.Why We Go Wrong

John Lim | January 16, 2021

I’VE LONG BEEN flummoxed by the difficulty people have managing money. It all seems so intuitive: Save, invest, repeat. Buy more when the market falls and a lot more when it crashes. Rebalance by adding more to losing asset classes—which today means buying value and international stocks.

Now, don’t get me wrong: I’m no financial genius. I’ve made my share of blunders. But I also know that being a do-it-yourself investor has saved me boatloads of money. When I’ve encouraged colleagues to do the same—imploring them that “it’s really not that hard”—I’ve received only steely stares and blank looks.

It’s slowly dawned on me that the financial demons people wrestle with are real and of Herculean proportions. Finance is a minefield that few navigate without getting maimed. It’s replete with mirages—what you see is often not what you get. Our instincts hurt us more often than they protect us. Actions that are sensible in every other realm of life lead us astray in finance.

.Money Lessons From Dr. Martin Luther King Jr.

By Dave @ Accidental Fire · Published January 18, 2019

Martin Luther King Day will be celebrated this coming Monday in America. It’s a federal government holiday, so I’ll be off. As a semi-retired and semi-quasi-professional blogger and graphic artist, I wasn’t planning on working anyway.

Sadly, many companies in the private sector do not recognize this holiday. So many out there will be working away, fighting to pay off the loans on their ill-advised auto purchases.

Speaking of which, in a speech two months prior to his assassination, King had this to say:

Do you ever see people buy cars that they can’t even begin to buy in terms of their income? You’ve seen people riding around in Cadillacs and Chryslers who don’t earn enough to have a good T-Model Ford. (Make it plain) But it feeds a repressed ego…

You know, economists tell us that your automobile should not cost more than half of your annual income. So if you make an income of five thousand dollars, your car shouldn’t cost more than about twenty-five hundred. That’s just good economics….But so often, haven’t you seen people making five thousand dollars a year and driving a car that costs six thousand? And they wonder why their ends never meet. That’s a fact….

.Whole New Game

Joe Kesler | January 19, 2021 Humble Dollar

BASEBALL USED TO BE a game where managers would go with their “gut.” But Brad Pitt changed everything. In the movie Moneyball, Pitt played Billy Beane, the first baseball general manager to use data analytics to great success—and suddenly it was all the rage.

Today, from a typical game, seven terabytes of data are gathered, everything from the arm angle of every single pitch to the exit velocity of hit balls. Teams then interpret these numbers using sophisticated algorithms, so managers have the insights necessary to make decisions based on statistical probabilities rather than intuition. Big data analytics now drive baseball decisions on and off the field—because the process has proven to work.

The traditionalist in me revolts at this dehumanization of baseball. But the investor in me sees an opportunity to learn from baseball’s experience. I see two key lessons.

.There Is No Such Thing As 100% Safety, There Are Only Trade-Offs

January 17, 2021 · by The Escape Artist · in Investing ·

Like many other people, I get emails. One thing I noticed about these emails in 2020/21 is that many of them ask whether I am “staying safe”? Sadly not…I have been involved in that dangerous activity called “life”. Scientific studies show that 100% of lives end in death.

Perspective

When I was at primary school we learned about something called “history”, a place in the past where many interesting things happened. For those not familiar with history, it was not always safe. There were wars. There were plagues. There were papercuts. I don’t have enough space in a 1,500 word blog post to cover everything in “history” but a lot of dangerous stuff happened, health & safety be ******.

This makes me wonder. Did we get more risk averse in recent years? Did we come to take safety, comfort and convenience for granted? Has a cult of safetyism, an extreme form of desire for safety, taken over our schools, universities and our public discussions?

.9 Financial Legends And The Habits That Made Them Wealthy

Ethan Rotberg Sat, January 16, 2021

Want to be the next Warren Buffett or Oprah Winfrey? You would do well to imitate their habits then. Sure, you probably won’t amass the same kind of wealth as those iconic billionaires, but you don’t become wealthy — and stay wealthy — without some smart habits and strict discipline.

Here are 10 spending, saving and investing tips you can apply to your own life, straight from 10 legendary financial experts and business tycoons.

1. Jim Cramer: Get to know yourself

While you’re growing as an investor, don’t try to find the perfect strategy for the perfect portfolio, says Mad Money host Jim Cramer. The key is to develop a strategy that’s perfect for you.

"The truth is, there’s no one-size-fits-all approach to investing, and anybody who tells you differently is either dangerously misinformed or flat-out lying to you," Cramer says.

.The Habit of Becoming Wealthy

By Mr. Refined · Published June 8, 2018 · Updated January 5, 2021

If You Can’t Beat Them, Join Them

The Habit of becoming Wealthy Habits of the Ultra-Successful

There I was, scouring the internet, podcasts, and blogs for the knowledge to outpace all of my contemporaries in success. I had been studying self-made millionaires and billionaires for a couple of years. Reading biographies, the books they publish and studying their decision trees throughout their careers.

I knew that a select few top performers achieved extremely more significant success than others that started with the same amount of time, intelligence, education, and money. So what made them different? What sets them apart? Why do some of my high school classmates that never went to college make more money than a ReFIned man with a few degrees and an indomitable spirit? How can I be one of the top performers and put myself in positions needed for advancement and success?

.How to Teach Kids About Money, Saving & Investing: Lesson 7

By Mr. Refined · January 5, 2021 · Updated January 12, 2021

What Stocks To Invest In For Kids

We discussed a lot in this series but there are a few more important points to cover. What stocks to invest in for kids is a keystone to this entire conversation. As you know, I am an insatiable optimizer, so, what complicated derivatives and cover option did we go with? Well, hold the phone, this is not my investment portfolio this is my kids’ investment portfolio the investment products must be suitable for the investor, so let’s look at how this all played out there is a lesson to be had. But, before we get there, one must inspire before one empowers.

Now, I could put my kids in a boring ol’ index fund for low fees and the simplest possible management over time. But that is zero fun for a kid. These may be popular investment products in the FIRE community but that simply won’t cut it for an eight-year-old.

.The 8 Safest Ways to Invest Your Money if You’re Terrified of Risk

by Robin Hartill, CFP®

Think back to what the stock market looked like to you in March 2020, aka, the apocalypse. Did it look like:

A.) The biggest bargain sale you’ve ever seen in your lifetime? Or B.) A burning pit of money that was about to incinerate your life’s savings? If you answered “B,” you probably have a low risk tolerance. You worry more about losing money than missing out on the opportunity to make more of it.

Being cautious about how you invest your money is a good thing. But if you’re so risk-averse that you avoid investing altogether, you’re putting your money at greater risk than you think.

Do Safe Investments Actually Exist?

When you think about the risks of investing, you probably think about losing principal, i.e., the original amount you invested. If you keep your money in a bank account, there’s virtually no chance of that happening because deposits of up to $250,000 are FDIC insured.

Don’t Worry - Be Resilient By Charles Hugh Smith

Reduce fragility and vulnerability

At some point, absorbing more information about the unsustainability of modern society yields diminishing returns. It becomes emotionally draining and thus counterproductive. Part of this exhaustion results from recognizing our powerlessness within the Status Quo, where independent thinking and structural innovation are intentionally winnowed out as threats to existing institutions and industries.

Another part arises from the burden of knowing that the supposedly permanent Status Quo is far more vulnerable than generally believed. I have described the psychology of knowing what lies ahead in The Burden of Knowing. A related factor that is never publicly discussed is the negative impact on our mental health of all the propaganda that we are force-fed by the Mainstream Media (MSM). When truth is incrementally undermined by massaged data and behind-the-façade manipulation, we lose faith in key State and media institutions and suffer from a propaganda-induced disconnect between what we see and what is reported as fact.