Some random thoughts on navigating a challenging period in life:
Simple matters more when things get hard. Simple beats complex for a variety of reasons. It also makes life easier when life gets harder.
You don’t want your financial life to be complicated when life gets messy.
Simplifying your investment process, the number of accounts you have, your holdings, your personal finances, you bill payments, etc. makes it so you have one less thing to worry about when something bad happens.
Cash is a terrible long-term investment. Over the past 97 years the U.S. stock market has compounded at nearly 7% per year over and above the rate of inflation.
Three-month T-bills, a cash proxy, have grown at an inflation-adjusted rate of less than 0.3% per year.
One hundred dollars invested in the stock market in 1928 would have grown to nearly $1 million by the end of 2024. That same $100 in T-bills would have turned into just $2,360.
Keeping your money in cash is an awful investment.
Regardless of all that, cash is still an insanely helpful asset in the financial planning process.
Cash is a wonderful hedge against life getting in the way of your plans.
My lists are changing. The list of things I don’t care about is growing exponentially. There is a lot of bullshit in the world I’m more or less done caring about.
The list of things I do care about is shrinking, but my feelings for the important things are growing stronger by the day.
I’ve always been a big believer of focusing on what you can control and ignoring the noise but those ideas become more important as I age.
I’m embracing the mundane. I needed to get out of my own head this week so I’ve been trying to enjoy life’s simple activities — taking the dog for a walk, shoveling the driveway, cleaning the house, organizing a closet or two, watching an old movie, etc.
Doing something is better than doing nothing.
Sometimes you need to live in the present to stop obsessing about the future and sometimes you need to live in the present to stop obsessing about the past.
Life events are the risks that matter. I’ve received a lot of questions over the years.
Sometimes they’re about personal finance:
How much should I be saving?
When can I retire?
How much should I spend in retirement?
Sometimes they’re about markets:
Which direction are rates going?
How do I hedge against inflation?
When should I buy/sell this stock?
There are also all sorts of questions about taxes, insurance, which accounts to stash your money, when to pay off your mortgage, how to hedge specific geopolitical risks, etc.
But the most meaningful questions are always about life events — getting married, buying a house, having kids, getting divorced, changing jobs, retirement, death and all of the other stuff life throws at you.
Sure, returns, rates, bull markets and bear markets matter but it’s your circumstances and how they change that end up dictating your financial plan.
Life is for living. Money is for spending. My personal finance journey goes something like this:
I was a saver from an early age through some combination of my upbringing and personality. I didn’t make much money right out of college so adopting frugality as a strategy was both necessary and easy. I was probably too obsessive about saving until my kids came along. That flipped a switch and made me realize I needed more balance in life between saving money for the future and spending money in the now.
Seeing Jon die far too early further cements the idea that you need to enjoy life while you can. That enjoyment doesn’t always require money but I will be even more deliberate about spending on time and experiences with loved ones now that I’ve gone through this experience.
Most people are kind and good. It’s easy to be cynical about the world right now. If you lived your life completely online you would think everything and everyone is terrible. Technology and social media makes us all seem like worse people than we really are.
Going through the loss of a loved one has reinforced for me the idea that most people are genuinely kind and good. There’s nothing anyone can say that will make the pain go away but simply hearing from loved ones on a regular basis has helped with the grieving process.
The text messages. The phone calls. The I love yous. The hugs. The meals.
I’m overwhelmed by the feedback I received for There Goes My Hero.
People I’ve never met have been sharing with me their own stories of loss and grief. People who read the blog or listen to the podcast have been sending me condolences and notes of support all week.
This is one of those moments that restores my faith in humanity. Hearing from others helped put a smile on my face during a very difficult period.
Thanks to everyone for the kind words, condolences, personal stories, love and support.
I cannot express how much it means to me and my family.
Michael and I talked about Jon’s story, our journeys with grief and much more on this week’s Animal Spirits:
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Further Reading:
There Goes My Hero
Now here’s what I’ve been reading lately:
- The other side of enough (The Way of Work)
- Is $1 million still a lot of money? (Of Dollars and Data)
- Velvet ropes everywhere (Downtown Josh Brown)
- Never enough (Humble Dollar)
- Be aware of your own bubble (The Big Picture)
- The death of my father (The New Yorker)
Books:
