You’ve got a machine just sitting around your house. It’s a money-printing machine, and it’s perfectly legal. This machine is expected to print $75,000 this year before taxes. You’ll use that cash to pay your household expenses.
Each year, the machine will print 3 percent more than it did in the previous year, and it will continue doing so for the next 40. That means, over its lifetime the machine will print $5,655,094.48, easily making it your most valuable asset today.
Yet there it sits, maybe in your garage, between an inherited set of golf clubs and a wheelbarrow with a flat tire, unprotected. Uninsured.
The machine, of course, is you, or more specifically, your ability to generate an income. It didn’t come cheap. You and your parents invested years of training and likely tens of thousands of dollars in hopes that your machine would not only support you financially for a lifetime but launch another generation as well.
We don’t question the need to buy insurance for the things our money machine purchases. But few of us know if—or at least how and to what degree—their income-generation engine is protected.
Giving Tuesday might officially be behind us, but let’s face it—we’re just getting started. The giving season is underway, with the holidays and year-end bearing down on us. So how can we transform one of the more stressful, and sometimes guilt-ridden, elements of the season into something more life-giving?
Whether you’re giving to a family member, a friend or a cause, please consider the following four directives as a guide to happy giving:
1) Give out of impulsion, not compulsion. Compulsion to give can arise from the mountain of expectations, perceived or otherwise, heaped upon us at this time of year. (Those expectations are more often self-imposed, by the way.) Impulsion, on the other hand, comes from within. Give because you want to, not because you have to. And don’t give if you don’t want to.
I travel a decent amount. I don’t mind flying, but I’ve always struggled with the loss of productivity. Hours waiting at the airport. Even more hours in flight. But with the advent of in-flight Wi-Fi, I thought my productivity problems were solved. I was wrong.
I’ve instead concluded that by nixing slow and unpredictable in-flight Wi-Fi altogether, we can save money and use flight time to more productive ends (like reading, writing and resting) better suited for that environment.
My initial plan was to use in-flight Wi-Fi to slay the email dragon. That way, I could land knowing that nothing had slipped through the cracks and that there were no surprises waiting. I might even allow non-urgent emails to pile up for a couple days if I knew I had an upcoming flight. Unfortunately, the strategy was a miserable failure.
We got the subtitle of my last book wrong. It reads, “Balancing Money and Life.” And while the book is still substantively solid and its aging content remains mostly relevant, the subtitle, I now believe, is a misnomer. It may actually contradict the book’s fundamental message.
Whether we’re talking about money and life, work and life—whatever and life—the temptation is to see the “whatever” as a force standing in opposition to life. An alternative to life.
And, unfortunately, this isn’t merely a rhetorical conundrum. As it often does, life follows language. Indeed, the phrase “work-life balance” has become so common that most of us now consider it an either-or proposition. We picture a scale, balancing work on one side and life on the other, as though it’s a zero-sum game. Work or life.
And so it has become with money. We can choose to expend life in pursuit of money or deplete our financial resources in pursuit of life.
Perhaps there’s a third option—the integration of money and life. Consider these seven ways we might view life and money differently if our approach to them was less mutually exclusive:
Even if you get your daily news from one of those celebrity tabloid shows, you have probably still heard that the market has been more than a little crazy in recent weeks.
Indeed, the typically overstated “surge” and “plunge” headlines have been less hyperbolic of late, as the Dow Jones Industrial Average burps out daily gains and losses in the hundreds of points. But over the past several trading days, the results have been all red, and since Sept. 18, the market has taken back more than 6% of what it’s given so far this year.
Is this volatility the precursor to another market gutting? Or perhaps it’s just a momentary ebb in advance of a continued upward flow?
The answer is yes.
The market is in the business of rising and falling, and of making fools of those who attempt to predict which it will do next. But be sure that we will feel both the pain of another big drop—perhaps sooner rather than later—and the euphoria of another unprecedented gain.
Whether this very recent pullback happens to be the beginning or the end of something, most investors have already lost enough to benefit from it.
Benefit? Yes, you did read that correctly. Here are three ways to gain from market losses:
Exchange-traded funds—commonly referred to as ETFs—are all the rage. While there are several excellent reasons to use an ETF over the seemingly archaic traditional mutual fund, they are not a universally preferable solution.
First, to be fair, let’s review a few reasons why ETFs can be a better solution than mutual funds.
ETFs generally have lower associated costs than comparable mutual funds. This isn’t news, I know, but since costs are one of the few variables over which we have control as investors, I don’t mind flogging this deceased ungulate.
The expense ratio is the most obvious cost reduction. For example, the legendarily inexpensive Vanguard 500 Index Fund has an expense ratio of 0.17 percent, while Vanguard’s S&P 500 ETF has a barely noticeable expense ratio of 0.05 percent. This makes ETFs an ideal choice for investors making a sizable, broadly-based, one-and-done purchase.
My son gave me a present. To be fair, I don’t think it was until after he realized the gift was monetarily worthless, but I appreciated it nonetheless. It’s a big hunk of the mineral pyrite, also known as fool’s gold. My son’s gift has value to me far beyond its function as an excellent paperweight. And, ironically, its worth to me is continually rising. It’s become a constant reminder to orient my life away from that which only appears valuable and towards that which truly is.
We all have our own versions of fool’s gold. It’s generally the stuff that, while largely worthless, receives an undue amount of our time, attention and investment. What’s yours?
Here are three ways to spot it:
1) Fool’s gold consumes time you’ve dedicated to other things. Not more than one paragraph into writing this post (on this topic, no less!) I found myself entering this Google search—“what is the best banjo ukulele”—and then navigating to this page, then this one.
As if PIMCO needed any more bad press, The Wall Street Journal reported this week that the Securities and Exchange Commission is investigating whether the bond giant “artificially boosted the returns of a popular fund aimed at small investors.” While we should all be attentive to the results of this probe—because I’d bet my lunch money that its implications will be felt beyond just PIMCO—there is an even deeper issue to consider. And this issue has a more direct impact on our individual portfolios and money management choices. The real danger in overstating returns, and indeed the root of most financial missteps, is self-deception.
“How’s your portfolio?”
Who among us wants to feel like a failure? We’ll generally avoid experiencing this sensation at all costs. So, absent conspicuous success, we permit ourselves to believe that we’ve at least not failed, frequently through self-deception.
“People have always been captivated by quests,” writes author Chris Guillebeau in his brand new book, The Happiness of Pursuit. Chris, for one, is most certainly one of those people. His book celebrates the completion of a personal quest to visit all 193 countries in the world before his 35th birthday.
Are the rest of us captivated by quests as well? Absolutely. But is the whole concept of questing, journeying and generally living life as an adventure something anybody can pursue? Or are we merely relegated to living vicariously through Chis and his band of fellow travelers? After all, the rest of us have obligations, right? Nine-to-five drudgery is a responsibility. To some, it’s even an honor. We’ve got spouses, kids, mortgages, car payments and PTA meetings. We can’t be gallivanting all over creation in search of enlightenment.
Or can we?
Chris has some pretty strong feelings on that—so strong that the stated lesson of the first chapter in his book is: “Adventure is for everyone.”
Perhaps it depends on how we define a quest? Here are Chris’ criteria:
- “A quest has a clear goals and a specific end point.”
- “A quest presents a clear challenge.”
- “A quest requires sacrifice of some kind.”
- “A quest is often driven by a calling or sense of mission.”
- “A quest requires a series of small steps and incremental progress toward the goal.”
By these measures, running a marathon would assuredly be considered a quest for most. How much more, then, is John Wallace’s feat of running 250 of them—in a single year?
Wallace is one of many questers featured in The Happiness of Pursuit, but most of the others’ exploits are far less headline worthy. Chris endeavors to bring the notion of questing closer to home by featuring a largely “ordinary” cast of characters, and in so doing, he succeeds.
Boomer Esiason is busy—I mean, really busy. “Starting next Tuesday, all the way until after the Super Bowl in 2015, I think I’ve got about four days off,” he told me.
Why, then, was he anxious to talk about financial planning and life insurance?
It’s because he has a message for today’s youth: “Protect your future and make sure that whenever adversity strikes, you are prepared for it.” Prepared, among other things, with the appropriate level of life insurance.
But how did one of the National Football League’s great quarterbacks and commentators become an advocate for life insurance and the spokesperson for Life Happens, a nonprofit dedicated to increasing awareness of the importance of planning with life insurance?