As I’ve shared before, I consume a lot of information, almost exclusively online as I don’t subscribe to any newspapers or magazines.
Today, I’d like to share a handful of recent articles I thought were interesting. My hope is you’ll find one (or more) of them interesting as well.
The first comes from a Marketwatch article by financial planner, Dan Moisand. This article was brought to my attention by Robert Batt, one of my colleagues and an important resource in helping with the financial planning I do for my clients.
In this article, Moisand answers a common question: are equity-indexed annuities a better solution for retirement savings than the stock market?
As I’ve written before, I’m not a fan of annuities. They can and do make sense, but in my experience, they’re appropriate far less often than those who sell them would lead you to believe.
Read the article and reply with your thoughts.
This next article is more technical as it’s written by Michael Kitces.
Kitces is a financial planner and prolific writer of articles primarily geared toward other financial planners. He’s also a widely recognized and respected authority in the financial services industry.
In this article from about 6 years ago, he points out that rather than lowering your investment risk (via your exposure to the stock market) as you age, it might make more sense to actually increase your stock market exposure during retirement.
While I understand his reasoning and the rationale behind this opinion, saying it makes sense, believing it makes sense, and actually implementing it are each very different matters.
This approach also relies on a “bucket” approach to retirement income planning which I’m not a fan of as it introduces unnecessary complexity and additional moving parts to your financial planning and portfolio management. It can also hurt your long-term net wealth as it relies on carrying a lot of cash which can create a drag on your overall portfolio returns.
If you decide to dive into this article, I’d be curious to know what you think.
Next up, let’s talk about living a longer, healthier life.
Bottom line: if you want to increase your odds of not only a long lifespan but also a longer healthspan, you should do some sort of resistance training.
Sure, walking, running or other aerobic pursuits are important but don’t discount the long-term benefits of building a solid foundation of muscular strength and conditioning. It can help with balance which can help prevent falls as you age, among other things.
This is an area where I need to make some improvements. I currently walk an average of 5+ miles a day while, according to the Mayo Clinic, the average American walks 1.5 to 2 miles each day. While I may be above average on moving around during the day, I’ve been ignoring my strength training.
Whether you belong to a gym or work out at home (or outside), be sure to get some strength training in.
If you want to live longer, that is.
And finally, I really enjoyed this article from Morgan Housel on “Different Kinds of Stupid.”
I’ve seen a lot of what Housel describes in his article over my 26+ years as a financial advisor. Heck, I’ve been guilty of some of this myself.
I believe one characteristic of those who are most successful in building and preserving their wealth over time is a certain degree of humility. Of recognizing the possible limits of their own knowledge and understanding.
Now, this isn’t me saying when it comes to your money I’m smart and your dumb.
I don’t believe that and you shouldn’t work with an advisor that makes you think or feel like you’re dumb.
However, I think taking a step back and recognizing that financial planning is really just an organized collection of guesses about the future vs grasping at a false sense of precision about things we couldn’t possibly know, like what your life will be like in 12 months or 12 years, is a solid first step in getting the most out your financial planning and decision making.
Because once you understand that goal-setting is really making an educated guess about the future, you can begin to appreciate the process of financial planning which is continually refining our guesses over time as we gain more clarity, information, and experience.
But I digress . . .
As Charles Ellis once wrote as compared the game of tennis to managing your finances, successful investing isn’t as much about hitting winners as it is about avoiding unforced errors.
In other words, you should focus more on not making dumb mistakes than trying to outsmart everyone.
I think this applies to our money decisions as much as it applies to our broader lives.