Morning Financial Reading, October 10
Here’s what I read regarding money, personal finance and wealth
management while procrastinating this morning:
https://moneywithapurpose.com/why-is-bashing-advisors-so-popular-with-fire-loggers/
Money With a Purpose comes out with a good piece about the
anti-establishment bent of the FIRE (Financially Independent, Retire Early)
movement. That’s really what he’s getting at when he mentions that FIRE
adherents tend to be somewhat hostile towards financial advisors and the
financial planning industry as a whole.
To be clear, I think the industry is painted with too broad
a brush by most of its critics, but is also well-deserving of popular ire.
FIRE adherents, like any grassroots internet-driven or
social media-driven trend, are deeply distrustful of traditional authority
figures and what we might deem conventional expertise. I think the recent
back-and-forth over Suze Orman’s comments on the FIRE movement is emblematic of
this trend.
Sometimes an investor or retirement saver needs to be kicked
in the teeth by reality, and self-revelation often takes too long or never
happens at all. It’s healthy to be confronted about poor choices, it’s also
healthy to be confronted by people who have very different views than your own.
I like to question everything – multiple times if possible. This is part of the
value that a financial advisor can deliver. I do think that hybrid advisory
services (like those offered by Vanguard and Betterment) can fill this role. In
some cases, social media communities may do the same, but I worry that they’re
too insulated and biased towards positively to give an investor on the wrong
path the gut-check they really need.
So you want to speculate. Do you have an edge? More
information than other investors? Are you relying on data and expertise to make an investment
decision, or are you going with your gut? Tony Isola gets to the heart of
whether a speculative idea is executable or not with his “Three Question Guide”
piece, another excellent contribution from the Ritholtz Wealth team.
My parents have planned very well and are completely financially
independent. I won’t be sandwiched by them – but I’ve seen personally the
financial, physical and emotional toll caring for a parent can take. I can
easily imagine my millennial friends caring for children, parents while still
trying to pay off their student loans. Ouch!
I love free financial apps – I have used Mint.com for several
years, I’m not a user but I’m a fan of Personal Capital as well – but you
should be aware of what’s lurking under the hood. This is a very basic overview
of where these applications are drawing their revenue from.
http://diversefi.com/2018/10/09/financial-independence-and-mental-health-2/
https://moneywithapurpose.com/gain-financial-freedom-know-your-why/
I put these two articles, one from DiverseFi, a financial
independence blogger, and another from Money With a Purpose, a chimera of
professional financial planner and personal finance blogger, together for good
reason. I think DiverseFi is illustrating a well-known problem, and Money With
a Purpose is identifying its well-known solution.
The interesting part, to me, is that the problems of mental
health I n financial independence so closely parallel the problems many
financial advisors have identified in retirees who are unprepared for their
retirements. For those who are financially prepared for retirement but not
emotionally, physically or behaviorally prepared to leave the workforce,
depression, anxiety and isolation are common issues no matter the age. Like it
or not, for many people work is a source of purpose, identity and self-worth –
especially for men. An unexpected retirement or a financial independence plan
focused only on financial matters provides people with little safety net
against these problems.
Recently, at Financial Advisor’s Inside Retirement
conference in Las Vegas, financial coach Mitch Anthony and several other
advisors discussed these problems in the context of traditional retirement. I
think a more extended discussion of these issues around financial independence
and early retirement is warranted.
I think Money With a Purpose is on the exact wavelength that
Mitch Anthony was riding in his EPIC Retirement presentation – the questions he
outlines in his “Know Your Why” post are very similar to the questions Anthony
suggested in his keynote. Sound financial behavior – and sound investing –
don’t have to be complicated, as long as you know why you’re doing it.
Yes, Virginia, there is a way to beat the market, one just
has to use the iron-clad laws of supply and demand. Good luck trying to
implement! Ritholtz Wealth’s Nick Magguilli uncovers a sure-fire way to better
investing results, then kicks us all in the gut by discussing the futility of
trying to adhere to a strict tactical strategy.
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