“Like vegetables, diversification sounds healthy but doesn’t always taste good. With true diversification, there will always be something in your portfolio that stinks.”
— Brian Portnoy, from his book The Geometry of Wealth. He says diversification is “Sensible…but also annoying.”
Tune out the noise
“News is the cattle prod that transforms sound financial strategies into foolishly frenetic activity. I enjoy following the market’s daily drama as much as the next person. But let’s be realistic: It’s about as meaningful as an episode of the Kardashians.”
— Jonathan Clements, writing on his Humble Dollar blog about the dangers of taking in too much market news.
Protecting yourself from... yourself
“There are many steps we can take as investors to shield ourselves from the worst aspects of our emotional behaviour, but one of the most effective, by far, is process, process, process.”
— Wealth manager Carolyn Gowan, suggesting on her blog, The Financial Bodyguard, how investors can avoid overconfidence after such a long bull market. Read the Full Article
What’s your Plan B?
“…planning to delay retirement isn’t the life raft it seems to be, and it doesn’t always translate into reality.”
— Steve Wendel, Morningstar’s head of behavioral science, warning that planning to work longer is not the solution to a savings shortfall many people believe it is. Morningstar research found about half of people retire earlier than planned because of health issues or job changes. Read the Full Article
“When you consider the modest financial resources that most workers have accumulated and the longer lives we’re all living, the math just doesn’t add up to workers’ expectations about when they can retire and what their standard of living in retirement will be.”
— CBS Money Watch Columnist Steve Vernon, in an 8/24/18 article. He cited research from the Transamerica Center for Retirement Studies, showing that almost two-thirds of today’s workers are confident they’ll be able to fully and comfortably retire from the workforce while at the same time the median retirement savings is just $71,000. Read the Full Article
It’s not a piggy bank
“Many young retirement savers seem to be missing the point.”
— CNBC’s Sarah O’Brien, reporting that 60% of workers ages 18-34 have already taken money from their retirement accounts. More than one-third of those who’ve borrowed from their accounts or taken early withdrawals said they used the money to “make a big purchase, go on vacation or spend it on themselves or family.” Read the Full Article
What could go wrong?
“It’s hard to bet against this market, but then again, when you can’t see any problems, that’s usually when the market gets nailed. So we want to be careful.”
— Richard Weiss, chief investment officer of multi-asset strategies at American Century Investments, quoted in a CNBC article. He’s been reducing risk in his firm’s target-date funds designed for investors with fewer than 20 years until retirement. Read the Full Article
Matt Bell is Sound Mind Investing's Managing Editor. He is the author of four personal finance books published by NavPress and two video-based small group resources. Matt speaks at churches and universities throughout the country and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.
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