.Count the Cash

Jonathan Clements  |  November 16, 2019

When we think about portfolio building, we tend to think first about stocks. They’re our engine of investment growth—and the source of endless anxiety. Indeed, to make stock market investing palatable, we take all kinds of precautionary measures, including diversifying broadly, adding bonds, throwing in cash, purchasing gold and goodness knows what else.

But maybe we have this all wrong. Perhaps, instead, we should start with cash: how much we currently have in safe, liquid investments, how much we expect to receive in the years ahead and how much we’ll need in the near future. Once we have a handle on our cash situation, we’re free to invest the rest of our portfolio as we wish—including potentially stashing much or all of our money in stocks.

Sitting pretty. How much cash should we hold? In addition to a modest sum in our checking account to cover the next month’s bills, we should all hold some cash or cash-like investments, whether we’re in our 20s or our 80s. This money might sit in a savings account, certificates of deposit or a high-quality short-term bond fund.

Think of it as comfort cash. It can ease our worries, knowing we have a backstop if we have a surprisingly expensive month—and it can help us avoid the financial anxiety suffered by four out of 10 Americans, who apparently either couldn’t cover a $400 unexpected expense or, to do so, would need to borrow or sell possessions.

.Personal Lessons Learned Since The 2008 Financial Crisis

By Financial Samurai

 On September 15, 2008, Lehman Brothers went bust. I remember this day clearly because I made a $200 side bet with my friend over the weekend that the US government would bail them out. To my surprise, the US government didn’t rescue Lehman, and the stock cratered that Monday and never recovered.

 Despite all the economic devastation, I wish I could rewind time. I’d rather be 31 than 41, simply because I love life and want to live as many years as possible.

 The period between 2008 – 2018 was the most exciting 10 years of my life. Here are some of the lessons I have learned since the financial crisis.

Lessons Learned Since The 2008 Financial Crisis

 1)  It’s really hard to go all-in, even when you know you should. Despite telling myself over and over again that we were in the buying opportunity of a lifetime, I couldn’t convince myself to invest much more than my usual 401(k) maximum because my world was falling apart.

 A couple dozen friends had been laid off, including my best friend at the time, who worked at Lehman. I feared I might be next and would need as much cash as possible to hold me over just in case.

.The 10 Most Valuable Financial Lessons I Learned in 2018

By Trent Hamm  Updated on 01-10-19

 Getting Started

​Each year, during the period between Christmas and New Year’s, I sit down and look over what happened during the past year, what I can learn from that, and what I can apply from that to the year to come.

 I usually come up with a big handful of life lessons during that review, things I learned from situations in my life that didn’t quite go as I liked. What went wrong? Where did I go wrong? What can I do better?

 These life lessons spread across all spheres of life and usually number in the dozens. I tend to literally make a list of them as I review the year as a way to figure out how to do better in the coming year.

​Among the lessons I learned in the past year were 10 that have real personal finance implications, though some tend to branch over into other spheres of life. I thought it might be valuable to share those lessons, along with what I hope to do differently going forward.

 Lesson #1:  If the stock market is scaring you in terms of your future, you’re either not invested appropriately or don’t know what you’re invested in.

.One of the Toughest Things to Master for Your Financial Health

 Invested Wallet

When it comes to your life, you want to stay physically and mentally healthy. And this also applies to your personal finances, which is commonly called your financial health.

 While your physical and mental health is far superior to your financial health, it’s still crucial to work on this too. And as I know and you may too, finances can cause some serious stress.

 That financial stress can then put a toll on your body, mind, and relationships.

​Yet, when it comes to your personal finances and financial well-being there is one area that is critical to master: self-control. The challenge is, it might be the toughest thing to be consistent with throughout your lifetime.

 What is Financial Health?

Before we get into how self-control affects your financial health, I think it’s important we are all on the same page on the definition.

 Financial health is the term used to describe your own personal finances and how healthy it is. This includes things like how well your saving, what you put away for retirement, how little debt you have, etc.

 There is a bit more to it than that, but for the sake of this post, we’ll keep it that simple.

.Teaching People About Money Doesn’t Seem To Make Them Any Smarter About Money

From Market Watch  Oct 12, 2018   By Philip Fernbach & Abigail Sussman

Teaching people about money doesn’t seem to make them any smarter about money – here’s what might

 Making Financial Decisions is hard, but three promising ideas are helping Americans Overcome Barriers

If the average American went in for a financial checkup, he or she might get rushed to the emergency room.

Forty-four percent of us can’t cover a $400 out-of-pocket expense, and 52% of American households have no retirement savings. We seem to be chronically poor at making financial decisions. We commit costly mistakes across all areas of personal finance including decisions about savings, investing, budgeting and borrowing.

Diagnosing the problem is easy: We make mistakes because financial decision making is hard, and we lack an understanding of the decisions we face. Finding a cure is much more difficult. To many, the obvious treatment is financial education, but recent research suggests that financial education is not effective.

Some promising new ideas such as “just-in-time” education and “nudges” to help us make better decisions are starting to emerge as alternative approaches.

Ineffective Programs

Governments around the world have invested huge resources in initiatives aimed at improving financial literacy, such as the Federal Deposit Insurance Corp.’s My Smart program, which helps low-income individuals develop financial skills.

.How to Create a Financial Binder

Written by Sam

It’s a common worry. Am I spending more than I should? When are my bills due? Have I paid them? Am I on track to reach my financial goals? Am I going to be able to get out (or stay out) of debt? Financial worries are not only one of the greatest causes of personal anxiety; they can also be one of the biggest strains on a relationship.

Many people don’t have their finances well organized and therefore aren’t able to tell where they stand. Disorganized finances can have severe consequences; In the short-term, you may end up paying hundreds of dollars in late fees and penalties.

You may be digging yourself deeper into debt without even realizing it. In the long-term you won’t meet your high-level financial goals. Couples often end up re-hashing the same financial issues over and over again because they don’t have a way of tracking the decisions and progress they’ve made as a result of their arguments…er discussions. If your finances are not organized how can you ever have any hope of getting them under control?

The good news is that by taking one simple step you can start down the road of financial security and begin to get your finances in order. You can get a good overall view of your financial picture and establish a base from which you can build your financial future. It all starts with creating your financial binder.

What Is A Financial Binder?