Take More Risk In Life And Less In Investing

“I just really wish I’d taken more risk in my investment portfolio,” said no one–ever–on their deathbed.

That may seem like an odd observation, unless you consider the fact that I had the privilege of spending a couple days recently with life planning luminary George Kinder. Among other benefits, I was able to reacquaint myself with his famous three questions, elegantly designed to progressively point us toward the stuff of life that is the most important–to us.

The final question invites us to explore what benchmark life experiences we would leave unaccomplished if we only had one day left on this Earth. And as you may suspect, even in a room filled with financial planners, achieving a more aggressive portfolio posture was, perhaps, the farthest from anyone’s mind.

Meanwhile, most of the items that people did list represented experiences (not things) that, individually, were outside of their to-date unarticulated–but now evident–comfort zones.

Participants almost universally wished they’d have taken more risks in life–personally, educationally, relationally, experientially, professionally and vocationally.  

Similarly, those most meaningful experiences they had enjoyed thus far in life were the ones that pushed the boundaries of their comfort zones, expanding their personal risk tolerance.

But what about financial risk tolerance?

Adaptation Devaluation: Why A U2 Concert Is Better Than A New Couch

My favorite discovery in the field of behavioral economics confirms what we already knew deep down, even if it contradicts “common sense”–that experiences are more valuable than stuff. I recently put this finding to the test:

Concert of a Lifetime

“You’re crazy.”

Those were my wife’s words when I called her from the road, rushing to discuss what I termed “the concert of a lifetime.”

I’d just learned that living legends U2 were touring in support of the 30th anniversary of their most celebrated album, “The Joshua Tree.”  

(Photo by Andrew Chin/Getty Images)

The greatest live band of a generation playing the soundtrack of my youth from start to finish.

Andrea was on board with going to the show–she’s a big fan, too. But what invited her claim of insanity was my insistence that we take the whole family to Seattle to see the show. We live in Charleston. South Carolina.

The 10 Email Commandments You’re Breaking Every Day

Do you live in fear of your email inbox? It is such an effective tool for information exchange that it can render us completely ineffective in our attempts to control it.

I fear that I’m going to miss the proverbial wheat because of all the darn chaff overstuffing my inbox. You, too?

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Well, apparently we’re in good company. As a student of behavioral economics and finance, my ears always perk up when behavioral economist Dan Ariely has something to say. He struggled so much with  managing the daily email harvest that he decided to create two apps, one that helps people send him better emails and another that helps him prioritize the emails he receives.

This inspired some colleagues and me to ask: “What are the ways that we might be contributing to the chaff in the inboxes of our business associates and friends?”

What are the often unspoken rules of good email etiquette? Here’s what we came up with…

The 10 Commandments of Business Email:

1. Thou shalt not gratuitously “cc.”

You’re on it–they know.  

PARENTS: Don’t Sacrifice Yourselves On The Altar Of Your Children’s Education

Parents have sacrificed their financial futures on the altar of their children’s education. Fueled by easy federal money and self-interested colleges, the result is a student loan crisis that appears already to be eclipsing the catastrophic proportions of mortgage indebtedness leading up to the financial collapse of 2008.

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Please allow me to disclaim a few things:  

  • I’m not anti-education. In fact, I valued my college education so much that I went back to teach at my alma mater, Towson University, for seven years.
  • I believe that a college education is a) inherently valuable, b) an enhancer of career prospects and c) fertile ground for unforgettable life experiences beyond the classroom.  
  • I’m a parent. I’ve encouraged my two sons, 13 and 11, to strive for a college education, and I’ve also offered to share in the financial burden.
  • I’m not a prognosticator. Therefore, I’m not predicting an imminent crisis akin to the Great Recession, led by student loan defaults. Crystal balls don’t work, and anyone who claims to have one is selling something.

I’m also not a conspiracy theorist, but the facts, according to a new Wall Street Journal article, are indisputable:

The Antidote for Stock Market Hysteria

Just for fun, Google the words “market pullback.” There are over 2.2 million results–most of them market predictions–and the first page of results is dominated by calls for an imminent market reversal that the simple desk calendar has already proven false. 

However, despite their worthlessness, market predictions remain as predictable as market opens and closes. (And I predict no end in sight.)

But why?

First, there’s a clear profit motive. Apparent urgency leads to activity, and activity is still how most of the financial services industry makes its money.  

“Bullish predictions encourage investors to pour fresh money into the markets, helping asset management companies to enjoy rising profits,” the New York Times reported, noting that the Wall Street forecaster’s consensus since 2000 has averaged a 9.5% increase each year. They accidentally got it (almost) right in 2016, but in 2008, the consensus prognostication missed the mark by 49 percentage points (an outcome that makes your local weatherman seem like a harbinger of accuracy)!  

But not everyone’s positive either. My colleague and the co-author of the new book “Your Complete Guide To Factor-Based Investing,” Larry Swedroe, analyzed Marc Faber’s perpetually cataclysmic proclamations and rendered the good doctor “without a clue.”  

Why Busyness Isn’t Good Business

12 Experts Share Their Thoughts

It’s old news that we’re busy and that we wear our busyness as a badge of honor. But a new study found that Americans, in particular, are actually buying it. Specifically, the study concluded that Americans who always say they’re “busy” are actually seen as more important. Unfortunately, it’s all a charade.

Busy, busy, busy

Busy, busy, busy

Numerous studies have shown that busyness isn’t actually good business, and here’s the big reason why: It makes us less productive. We’re all susceptible to it, but If I’m saying to myself (and I have), “Woo, I’m busy; really busy,” I’m likely being distracted from the most important, most productive work that I could be doing. I may feel like I’m doing more, but the net result is actually less. And it often feels like it.

But not everyone wears busyness as a status symbol. In response to the research and their own well-informed gut feelings, many are finding enjoyment in more productive work at a less busy pace. I wanted to know how these people recognize when they’re devolving into busyness and what they do to stop the downward spiral, so I asked 12 thought leaders who’ve inspired me two simple questions:

  • How do you know when you’ve gotten too busy?
  • What is a technique that you use to “unbusy” yourself?

Here’s what they had to say:

The Three-Step Investor’s Guide To Navigating The Financial Advisory Fiduciary Issue

Originally in ForbesAs an educator in the arena of personal finance, I generally avoid matters of public policy or politics because they tend to devolve into dogma and division, all too often leaving wisdom and understanding behind. But occasionally, an issue arises of such importance that I feel an obligation to advocate on behalf of those who don’t have a voice. The issue of the day revolves around a single word: “fiduciary.”

At stake is a Department of Labor ruling set to take effect this coming April that would require any financial advisor, stock broker or insurance agent directing a client’s retirement account to act in the best interest of that client. In other words, the rule would require such advisors to act as a fiduciary. The incoming Trump administration has hit the pause button on that rule, a move that many feel is merely a precursor to the rule’s demise.

Why? Because a vocal constituency of the new administration has lobbied for it—hard. They stand to lose billions—with a “b”—so they’re protecting their profitable turf with every means necessary, even twisted logic.

The good news is that informed investors need not rely on any legislation to ensure they are receiving a fiduciary level of service. Follow these three steps to receive the level of service you deserve:

The Ironic Conflict Of Interest Of The Fiduciary Financial Advisor

Originally in ForbesThe Trump administration’s move to delay implementation of the Department of Labor’s fiduciary rule has inspired me to delay implementation of my commitment to remain silent on matters of public policy and politics. It’s that important.

financial-aadvisorIt seems pretty obvious that those in the financial establishment who oppose the rule do so primarily out of self-interest. After all, it’s estimated that they will lose billions in profits if the final rule goes into effect. I get it.

But I was fascinated recently when a member of the media wondered aloud if my advocacy for a wider fiduciary standard was also simply an outgrowth of my own bias.

Indeed, who’s to say I’m not just grinding my own axe on this issue? Maybe I’m in favor of all financial advisors being held to a fiduciary standard because I’m a fiduciary financial advisor and part of a national community of financial advisors that supports the fiduciary standard.

That would be a convenient rebuttal from the anti-fiduciary community, but here’s the (huge) problem with that rationale:

Top 3 Reasons For Millennials To Choose A Roth IRA

Originally in ForbesMuch—too much—has been said and written about the relative superiority of Roth IRAs versus Traditional IRAs. The debate over which is better too often involves the technical numerical merits. In truth, the Roth wins in almost every situation because of its massive behavioral advantage: a dollar in a Roth IRA is (almost) always worth more than a dollar in a Traditional IRA. This is true regardless of one’s age, but the Roth IRA is even more advantageous for Millennials.

I must first disclaim that you can disregard any discussion of Roth or Traditional IRA if you’re not taking full advantage of a corporate match in your employer’s 401(k)—free money is still better than tax-free money. But after you’ve “maxed out” the match in your corporate retirement account, here are the top three reasons Millennials should consider putting their next dollar of savings in a Roth IRA:

1) Life is liquid, but most retirement savings isn’t.

Yes, of course, in a perfect, linear world, every dollar we put in a retirement account would forevermore remain earmarked for our financial futures. But hyperbolic discounting—and the penalties and tax punishments associated with early withdrawal from most retirement savings vehicles—can scare us away from saving today for the distant future. The further the future, the more we fear.

The Roth IRA, however, allows you to remove whatever contributions you’ve made—your principal—without any taxes or penalties at any time for any reason. Therefore, even though I’d prefer you to generally employ a set-it-and-forget-it rule with your Roth and not touch it, if the privilege of liquidity in a Roth helps you save for retirement, I’m all for it.

5 Reasons Why Non-Digital Time Management Is More Productive

As technological innovation marches forward in so many aspects of life, there is a movement gaining momentum to return to the past in search of something important that progress may have left behind.

No, you can’t beat the convenience of streaming and digitized music, but the listening experience still falls short of dropping the needle on a vinyl record. Similarly, while the ubiquity of tech-driven tools may make the process of managing our time easier than ever, we may actually end up increasing our productivity by decreasing efficiency through an analog, manual, pen-and-paper system.

Personally, I’d been successfully employing a time-management system for years—a simplified, customized amalgamation of David Allen and Steven Covey’s wisdom—designed using the online tool Trello. As someone who believes our most valuable investment is time, however, I was still curious when a friend I respect told me about a new system that he’d been using effectively. But when I invited him to show me, he didn’t pull out his phone or tablet, but a simple journal—a Bullet Journal.

The Bullet Journal is a product, but it’s also more than that. It’s really a modifiable productivity method that has grown into a community. The system, interestingly, was created by a digital product designer, Ryder Carroll, as a way to bring the discipline of task management under the practice of mindfulness. After testing out the system for a few months—and becoming an adherent in the process—I discussed the inspiration for the Bullet Journal with Mr. Carroll.

While how, exactly, I’ve adapted the Bullet system in my work as a financial advisor, writer and speaker—including the specific journal and writing tools I use—does make for an interesting story, today I’d like to address the bigger question:

WHY?