. Almost instantaneously, investors somehow figured out which of the companies that had worked on the Challenger was most likely at fault—and drove down its stock price. After a monthslong investigation, investors’ instantaneous judgment was proven correct. To EMH adherents, this is a picture-perfect illustration of why, in their view, stock prices accurately reflect each company’s value at any given moment.
And this is why Fama is skeptical of stock market bubbles. He allows that sometimes investors make mistakes and the price of isolated stocks get out of whack. But Fama rejects the idea that the broad stock market can ever be characterized as too high. That’s because he believes so strongly in informational efficiency and investor rationality.
Now age 81, Fama continues to defend this view, despite the rise of behavioral finance, which argues that stock prices are driven by human beings, who are sometimes rational but—more often than not—very emotional. Fama, in fact, goes as far as to say, “There is no such thing as behavioral finance. Essentially, it’s just a criticism of efficient markets.” In his rejection of the human element in driving stock prices, Fama is a little bit like the ancients who—despite mounting evidence—believed that the Earth was flat.
Who am I to criticize one of the best-known people in finance, a winner of academia’s most prestigious prize? The reason I’m so critical is precisely because of his status in the investment world. I believe it’s irresponsible to say stock prices are always rational—and not to urge caution when caution is warranted. In Fama’s words, “Almost all investors should regard markets as efficient for their own investment decisions.” He continues with this declarative statement, “If they do that, they will be better off in the long term.”
In other words, Fama is saying, don’t worry about the price you pay for an investment because it is, by definition, correct. In my view, this is just crazy. Consider a few examples from 2020:
Tesla’s shares are up more than 700% and in a class of their own. But it’s not just Tesla. The price-earnings ratio on Apple’s stock has risen by 75%, from about 17 to more than 30.
Bitcoin has tripled in price, despite lacking any tangible basis for valuation.
Initial public offerings of special purpose acquisition companies (SPACs), also known as “blank check companies,” have quadrupled from last year.
In a throwback to 1999, barely profitable technology companies are going public. Since its debut in October, Palantir Technologies (symbol: PLTR) has seen its price run up 174%.
In other words, broad segments of the market have become unhinged from reality. This isn’t a new phenomenon. Individual stocks, and sometimes the entire market, can get carried away. Despite Fama’s assertion that prices are rational, the reality is that markets are often driven by stories, momentum, greed, fear, euphoria—and, among those late to the party, a fear of missing out.
Fama’s view is that, if they even exist, bubbles can only be recognized with the benefit of hindsight. He derides those who even attempt to spot bubbles: “Now after the fact you always find people who said before the fact that prices are too high. People are always saying that prices are too high. When they turn out to be right, we anoint them. When they turn out to be wrong, we ignore them.”
I’m the first to say that market forecasting is difficult. But I also think that’s a little too glib. When you see things that look like market excesses, I would recommend this more balanced approach:
1. Stand clear. Fear of missing out is a powerful force, and it’s exacerbated when the media runs stories like the one about Brandon Smith, who became a millionaire by plowing his entire life’s savings into Tesla.
2. Stay the course. I don’t recommend jumping on the Tesla bandwagon—but I would be equally careful of going to the other extreme. If today’s market has you worried, avoid the temptation to sell—or to sell everything. Instead, just take the opportunity to judiciously rebalance back to your asset allocation targets.
3. Don’t overstay the party. If you own one of this year’s hot investments and are now sitting on big profits, that’s great. But I wouldn’t do what Brandon Smith is doing, which is to stay 100% invested in Tesla. Instead, I’d develop a framework for selling so that these gains don’t slip through your fingers. You could, for example, sell half of your shares now, then sell more on a fixed schedule—once a month, for example. Or you could tie the size of your sales to the share price, selling more as the price rises. But whatever you do, don’t take Fama’s word as gospel. If a stock’s price looks too good to be true, it probably is.
Adam M. Grossman’s previous articles include Help Today's Self, Split the Difference and Game Theory. Adam is the founder of Mayport, a fixed-fee wealth management firm. In his series of free e-books, Adam advocates an evidence-based approach to personal finance. Follow Adam on Twitter @AdamMGrossman.
But suppose that an observer instead responded, “That fellow’s speed is perfectly appropriate. Nothing at all wrong with it.” Now, you might think it’s the observer who’s the crazy one.
That, in a nutshell, describes the viewpoint of Eugene Fama, a finance professor who won the Nobel Memorial Prize in Economics for his work developing a concept known as the efficient market hypothesis (EMH). If you aren’t familiar with EMH, it postulates that stock prices are rational because they reflect all publicly available information about the underlying company.
Supporters of EMH like to point to the case of the Challenger Space Shuttle. In 1986, it suffered a catastrophic failure shortly after launch that killed all seven crew members. Almost instantaneously, investors somehow figured out which of the companies that had worked on the Challenger was most likely at fault—and drove down its stock price. After a monthslong investigation, investors’ instantaneous judgment was proven correct. To EMH adherents, this is a picture-perfect illustration of why, in their view, stock prices accurately reflect each company’s value at any given moment.
And this is why Fama is skeptical of stock market bubbles. He allows that sometimes investors make mistakes and the price of isolated stocks get out of whack. But Fama rejects the idea that the broad stock market can ever be characterized as too high. That’s because he believes so strongly in informational efficiency and investor rationality.
Now age 81, Fama continues to defend this view, despite the rise of behavioral finance, which argues that stock prices are driven by human beings, who are sometimes rational but—more often than not—very emotional. Fama, in fact, goes as far as to say, “There is no such thing as behavioral finance. Essentially, it’s just a criticism of efficient markets.” In his rejection of the human element in driving stock prices, Fama is a little bit like the ancients who—despite mounting evidence—believed that the Earth was flat.
Who am I to criticize one of the best-known people in finance, a winner of academia’s most prestigious prize? The reason I’m so critical is precisely because of his status in the investment world. I believe it’s irresponsible to say stock prices are always rational—and not to urge caution when caution is warranted. In Fama’s words, “Almost all investors should regard markets as efficient for their own investment decisions.” He continues with this declarative statement, “If they do that, they will be better off in the long term.”
In other words, Fama is saying, don’t worry about the price you pay for an investment because it is, by definition, correct. In my view, this is just crazy. Consider a few examples from 2020:
Tesla’s shares are up more than 700% and in a class of their own. But it’s not just Tesla. The price-earnings ratio on Apple’s stock has risen by 75%, from about 17 to more than 30.
Bitcoin has tripled in price, despite lacking any tangible basis for valuation.
Initial public offerings of special purpose acquisition companies (SPACs), also known as “blank check companies,” have quadrupled from last year.
In a throwback to 1999, barely profitable technology companies are going public. Since its debut in October, Palantir Technologies (symbol: PLTR) has seen its price run up 174%.
In other words, broad segments of the market have become unhinged from reality. This isn’t a new phenomenon. Individual stocks, and sometimes the entire market, can get carried away. Despite Fama’s assertion that prices are rational, the reality is that markets are often driven by stories, momentum, greed, fear, euphoria—and, among those late to the party, a fear of missing out.
Fama’s view is that, if they even exist, bubbles can only be recognized with the benefit of hindsight. He derides those who even attempt to spot bubbles: “Now after the fact you always find people who said before the fact that prices are too high. People are always saying that prices are too high. When they turn out to be right, we anoint them. When they turn out to be wrong, we ignore them.”
I’m the first to say that market forecasting is difficult. But I also think that’s a little too glib. When you see things that look like market excesses, I would recommend this more balanced approach:
1. Stand clear. Fear of missing out is a powerful force, and it’s exacerbated when the media runs stories like the one about Brandon Smith, who became a millionaire by plowing his entire life’s savings into Tesla.
2. Stay the course. I don’t recommend jumping on the Tesla bandwagon—but I would be equally careful of going to the other extreme. If today’s market has you worried, avoid the temptation to sell—or to sell everything. Instead, just take the opportunity to judiciously rebalance back to your asset allocation targets.
3. Don’t overstay the party. If you own one of this year’s hot investments and are now sitting on big profits, that’s great. But I wouldn’t do what Brandon Smith is doing, which is to stay 100% invested in Tesla. Instead, I’d develop a framework for selling so that these gains don’t slip through your fingers. You could, for example, sell half of your shares now, then sell more on a fixed schedule—once a month, for example. Or you could tie the size of your sales to the share price, selling more as the price rises. But whatever you do, don’t take Fama’s word as gospel. If a stock’s price looks too good to be true, it probably is.
Adam M. Grossman’s previous articles include Help Today's Self, Split the Difference and Game Theory. Adam is the founder of Mayport, a fixed-fee wealth management firm. In his series of free e-books, Adam advocates an evidence-based approach to personal finance. Follow Adam on Twitter @AdamMGrossman.The post Unhelpful Advice appeared first on HumbleDollar.
December 19, 2020
Time Limited
OUR MOST PRECIOUS resource is time. I’m determined to waste as little as possible.
Unless we’re at death’s door, none of us knows how much time we have, but we all know it’s limited. Yes, money is also limited—but, if we squander money, there’s always a chance we can make it back. Time lost, by contrast, is gone forever.
My preoccupation with time and its dwindling supply has grown as I’ve grown older. I may be patient with my investments, but I’m not patient with much else. After 58 years of trial and error, I know how I want to spend my days—and what miseries I want to avoid. That’s led me to adopt nine strategies:
1. Fix problems quickly. Faced with a distasteful task, I’m often tempted to put it off until next week or next month. This is foolish. The distasteful task—calling customer service, dealing with my tax return, cleaning out the basement—is going to cost me time, but now I’ve compounded that loss by spending unnecessary days contemplating the need to do it.
I’ve tried to break myself of this habit, with mixed results. What if I can’t handle a distasteful task right away? I’ll add it to my to-do list. If I do that, I find I don’t think about the task quite so much, plus writing it down removes some of the problem’s perceived burden, perhaps because I feel like I’m one step closer to getting it done.
2. Don’t stop halfway. This is another bad habit. I’ll often start on a project, but then switch to something else and come back to it later. This works well when writing—time away from the draft of an article allows me to look at it with fresh eyes—but it’s usually a time waster with other endeavors, because stopping and restarting chews up precious minutes.
3. Search less. Thanks to the internet, we can spend countless hours finding, say, the perfect toaster at the best possible price. But how about capping that search at 10 minutes? To save time, I’m inclined to check out a few options and then make a quick decision.
I realize that shopping brings great pleasure to some folks, in which case they should take all the time they want. Along those lines, I like pondering possible vacations, so I’m happy to spend an hour scouring the internet for information. But toasters? Not so much.
4. Skip the line. In these pandemic times, when there are strict limits on the number of people in local stores, I see folks queuing outside Whole Foods, Trader Joe’s, the local liquor store and elsewhere. You won’t see me standing in these lines or any other, unless it’s absolutely necessary. Yes, you guessed it: Airport security and the Department of Motor Vehicles are not my favorite places.
5. Don’t buy trouble. Like so many others, I muse occasionally about buying a second home as a weekend getaway. But then I come to my senses and realize it’s a terrible idea. Why would I want a second place that I’d need to waste part of my weekend driving to, and which would require regular cleaning and occasional home repairs?
Houses are the biggest drain on our budgets, accounting for a third of U.S. family spending. What’s No. 2? That would be cars and other vehicles. These, too, can be a source of headaches, but most folks have no choice in the matter, because a car is pretty much a necessity where they live. Now that I’ve returned to city life, I’m carless, which I consider a great privilege, especially when I see drivers circling the neighborhood, desperately searching for a parking space.
6. Drive off-hours. Because I no longer have a car, I occasionally rent one. But when I do, it’s always for trips that I take at odd hours. Just as I hate standing in line, I loathe sitting in traffic. Indeed, commuting ranks as a major source of unhappiness, which is why living close to work—preferably within walking distance—can be such a boost to our quality of life.
7. Offload chores. After spending the workweek staring at my laptop, I rather enjoy weekend chores, whether it’s incompetently re-caulking the bathtub or climbing a ladder to clean the gutters. But not all chores bring happiness—and, for those that don’t, research suggests paying others to do them is money well spent. Indeed, hiring others to do distasteful tasks is a double win: No only do we liberate ourselves from something we dislike, but also we create time for things we enjoy.
8. Lose the losers. We all know people who complain constantly, or never offer to pick up the tab, or only talk about themselves. I’m not very good at separating myself from such “friends,” because I’m loath to hurt anybody’s feelings, but I’ve become a tad more ruthless in recent years. If you’re going to spend time with friends, wouldn’t it be better spent with those whose company you truly enjoy?
9. Don’t dwell. This is perhaps life’s biggest time waster. We all know the drill: Somebody’s playing politics at the office, or we get into some silly argument, or the neighbors are once again being jerks. But then we chew up yet more time by letting the incident “rent space in our head,” as we replay the event in our mind and ponder all possible angles.
This is obviously a colossal waste of time and a prescription for further unhappiness. What to do? I don’t have a good strategy for avoiding such mental churning, except to be aware of it and to talk to others about it. What if there's nobody around to talk to? I try to cut it off with a curt, “Shut up, brain, you’re being an idiot.” Sometimes, that works—but not often.
New Articles
HERE ARE THE SIX other articles published by HumbleDollar this week:
Want to make the most of your retirement? Anika Hedstrom offers a four-step program—one that, ideally, you start years before you actually quit the workforce.
"In the past two years, my wife and I have helped our son and daughter pick colleges," recounts Bill Anderson. "Along the way, we’ve learned four lessons I wish we’d known at the start of the process."
Doing some holiday shopping for family and friends—or perhaps for yourself? David Powell offers five gift ideas for the techie in your life.
"We sold the ranch for more than we’d put into it, but not by a lot," recounts Andrew Forsythe. "If you compared our return to what we would’ve made by investing in the S&P 500, it would bring a tear to the eye."
Naming beneficiaries for your retirement accounts? When it comes to your spouse, there's a crucial difference between IRAs and 401(k)s. James McGlynn digs into the details.
Personal finance is mostly about the future. But what can you do to help yourself today? Adam Grossman offers eight suggestions.
Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook. Jonathan's most recent articles include Long Time Coming, Next Year Foretold and Dialed In.
Unless we’re at death’s door, none of us knows how much time we have, but we all know it’s limited. Yes, money is also limited—but, if we squander money, there’s always a chance we can make it back. Time lost, by contrast, is gone forever.
My preoccupation with time and its dwindling supply has grown as I’ve grown older. I may be patient with my investments, but I’m not patient with much else. After 58 years of trial and error, I know how I want to spend my days—and what miseries I want to avoid. That’s led me to adopt nine strategies:
1. Fix problems quickly. Faced with a distasteful task, I’m often tempted to put it off until next week or next month. This is foolish. The distasteful task—calling customer service, dealing with my tax return, cleaning out the basement—is going to cost me time, but now I’ve compounded that loss by spending unnecessary days contemplating the need to do it.
I’ve tried to break myself of this habit, with mixed results. What if I can’t handle a distasteful task right away? I’ll add it to my to-do list. If I do that, I find I don’t think about the task quite so much, plus writing it down removes some of the problem’s perceived burden, perhaps because I feel like I’m one step closer to getting it done.
2. Don’t stop halfway. This is another bad habit. I’ll often start on a project, but then switch to something else and come back to it later. This works well when writing—time away from the draft of an article allows me to look at it with fresh eyes—but it’s usually a time waster with other endeavors, because stopping and restarting chews up precious minutes.
3. Search less. Thanks to the internet, we can spend countless hours finding, say, the perfect toaster at the best possible price. But how about capping that search at 10 minutes? To save time, I’m inclined to check out a few options and then make a quick decision.
I realize that shopping brings great pleasure to some folks, in which case they should take all the time they want. Along those lines, I like pondering possible vacations, so I’m happy to spend an hour scouring the internet for information. But toasters? Not so much.
4. Skip the line. In these pandemic times, when there are strict limits on the number of people in local stores, I see folks queuing outside Whole Foods, Trader Joe’s, the local liquor store and elsewhere. You won’t see me standing in these lines or any other, unless it’s absolutely necessary. Yes, you guessed it: Airport security and the Department of Motor Vehicles are not my favorite places.
5. Don’t buy trouble. Like so many others, I muse occasionally about buying a second home as a weekend getaway. But then I come to my senses and realize it’s a terrible idea. Why would I want a second place that I’d need to waste part of my weekend driving to, and which would require regular cleaning and occasional home repairs?
Houses are the biggest drain on our budgets, accounting for a third of U.S. family spending. What’s No. 2? That would be cars and other vehicles. These, too, can be a source of headaches, but most folks have no choice in the matter, because a car is pretty much a necessity where they live. Now that I’ve returned to city life, I’m carless, which I consider a great privilege, especially when I see drivers circling the neighborhood, desperately searching for a parking space.
6. Drive off-hours. Because I no longer have a car, I occasionally rent one. But when I do, it’s always for trips that I take at odd hours. Just as I hate standing in line, I loathe sitting in traffic. Indeed, commuting ranks as a major source of unhappiness, which is why living close to work—preferably within walking distance—can be such a boost to our quality of life.
7. Offload chores. After spending the workweek staring at my laptop, I rather enjoy weekend chores, whether it’s incompetently re-caulking the bathtub or climbing a ladder to clean the gutters. But not all chores bring happiness—and, for those that don’t, research suggests paying others to do them is money well spent. Indeed, hiring others to do distasteful tasks is a double win: No only do we liberate ourselves from something we dislike, but also we create time for things we enjoy.
8. Lose the losers. We all know people who complain constantly, or never offer to pick up the tab, or only talk about themselves. I’m not very good at separating myself from such “friends,” because I’m loath to hurt anybody’s feelings, but I’ve become a tad more ruthless in recent years. If you’re going to spend time with friends, wouldn’t it be better spent with those whose company you truly enjoy?
9. Don’t dwell. This is perhaps life’s biggest time waster. We all know the drill: Somebody’s playing politics at the office, or we get into some silly argument, or the neighbors are once again being jerks. But then we chew up yet more time by letting the incident “rent space in our head,” as we replay the event in our mind and ponder all possible angles.
This is obviously a colossal waste of time and a prescription for further unhappiness. What to do? I don’t have a good strategy for avoiding such mental churning, except to be aware of it and to talk to others about it. What if there's nobody around to talk to? I try to cut it off with a curt, “Shut up, brain, you’re being an idiot.” Sometimes, that works—but not often.
New Articles
HERE ARE THE SIX other articles published by HumbleDollar this week:
Want to make the most of your retirement? Anika Hedstrom offers a four-step program—one that, ideally, you start years before you actually quit the workforce.
"In the past two years, my wife and I have helped our son and daughter pick colleges," recounts Bill Anderson. "Along the way, we’ve learned four lessons I wish we’d known at the start of the process."
Doing some holiday shopping for family and friends—or perhaps for yourself? David Powell offers five gift ideas for the techie in your life.
"We sold the ranch for more than we’d put into it, but not by a lot," recounts Andrew Forsythe. "If you compared our return to what we would’ve made by investing in the S&P 500, it would bring a tear to the eye."
Naming beneficiaries for your retirement accounts? When it comes to your spouse, there's a crucial difference between IRAs and 401(k)s. James McGlynn digs into the details.
Personal finance is mostly about the future. But what can you do to help yourself today? Adam Grossman offers eight suggestions.
Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook. Jonathan's most recent articles include Long Time Coming, Next Year Foretold and Dialed In.The post Time Limited appeared first on HumbleDollar.
December 18, 2020
Four College Lessons
HELPING YOUR CHILD choose a college that’s a good fit—and that you and your teenager can afford—can be a confusing process. The right fit can be a life- and paycheck-enhancing experience. The wrong fit can be a waste of time and money.
In the past two years, my wife and I have helped our son and daughter pick colleges. Along the way, we’ve learned four lessons I wish we’d known at the start of the process.
Lesson 1: The net price calculator is your friend.
Every college that participates in federal financial-aid programs is required to provide a net price calculator on its website. The calculator allows you to enter details about your finances and receive an estimate of how much your family will have to pay. That estimate will include details about the expected amount of loans you’ll receive—and which your child or you will need to repay—as well as any grant or scholarship aid, which doesn’t need to be paid back.
To complete the calculator’s inputs accurately, you’ll likely need a copy of your most recent federal tax return, plus your bank and investment account statements. The estimates I got from the calculator closely matched what the colleges offered. Be aware that some colleges may offer generous grants the first year and then require high loans in later years.
The calculator is a great way to find out whether you’ll be able to afford a college and how net expenses compare across colleges. Please don’t make the mistake of letting your child get excited about a college, apply to it and get accepted—only to discover you can’t afford it.
Lesson 2: Some assets and debts affect financial aid—and some don’t.
Retirement assets like 401(k)s, 403(b)s and IRAs generally don’t affect the amount of aid you receive. But the same money in a non-retirement account will typically be considered funds available to pay for college.
Just as some assets can affect the amount of aid you receive, some debts can, too. A primary mortgage is sometimes taken into account by colleges when determining how much aid you’re eligible for. Other loans, such as car loans and credit card debt, aren’t usually considered and hence you won’t get more aid because of that debt.
If in doubt, play around with a college’s net price calculator. That way, you’ll better understand which assets and debts are used in its calculations. Why the variation across colleges? Much depends on whether a college disburses mostly federal financial aid, or whether it also has a large amount of its own grant money to award.
Lesson 3: Be leery of loans.
When I researched available loans, some made sense for us, while others had me running away screaming. For example, direct subsidized loans from the federal government can be a good deal, because the government pays the interest while your kid is in college, but there are limits on how much a student can borrow. At the other end of the spectrum are direct PLUS loans. These aren’t subsidized, allow the full cost of college to be borrowed and, for undergraduates, require parents to take responsibility for paying the money back.
It makes sense to weigh the amount of loans taken out against your child’s potential future earnings. In my research, I found that some colleges appear to be predatory, saddling students with a heavy debt burden, despite low odds of obtaining a job that pays enough to service the loans taken out.
Lesson 4: Take a holistic view
It’s worth looking at college expenses and benefits from a broader financial perspective. For example, using the net price calculator, you could find that a pricey private college has a lower net price for your family than the local in-state college—assuming, of course, that your child gets into the private college.
It’s also worth considering less conventional approaches, such as attending a community college for two years and then transferring to a four-year college. Alternatively, online certificate programs, such as those for computer science, may provide the necessary credentials for some careers, saving your family thousands of dollars in college costs.
Bill Anderson lives in Boulder, Colorado, and has worked as a system engineer for 30 years. He enjoys learning about personal finance and sharing his knowledge with others. Although generally pretty frugal, he can be a spendthrift when it comes to family vacations, which he believes are worth every penny.
In the past two years, my wife and I have helped our son and daughter pick colleges. Along the way, we’ve learned four lessons I wish we’d known at the start of the process.
Lesson 1: The net price calculator is your friend.
Every college that participates in federal financial-aid programs is required to provide a net price calculator on its website. The calculator allows you to enter details about your finances and receive an estimate of how much your family will have to pay. That estimate will include details about the expected amount of loans you’ll receive—and which your child or you will need to repay—as well as any grant or scholarship aid, which doesn’t need to be paid back.
To complete the calculator’s inputs accurately, you’ll likely need a copy of your most recent federal tax return, plus your bank and investment account statements. The estimates I got from the calculator closely matched what the colleges offered. Be aware that some colleges may offer generous grants the first year and then require high loans in later years.
The calculator is a great way to find out whether you’ll be able to afford a college and how net expenses compare across colleges. Please don’t make the mistake of letting your child get excited about a college, apply to it and get accepted—only to discover you can’t afford it.
Lesson 2: Some assets and debts affect financial aid—and some don’t.
Retirement assets like 401(k)s, 403(b)s and IRAs generally don’t affect the amount of aid you receive. But the same money in a non-retirement account will typically be considered funds available to pay for college.
Just as some assets can affect the amount of aid you receive, some debts can, too. A primary mortgage is sometimes taken into account by colleges when determining how much aid you’re eligible for. Other loans, such as car loans and credit card debt, aren’t usually considered and hence you won’t get more aid because of that debt.
If in doubt, play around with a college’s net price calculator. That way, you’ll better understand which assets and debts are used in its calculations. Why the variation across colleges? Much depends on whether a college disburses mostly federal financial aid, or whether it also has a large amount of its own grant money to award.
Lesson 3: Be leery of loans.
When I researched available loans, some made sense for us, while others had me running away screaming. For example, direct subsidized loans from the federal government can be a good deal, because the government pays the interest while your kid is in college, but there are limits on how much a student can borrow. At the other end of the spectrum are direct PLUS loans. These aren’t subsidized, allow the full cost of college to be borrowed and, for undergraduates, require parents to take responsibility for paying the money back.
It makes sense to weigh the amount of loans taken out against your child’s potential future earnings. In my research, I found that some colleges appear to be predatory, saddling students with a heavy debt burden, despite low odds of obtaining a job that pays enough to service the loans taken out.
Lesson 4: Take a holistic view
It’s worth looking at college expenses and benefits from a broader financial perspective. For example, using the net price calculator, you could find that a pricey private college has a lower net price for your family than the local in-state college—assuming, of course, that your child gets into the private college.
It’s also worth considering less conventional approaches, such as attending a community college for two years and then transferring to a four-year college. Alternatively, online certificate programs, such as those for computer science, may provide the necessary credentials for some careers, saving your family thousands of dollars in college costs.
Bill Anderson lives in Boulder, Colorado, and has worked as a system engineer for 30 years. He enjoys learning about personal finance and sharing his knowledge with others. Although generally pretty frugal, he can be a spendthrift when it comes to family vacations, which he believes are worth every penny.The post Four College Lessons appeared first on HumbleDollar.
December 17, 2020
Time to Explore
JOHN GOODENOUGH was awarded the Nobel Prize in chemistry in 2019. At 97 years old, he was the oldest Nobel laureate in history. This didn’t happen by accident. At age 57, when most folks are looking to scale back their careers, Goodenough pressed ahead, co-inventing the lithium-ion rechargeable battery, which today powers pacemakers, digital cameras, smartphones, electric wheelchairs and more.
Americans are healthier and living longer than at any time in history. If Goodenough had taken “retirement” to heart and scaled back or completely stopped pursuing his life’s passion, we’d all be worse off. Folks like him are helping to redefine retirement not as a time to withdraw or, as some might say, head out to pasture, but as a chance to make the most of a new, less structured chapter in our life.
The challenge we each face: To discard passive notions of retirement and instead view this as a time of opportunity. Here are four steps that’ll help you discover what you’re passionate about, so you get the most out of your retirement.
1. Start now. Ideally, this period of exploration should begin long before retirement. Try to think about a life that’s less driven by financial constraints and, instead, more focused on your unique abilities and your personal satisfaction. In the years running up to retirement, assess and reassess those interests and capabilities.
Feeling stuck? Try Yale University’s most popular class ever, The Science of Wellbeing. Available through Coursera, it focuses on increasing personal happiness and building better habits to live a more fulfilled life.
2. Embrace boredom. Schedule time to do nothing. To consume nothing. To pause and just be.
If this concept seems foreign to you, start with a “Shultz hour.” George Shultz, former U.S. secretary of state, often carved out an hour each week for quiet reflection. His wife and the president were the only two people allowed to interrupt these hours. Eliminate distractions—no meetings, no phone calls, no social media, no technology. Quiet reflection creates focus, helping us to direct our thoughts to what matters most.
By taking time to ponder bigger questions and make sense of our life, we can discover our core values, those fundamental beliefs that guide our behavior. These beliefs underlie how we conduct ourselves and the standards we hold ourselves to. Yours may include notions like service, autonomy, balance, fidelity or joy.
During your Shultz hour, here are some questions to consider: How are you using money to improve your life? What do you do that makes you feel alive? How will you measure your life?
3. Create a one pager. Drawing on these periods of self-reflection, use the information, observations, learnings and revelations you gather to form a plan. Think of it as a business plan for your life. A good plan is written, specific, and provides purpose and guidance. It also allows for flexibility. It doesn’t need to be some monumental document. A simple one-page summary is preferable.
Begin with a blank piece of paper. Divide it into thirds. The first part includes your core values. Try to keep this list to no more than five values.
The second part is where you state your purpose—a one- or two-sentence personal mission statement. Business and leadership guru Simon Sinek refers to a strong mission statement as your “why,” the purpose, cause or belief that inspires and fuels you. Clearly defining your why gives you a filter, so you make choices that fit with what you care about most.
The final part is where you specify how you’ll put your core values and mission statement into action. How will you spend your time? Perhaps you want to volunteer one day a week, read one nonfiction book a month and take that European trip you’ve always dreamed of. The thread connecting all these activities are your values and purpose.
4. Play. Researchers at the Stanford Center on Longevity believe older adults are happier than their younger counterparts. What drives this? Stress and anxiety tend to decrease with age, while our freedom over our daily life increases.
Now that you have an idea of how you intend to spend your time, it’s time to experiment. Have fun. Try new things. The retirement activities that you initially identified may be tweaked, ramped up or dialed down. Your goals and plan will change and evolve, though you’ll likely find that your “why” rarely does.
Anika Hedstrom, MBA, CFP, is a personal finance expert and advisor. Her previous articles include Going Soft, Make the Connection and Effort Counts Twice. Anika writes on motivational and behavioral aspects of financial planning, and has been featured in USA Today, MarketWatch, Huffington Post, Business Insider and NPR. Always up for adventure, Anika can be found exploring new countries, whitewater rafting and chasing after her twins. Follow her on Twitter
@AnikaHedstrom
.
Americans are healthier and living longer than at any time in history. If Goodenough had taken “retirement” to heart and scaled back or completely stopped pursuing his life’s passion, we’d all be worse off. Folks like him are helping to redefine retirement not as a time to withdraw or, as some might say, head out to pasture, but as a chance to make the most of a new, less structured chapter in our life.
The challenge we each face: To discard passive notions of retirement and instead view this as a time of opportunity. Here are four steps that’ll help you discover what you’re passionate about, so you get the most out of your retirement.
1. Start now. Ideally, this period of exploration should begin long before retirement. Try to think about a life that’s less driven by financial constraints and, instead, more focused on your unique abilities and your personal satisfaction. In the years running up to retirement, assess and reassess those interests and capabilities.
Feeling stuck? Try Yale University’s most popular class ever, The Science of Wellbeing. Available through Coursera, it focuses on increasing personal happiness and building better habits to live a more fulfilled life.
2. Embrace boredom. Schedule time to do nothing. To consume nothing. To pause and just be.
If this concept seems foreign to you, start with a “Shultz hour.” George Shultz, former U.S. secretary of state, often carved out an hour each week for quiet reflection. His wife and the president were the only two people allowed to interrupt these hours. Eliminate distractions—no meetings, no phone calls, no social media, no technology. Quiet reflection creates focus, helping us to direct our thoughts to what matters most.
By taking time to ponder bigger questions and make sense of our life, we can discover our core values, those fundamental beliefs that guide our behavior. These beliefs underlie how we conduct ourselves and the standards we hold ourselves to. Yours may include notions like service, autonomy, balance, fidelity or joy.
During your Shultz hour, here are some questions to consider: How are you using money to improve your life? What do you do that makes you feel alive? How will you measure your life?
3. Create a one pager. Drawing on these periods of self-reflection, use the information, observations, learnings and revelations you gather to form a plan. Think of it as a business plan for your life. A good plan is written, specific, and provides purpose and guidance. It also allows for flexibility. It doesn’t need to be some monumental document. A simple one-page summary is preferable.
Begin with a blank piece of paper. Divide it into thirds. The first part includes your core values. Try to keep this list to no more than five values.
The second part is where you state your purpose—a one- or two-sentence personal mission statement. Business and leadership guru Simon Sinek refers to a strong mission statement as your “why,” the purpose, cause or belief that inspires and fuels you. Clearly defining your why gives you a filter, so you make choices that fit with what you care about most.
The final part is where you specify how you’ll put your core values and mission statement into action. How will you spend your time? Perhaps you want to volunteer one day a week, read one nonfiction book a month and take that European trip you’ve always dreamed of. The thread connecting all these activities are your values and purpose.
4. Play. Researchers at the Stanford Center on Longevity believe older adults are happier than their younger counterparts. What drives this? Stress and anxiety tend to decrease with age, while our freedom over our daily life increases.
Now that you have an idea of how you intend to spend your time, it’s time to experiment. Have fun. Try new things. The retirement activities that you initially identified may be tweaked, ramped up or dialed down. Your goals and plan will change and evolve, though you’ll likely find that your “why” rarely does.
Anika Hedstrom, MBA, CFP, is a personal finance expert and advisor. Her previous articles include Going Soft, Make the Connection and Effort Counts Twice. Anika writes on motivational and behavioral aspects of financial planning, and has been featured in USA Today, MarketWatch, Huffington Post, Business Insider and NPR. Always up for adventure, Anika can be found exploring new countries, whitewater rafting and chasing after her twins. Follow her on Twitter
@AnikaHedstrom
.The post Time to Explore appeared first on HumbleDollar.
December 16, 2020
Weekend Warriors
AH, A SECOND HOME—a fond dream for so many. While we try to justify a weekend house as a “good investment,” they’re often bought to fulfill some emotional need.
For some, it’s a beach house. For others, it’s a mountain getaway. But for me, it’s always been a place in the country. I’m an introvert. The prospect of getting away from crowds and noise to a secluded place of peace and quiet is my ideal.
After marrying and becoming the father of four, I wasted little time before starting to scout the beautiful Texas Hill Country outside of Austin for our weekend getaway home. On many Saturdays and Sundays, I’d load the younger kids into the car. Promising them a great adventure, we’d head out for a long afternoon spent checking out various rural properties for sale. Our older kids were, by then, completely involved with friends and school activities. Meanwhile, my wife was too smart to go. “Let me know when you find it,” she’d say.
My first find was a beautiful 25-acre property on a high hillside with spectacular views and a creek below. I thought it was paradise and we had many fun times there. But it didn’t have a house or even a cabin. We built a spacious covered gazebo on the hilltop, but it still meant camping out if we wanted to spend the night. This didn’t bother me. But when I showed my wife the very comfortable tree trunk in the woods, which I thought made for an exceptional open-air potty, she was not impressed.
So, after a few years, I resumed the search. Lo and behold, I stumbled on another incredible place: 83 acres with great views, beautiful trees and half a mile of good creek. Though it was considerably farther out, which also made it affordable, the key feature was a large cabin with three bedrooms, two baths and a functional kitchen. We sold the first place and bought this one, and began an eight-year adventure as part-time rural denizens.
We spent many weekends there and got a lot of pleasure from making major improvements. We were lucky to find local folks to do badly needed renovations on the cabin, while also getting sore and blistered ourselves chopping “cedar”—the ubiquitous Ashe Juniper, an invasive demon that sucks up water and crowds out native grasses all over the Texas Hill Country. My wife and I had some of our happiest times at “the ranch,” which was truly magical in many ways.
But eventually, reality began creeping in. Our older girls were already graduated or soon to graduate from college, while our younger two kids were entering their teenage years and preferred being with their friends than out in the sticks with Mom and Dad.
Moreover, the cabin—while a big step up from the gazebo and tree trunk toilet—was not of high-dollar construction, and increasingly needed plumbing, roof, appliance and other repairs. I’m no handyman, so we needed a variety of professional help and that became a major issue. Our property was many miles from the closest sizable town and we were typically there only on weekends, so arranging for repairmen to make the trip was problematic.
Gradually, we began to experience our own version of the old joke about the two happiest days in the life of boat owners—the day they buy and the day they sell. The negatives began to overtake the positives, and we put our beloved ranchito on the market. At that point, we were once again reminded of one of the fundamental truths about real estate: It’s often very “illiquid.” Finally, more than two years later, we sold the place.
How did we do investment-wise? We sold the ranch for more than we’d put into it, but not by a whole lot. If you compared our return to what we would’ve made by simply investing in the S&P 500, it would bring a tear to the eye.
Do I regret it? Not a bit. I’m under no illusion that it was a great investment. But we got so much enjoyment out of our country place that we’ll be cherishing the experience and the memories for the rest of our life. Sometimes, it isn’t all about the money.
Andrew Forsythe retired in 2017 after almost four decades practicing criminal law in Austin, Texas, first as a prosecutor and then as a defense attorney. His wife Rosalinda and he, along with their dogs, live outside Austin, at the edge of the Texas Hill Country. Their four kids are now grown, independent and successful. They're also blessed with four beautiful grandkids. Andrew loves dogs, and enjoys collecting pocketknives and flashlights. His previous articles include Cheap and Proud, Slim Pickings and The Path Not Taken.
For some, it’s a beach house. For others, it’s a mountain getaway. But for me, it’s always been a place in the country. I’m an introvert. The prospect of getting away from crowds and noise to a secluded place of peace and quiet is my ideal.
After marrying and becoming the father of four, I wasted little time before starting to scout the beautiful Texas Hill Country outside of Austin for our weekend getaway home. On many Saturdays and Sundays, I’d load the younger kids into the car. Promising them a great adventure, we’d head out for a long afternoon spent checking out various rural properties for sale. Our older kids were, by then, completely involved with friends and school activities. Meanwhile, my wife was too smart to go. “Let me know when you find it,” she’d say.
My first find was a beautiful 25-acre property on a high hillside with spectacular views and a creek below. I thought it was paradise and we had many fun times there. But it didn’t have a house or even a cabin. We built a spacious covered gazebo on the hilltop, but it still meant camping out if we wanted to spend the night. This didn’t bother me. But when I showed my wife the very comfortable tree trunk in the woods, which I thought made for an exceptional open-air potty, she was not impressed.
So, after a few years, I resumed the search. Lo and behold, I stumbled on another incredible place: 83 acres with great views, beautiful trees and half a mile of good creek. Though it was considerably farther out, which also made it affordable, the key feature was a large cabin with three bedrooms, two baths and a functional kitchen. We sold the first place and bought this one, and began an eight-year adventure as part-time rural denizens.
We spent many weekends there and got a lot of pleasure from making major improvements. We were lucky to find local folks to do badly needed renovations on the cabin, while also getting sore and blistered ourselves chopping “cedar”—the ubiquitous Ashe Juniper, an invasive demon that sucks up water and crowds out native grasses all over the Texas Hill Country. My wife and I had some of our happiest times at “the ranch,” which was truly magical in many ways.
But eventually, reality began creeping in. Our older girls were already graduated or soon to graduate from college, while our younger two kids were entering their teenage years and preferred being with their friends than out in the sticks with Mom and Dad.
Moreover, the cabin—while a big step up from the gazebo and tree trunk toilet—was not of high-dollar construction, and increasingly needed plumbing, roof, appliance and other repairs. I’m no handyman, so we needed a variety of professional help and that became a major issue. Our property was many miles from the closest sizable town and we were typically there only on weekends, so arranging for repairmen to make the trip was problematic.
Gradually, we began to experience our own version of the old joke about the two happiest days in the life of boat owners—the day they buy and the day they sell. The negatives began to overtake the positives, and we put our beloved ranchito on the market. At that point, we were once again reminded of one of the fundamental truths about real estate: It’s often very “illiquid.” Finally, more than two years later, we sold the place.
How did we do investment-wise? We sold the ranch for more than we’d put into it, but not by a whole lot. If you compared our return to what we would’ve made by simply investing in the S&P 500, it would bring a tear to the eye.
Do I regret it? Not a bit. I’m under no illusion that it was a great investment. But we got so much enjoyment out of our country place that we’ll be cherishing the experience and the memories for the rest of our life. Sometimes, it isn’t all about the money.
Andrew Forsythe retired in 2017 after almost four decades practicing criminal law in Austin, Texas, first as a prosecutor and then as a defense attorney. His wife Rosalinda and he, along with their dogs, live outside Austin, at the edge of the Texas Hill Country. Their four kids are now grown, independent and successful. They're also blessed with four beautiful grandkids. Andrew loves dogs, and enjoys collecting pocketknives and flashlights. His previous articles include Cheap and Proud, Slim Pickings and The Path Not Taken.The post Weekend Warriors appeared first on HumbleDollar.
December 15, 2020
He Gets, She Gets
IF YOU DESIGNATE beneficiaries for your retirement accounts, that’s usually a surefire way to pass those assets directly to your desired heirs without going through probate—but not always.
Because those beneficiary designations are so important, you should verify your choices every year in case there’s a change due to, say, marriage, birth, divorce or death. Especially marriage and divorce. Which brings me to a crucial issue: When dealing with IRA and 401(k) beneficiary designations, there’s a key difference when it comes to your spouse.
In general, a spouse who hasn’t been named beneficiary of an IRA isn’t entitled to inherit it. Unlike 401(k) plans, IRAs aren’t governed by ERISA—the Employee Retirement Income Security Act—so these accounts don’t have the same protections for spouses. You’re free to name whoever you wish as your IRA beneficiary, even if you’re married, provided you don’t live in a community property state. Indeed, IRAs are excluded from ERISA coverage, even if the funds originated in a 401(k).
By contrast, under ERISA, if the owner of a 401(k) account is married when he or she dies, his or her spouse is automatically entitled to receive 50% of the money, regardless of what the beneficiary designation says. If there’s no beneficiary listed, the spouse is entitled to 100% of the account.
The spouse can sign a waiver, giving up his or her 50% of the account, but only if the spouse is at least 35 years of age. It isn’t enough just to name someone else on the beneficiary form that your employer gives you. The waiver must be filled out, with the spouse consenting to the participant’s choice of beneficiary. If your spouse signs the waiver, which should be provided by the firm that administers your 401(k), a plan representative or a notary public must act as a witness. Why all this bother? Congress wanted to make sure surviving spouses weren’t shortchanged.
Beneficiary designations for 401(k)s become particularly tricky with divorces and remarriages. The right of the surviving spouse is triggered, regardless of when the assets were amassed or how long the couple has been married. That said, there’s a potential exception: Plans can include a one-year marriage rule, whereby a surviving spouse must have been married to the plan participant for at least a year before he or she has a right to 401(k) assets. But not all plans have adopted this provision.
If your former spouse gave up any claim to retirement assets in a divorce, make sure your beneficiary designation form is modified to reflect that change. If not, after your death, the plan administrator will hand over the money to the designated beneficiary—which will be your ex.
Often, the 401(k) owner will change his or her beneficiary designation upon divorce and name the children as the beneficiaries. If the owner later remarries, 50% of the 401(k) assets will still go to the new spouse, instead of the children, even if the new spouse is not added as a beneficiary—unless, that is, the new spouse signs a waiver.
Keep in mind that a prenuptial agreement can’t take the place of a waiver. Instead, the law specifies that the spouse must sign the waiver. This can be tricky, because such a waiver can be signed only after a couple is married, at which point the spouse has already acquired the right to be a beneficiary of the 401(k).
Planning to remarry? If you want someone else to benefit from your 401(k) assets, such as the children from an earlier marriage, it’s prudent to roll over your 401(k) to an IRA account before you remarry. That should be easy enough if you have a 401(k) at an old employer, but you likely won’t have that option with your current employer’s plan—unless you’re age 59½ or older.
James McGlynn, CFA, RICP, is chief executive of
Next Quarter Century LLC
in Fort Worth, Texas, a firm focused on helping clients make smarter decisions about long-term-care insurance, Social Security and other retirement planning issues. He was a mutual fund manager for 30 years. James is the author of
Retirement Planning Tips for Baby Boomers
. His previous articles include The Taxman Cometh, Back When and Fatten That Policy.
Because those beneficiary designations are so important, you should verify your choices every year in case there’s a change due to, say, marriage, birth, divorce or death. Especially marriage and divorce. Which brings me to a crucial issue: When dealing with IRA and 401(k) beneficiary designations, there’s a key difference when it comes to your spouse.
In general, a spouse who hasn’t been named beneficiary of an IRA isn’t entitled to inherit it. Unlike 401(k) plans, IRAs aren’t governed by ERISA—the Employee Retirement Income Security Act—so these accounts don’t have the same protections for spouses. You’re free to name whoever you wish as your IRA beneficiary, even if you’re married, provided you don’t live in a community property state. Indeed, IRAs are excluded from ERISA coverage, even if the funds originated in a 401(k).
By contrast, under ERISA, if the owner of a 401(k) account is married when he or she dies, his or her spouse is automatically entitled to receive 50% of the money, regardless of what the beneficiary designation says. If there’s no beneficiary listed, the spouse is entitled to 100% of the account.
The spouse can sign a waiver, giving up his or her 50% of the account, but only if the spouse is at least 35 years of age. It isn’t enough just to name someone else on the beneficiary form that your employer gives you. The waiver must be filled out, with the spouse consenting to the participant’s choice of beneficiary. If your spouse signs the waiver, which should be provided by the firm that administers your 401(k), a plan representative or a notary public must act as a witness. Why all this bother? Congress wanted to make sure surviving spouses weren’t shortchanged.
Beneficiary designations for 401(k)s become particularly tricky with divorces and remarriages. The right of the surviving spouse is triggered, regardless of when the assets were amassed or how long the couple has been married. That said, there’s a potential exception: Plans can include a one-year marriage rule, whereby a surviving spouse must have been married to the plan participant for at least a year before he or she has a right to 401(k) assets. But not all plans have adopted this provision.
If your former spouse gave up any claim to retirement assets in a divorce, make sure your beneficiary designation form is modified to reflect that change. If not, after your death, the plan administrator will hand over the money to the designated beneficiary—which will be your ex.
Often, the 401(k) owner will change his or her beneficiary designation upon divorce and name the children as the beneficiaries. If the owner later remarries, 50% of the 401(k) assets will still go to the new spouse, instead of the children, even if the new spouse is not added as a beneficiary—unless, that is, the new spouse signs a waiver.
Keep in mind that a prenuptial agreement can’t take the place of a waiver. Instead, the law specifies that the spouse must sign the waiver. This can be tricky, because such a waiver can be signed only after a couple is married, at which point the spouse has already acquired the right to be a beneficiary of the 401(k).
Planning to remarry? If you want someone else to benefit from your 401(k) assets, such as the children from an earlier marriage, it’s prudent to roll over your 401(k) to an IRA account before you remarry. That should be easy enough if you have a 401(k) at an old employer, but you likely won’t have that option with your current employer’s plan—unless you’re age 59½ or older.
James McGlynn, CFA, RICP, is chief executive of
Next Quarter Century LLC
in Fort Worth, Texas, a firm focused on helping clients make smarter decisions about long-term-care insurance, Social Security and other retirement planning issues. He was a mutual fund manager for 30 years. James is the author of
Retirement Planning Tips for Baby Boomers
. His previous articles include The Taxman Cometh, Back When and Fatten That Policy.The post He Gets, She Gets appeared first on HumbleDollar.
December 14, 2020
Toys for Techies
IF YOU’RE ONE of the lucky ones in this COVID-19 economy, with a job and the wherewithal to buy holiday gifts for friends or family, here are five eclectic tech gift ideas for budgets small, large and XXL:
1. Ergonomic Desk. The pandemic has many of us working from home. After a couple months of this, my back, neck and forearms cried out for the ergonomic desk I had at the office. Luckily, my friend Diz turned me on to GeekDesk.
The company’s super-sturdy Model 4 adjustable height desk starts at $749 and was pretty easy to assemble, especially when you have help. (Thanks, Katie.) Get the optional controller, which has four presets, so you can quickly flip between standing and sitting or just tweak the height a bit. For another $150, splurge on the gorgeous bamboo desk surface. GeekDesk’s cord tray is an essential accessory. Paired with an AmazonBasics power strip set in the cord tray and a power grommet for desktop devices, you have a neat, single-cord look for your desk.
2. Oura Ring. There are a lot of wearable health and fitness sensor products on the market today, but none I’ve tried works as well as Oura Ring for tracking and hacking your sleep. Deep sleep activates your immune system and, today, we could all use more of that. Starting at $299, Oura’s ring has sensors which accurately measure heart rate, respiration, relative body temperature and motion, everything Oura needs to tell not just how long you’re sleeping, but also how well.
Other solutions track sleep, but through an uncomfortable wrist-sized bracelet. Others can record resting heart rate or heart rate variability, but not as accurately as Oura. A single charge lasts nearly a week and the ring is waterproof, so no worries showering or washing dishes while wearing it. Matthew Walker’s bestselling book Why We Sleep makes a great companion gift.
3. Factfulness. Speaking of great books, many tech-loving readers on your shopping list will enjoy Factfulness by Hans Rosling, a sword-swallowing public health expert from Sweden who entertains with great storytelling, while upgrading your worldview and enhancing your understanding of the natural biases all humans have. If you wonder how in the world your beloved relatives or coworkers can look at the same information and reach opposite conclusions, this book sets you on a path to clarity and empathy. It helped me retain a glimmer of optimism in 2020, and that’s surely worth $12.
4. Anker Power Chargers. Okay, it’s not a sexy gift idea. But if you’re keen to save time charging devices, enjoy the simplicity of carrying one compact power adapter on trips (remember trips?) or want the convenience of wireless charging, Anker makes well-built products like this, with a USB-C port to power a 45-watt Surface or MacBook computer while also quick-charging a phone or tablet. For fastest charging with a cable, use Anker’s products with a USB-C connector or a blue USB 3 type A connector.
5. Tesla Model Y. If you’re looking to thrill your spouse with a vehicle that plugs in, or it’s just time to replace an old clunker, check out Tesla’s latest model. The midsized, all-wheel drive, pure electric Model Y SUV has wicked acceleration, 68 cubic feet of cargo room, optional trailer hitch and EPA-rated range of 326 miles (your range will vary). At half the price of Tesla’s Model X, the Model Y is a bit less refined in its ride but equally thrilling to drive.
For owners of all its cars, Tesla has delivered a simplified driving experience which improves with age, as new features and refinements get released in its monthly updates. Paired with Tesla’s Wall Connector in your garage and its lightning-fast Supercharger network for long trips, you’ll not miss gas stations or the expense and hassle of quarterly oil changes. That said, I do urge caution using Tesla’s autopilot features if you go for that option.
David Powell has spent his career writing software and leading engineering teams. During his 40 years working in tech, he has come to respect the limits of human imagination in any planning. Like the rest of us, David looks forward to a post-COVID world with lots of travel, shaking hands and dining in restaurants. His previous articles include Money for Later, Beat the Cheats and Get Me a Margarita. Follow David on Twitter @AmpedToGo.
1. Ergonomic Desk. The pandemic has many of us working from home. After a couple months of this, my back, neck and forearms cried out for the ergonomic desk I had at the office. Luckily, my friend Diz turned me on to GeekDesk.
The company’s super-sturdy Model 4 adjustable height desk starts at $749 and was pretty easy to assemble, especially when you have help. (Thanks, Katie.) Get the optional controller, which has four presets, so you can quickly flip between standing and sitting or just tweak the height a bit. For another $150, splurge on the gorgeous bamboo desk surface. GeekDesk’s cord tray is an essential accessory. Paired with an AmazonBasics power strip set in the cord tray and a power grommet for desktop devices, you have a neat, single-cord look for your desk.
2. Oura Ring. There are a lot of wearable health and fitness sensor products on the market today, but none I’ve tried works as well as Oura Ring for tracking and hacking your sleep. Deep sleep activates your immune system and, today, we could all use more of that. Starting at $299, Oura’s ring has sensors which accurately measure heart rate, respiration, relative body temperature and motion, everything Oura needs to tell not just how long you’re sleeping, but also how well.
Other solutions track sleep, but through an uncomfortable wrist-sized bracelet. Others can record resting heart rate or heart rate variability, but not as accurately as Oura. A single charge lasts nearly a week and the ring is waterproof, so no worries showering or washing dishes while wearing it. Matthew Walker’s bestselling book Why We Sleep makes a great companion gift.
3. Factfulness. Speaking of great books, many tech-loving readers on your shopping list will enjoy Factfulness by Hans Rosling, a sword-swallowing public health expert from Sweden who entertains with great storytelling, while upgrading your worldview and enhancing your understanding of the natural biases all humans have. If you wonder how in the world your beloved relatives or coworkers can look at the same information and reach opposite conclusions, this book sets you on a path to clarity and empathy. It helped me retain a glimmer of optimism in 2020, and that’s surely worth $12.
4. Anker Power Chargers. Okay, it’s not a sexy gift idea. But if you’re keen to save time charging devices, enjoy the simplicity of carrying one compact power adapter on trips (remember trips?) or want the convenience of wireless charging, Anker makes well-built products like this, with a USB-C port to power a 45-watt Surface or MacBook computer while also quick-charging a phone or tablet. For fastest charging with a cable, use Anker’s products with a USB-C connector or a blue USB 3 type A connector.
5. Tesla Model Y. If you’re looking to thrill your spouse with a vehicle that plugs in, or it’s just time to replace an old clunker, check out Tesla’s latest model. The midsized, all-wheel drive, pure electric Model Y SUV has wicked acceleration, 68 cubic feet of cargo room, optional trailer hitch and EPA-rated range of 326 miles (your range will vary). At half the price of Tesla’s Model X, the Model Y is a bit less refined in its ride but equally thrilling to drive.
For owners of all its cars, Tesla has delivered a simplified driving experience which improves with age, as new features and refinements get released in its monthly updates. Paired with Tesla’s Wall Connector in your garage and its lightning-fast Supercharger network for long trips, you’ll not miss gas stations or the expense and hassle of quarterly oil changes. That said, I do urge caution using Tesla’s autopilot features if you go for that option.
David Powell has spent his career writing software and leading engineering teams. During his 40 years working in tech, he has come to respect the limits of human imagination in any planning. Like the rest of us, David looks forward to a post-COVID world with lots of travel, shaking hands and dining in restaurants. His previous articles include Money for Later, Beat the Cheats and Get Me a Margarita. Follow David on Twitter @AmpedToGo.The post Toys for Techies appeared first on HumbleDollar.
