Rank #1: Trump Wins. Now What?
#132 What should you do about Trump presidency? And how the truth was the real loser in this presidential election.
Nov 09 2016
Rank #2: Financial Independence Is a Choice
Why true financial independence means eliminating financial vulnerability including not being overly reliant on stock market appreciation.
Topics covered in this episode include:
- What does it mean to be financially vulnerable.
- What are the two paths to financial independence.
- Why we shouldn’t stake our financial independence and early retirement on the historical performance of stocks and bonds.
- What are the rules of thumb we can use to develop reasonable assumptions for stocks and bonds and how those assumptions will lead to lower portfolio balances compared to using historical returns.
- What has historical earnings growth been for U.S. stocks.
- Why stock buybacks will be less in the future due to high debt balances unless companies grow their revenues and overall earnings.
- How are actions lead to financial independence even when it is difficult.
For show notes and more information on this episode click here.
- [0:17] Being financially independent begins with a decision.
- [2:33] Protecting yourself against financial vulnerability.
- [4:14] Should you solely rely on investment returns for financial stability?
- [7:52] Estimating the returns of asset classes.
- [13:40] Earnings per share drives the returns of the stock market.
- [17:31] Build an active and flexible strategy for financial stability.
- [22:49] Uncertainty doesn’t negate the positive effect of small actions.
Oct 02 2019
Rank #3: Investing Won't Make You Rich
#119 The primary role of investing is to preserve your wealth not grow it. How then do we grow our wealth?
Aug 10 2016
Rank #4: How To Become Wealthy
The three-step plan for becoming financially wealthy and how to be wealthy without the money.
In this episode you’ll learn:
- The results of two recent surveys on wealth, investing and retirement planning.
- How much money do people believe they need to consider themselves wealthy.
- How is wealth distributed across the U.S. population and how wealthy are Americans?
- Why you need a simple financial plan.
- What are the three steps to becoming financially wealthy.
- How to live like you are already wealthy.
For show notes and more information on this episode click here.
- [0:16] Schwab and Stash survey results.
- [2:49] Saving vs. living paycheck to paycheck.
- [4:29] How much does one need to be considered wealthy?
- [7:44] The value of social security.
- [9:23] The historical distribution of the country’s overall wealth.
- [11:33] The importance of having a plan.
- [13:38] Step One: increase your income.
- [15:10] Step Two: increase your savings percentage.
- [16:44] Step Three: increase your investment returns.
- [23:57] It’s not about optimization. It’s about diversifying and learning.
- [25:20] How to live like you are wealthy today.
May 15 2019
Rank #5: Is There An Indexing Bubble?
#163 How an indexing bubble is manifest, why most active managers underperform and how individuals can structure their own quasi index fund that outperforms the market.
Jun 28 2017
Rank #6: Should You Buy A Vacation Home?
#130 How changes in financial circumstances, property markets, zoning rules and personal taste can make owning an illiquid vacation property a risky proposition, but why we bought our dream place anyway (and then sold it).
Oct 26 2016
Rank #7: What You Need To Know About Retirement Calculators
#161 How retirement planning and retirement spending calculators work and what are some of their flaws. Why figuring out how much money you will have when you retire and how long it will last is a lot like the work hydrologists do to figure out whether Phoenix or Los Angeles will run out of water.
Jun 14 2017
Rank #8: Do You Have Enough To Retire?
#149 How to estimate how long your assets will last in retirement and the steps you can take to take make them last longer.
Mar 15 2017
Rank #9: The Debt Ceiling—What Happens If the U.S. Defaults
#169 What could happen if the U.S. Congress doesn't raise the debt ceiling and defaults on U.S. financial obligations, and why does Congress wait until the last minute before it acts on these things.
Aug 16 2017
Rank #10: Should You Invest In Individual Stocks?
#3 Why investing in individual stocks can be so intoxicating and dangerous. What you should know before you try. Show notes at https://moneyfortherestofus.com/should-you-invest-in-individual-stocks-003/
May 18 2014
Rank #11: Should You Pay Off Debt Or Invest?
#188 How our net worth is more than our financial capital but includes our lifetime earning capacity or human capital. What role does debt play in investing in human capital and how our human capital impacts how we allocate our financial investments. Why stocks aren't less risky in the long-term. How to invest a lump sum payment and how I recently did so in today's market environment. More information, including show notes, can be found here.
At some point in our lives, we all have to deal with the issue of debt. It’s a specter that hangs over our heads and gives us an uneasy feeling until it is gone. Debt has a cost, naturally so because it demands interest all the time. A question that comes up often is whether or not it is better to pay off debt immediately, primarily because it IS debt, or if a better return can be achieved, should available money be placed into investments instead? You could run the numbers and figure out what looks best on paper and go with that. But the answer is honestly not that simple. This episode is designed to walk you through many of the issues that should be considered when answering the question.
If it costs you less numerically to pay interest on loans than you could make on investments, you should invest instead of paying off debt, right? Maybe it’s not that simple
Let’s do the math. If you are paying 5% for your home mortgage and have a lump sum of cash available to pay it off, but you also have the opportunity to lend the money to a real estate crowdfunding platform with a guaranteed return of 9%, isn’t it true that you would make 4% more by investing in the crowdfunding platform than you would if you paid off the mortgage? Yes, that’s what the numbers say, but there’s more to be considered. You want to think about things like human capital, the nature of the debt, and the mental cost you bear for having the debt hanging over you.
Most people should try to do both: invest and pay off debt. Here’s why-
When it comes to the choice between paying off debt with available funds or investing those funds elsewhere, there is no cut-and-dried answer that fits everyone. But after doing his research in thinking through the issue, David feels that most people should try to do both. While there is a psychological benefit to paying off debt, there is also the knowledge and discipline that comes from investing.
In This Episode You’ll Learn
[0:46] Welcome to the show – and could you help spread the word?
[1:55] Should you pay off student loans first or put your cash into investments?
[4:20] We’ve got to consider the cost of developing “human capital”
[9:40] What is debt and how does short-term VS long-term debt apply
[12:45] How do human capital issues impact how we invest?
[16:13] Why most people should try to do both: invest AND pay off debt
[22:50] Should a lump sum be invested all at once or dollar cost average it?
Jan 17 2018
Rank #12: Where Should You Invest Your Cash Savings?
#220 How to evaluate cash savings options at banks, credit unions and brokerage firms. Why are yields on cash savings so much higher than a few years ago. How to tell if your bank or credit union is in experiencing financial difficulties. Thank you to Blinkist for sponsoring this week's episode.
For show notes and more information on this episode click here.
- [0:10] All about banks, credit unions, and the pros and cons of cash savings
- [4:47] How can banks and credit unions become financially unstable?
- [14:25] The Federal Reserve is setting a new short term interest rate target
- [15:55] What tools does the Federal Reserve have to keep short-term interest rates in line with its target?
- [19:20] There are other options for investing your cash savings
- [25:49] Is it really worth pursuing multiple investing options for your cash savings?
Sep 05 2018
Rank #13: Is It Possible To Win At Trade?
Apr 20 2016
Rank #14: Do We Really Need Growth?
#166 Why enterprises, industries, and economies can't grow at all costs but need to enrich humanity and strive for permanence and sustainability through regeneration.
Jul 26 2017
Rank #15: Why Health Insurance Premiums and Prescription Drug Prices Are Exploding
#123 How pharmaceutical companies use of maximum pricing power is leading to double digit annual increases for prescription drug prices and health insurance premiums.
Sep 07 2016
Rank #16: Finding Simplicity On Other Side of Complexity
#129 Why we need to embrace complexity in order to find lower cost, less stressful solutions to challenges including with investing. Plus is investing moral?
Oct 19 2016
Rank #17: What If Everyone Starts Indexing?
#121 How more and more indexing via ETFs leads to market fragility, lower diversification and herd behavior, but why most investors should index anyway.
Aug 24 2016
Rank #18: Four Investment Lessons From Warren Buffett
#194 Four investment lessons from Berkshire Hathaway's fiscal year 2017 Shareholder Letter with additional insights from Howard Marks and Seth Klarman. More information, including show notes, can be found here.
Every year, Berkshire Hathaway releases a letter written for their shareholders filled with information on their performance, portfolios, and investments. On this episode of Money For the Rest of Us, David digs into the 2017 letter and discusses four investment lessons Warren Buffet shares. It’s filled with great insights that any independent investor shouldn’t miss, so be sure to check out this informative episode.
Investment Lesson #1 – Use debt prudently
Buffett writes in this letter, “Investing is an activity in which consumption today is foregone in an attempt to allow greater consumption at a later date. ‘Risk’ is the possibility that this objective won’t be attained.” On this episode of Money For the Rest of Us, David encourages his listeners to utilize debt in such a way that maximizes future opportunities while also managing the risk that comes with taking on debt. He discusses the idea of “float” money, how one investor could have avoided losing half of his portfolio, how to manage margin calls, and why you have to be confident in your decisions as an independent investor.
Investment Lesson #2 – Keep your eyes open and focus on a few fundamentals
It takes patience, but independent investors can focus on the leading edge of the present and invest in ways that major corporations may not be able to do. One must simply be aware of the opportunities that are occurring right now as well as focus on a few fundamentals: valuations, economic trends, portfolio drivers, asset classes, etc. David quotes Buffet on this episode and explains that “Though markets are generally rational, they occasionally do crazy things. Seizing the opportunities then offered does not require great intelligence, a degree in economics or a familiarity with Wall Street jargon such as alpha and beta. What investors then need instead is an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals. A willingness to look unimaginative for a sustained period – or even to look foolish – is also essential.”
Investment Lesson #3 – Stick with easy decisions and avoid excessive trading
Unfortunately, trying to outsmart the market can lead to short-term gains but longer-term mediocrity in investing. David outlines a bet that Warren Buffett made with Protégé Partners and how Buffett learned that sticking with the big, easy decisions often pays off more than getting caught up in the minutia of constantly buying and selling. By making infrequent, larger decisions an independent investor can make better progress in their portfolio.
Investment Lesson #4 – Be willing to be early and look foolish
Investing is never a guaranteed game. All investors have a fear of looking foolish after making a decision, but Buffett explains that “A willingness to look unimaginative for a sustained period – or even to look foolish – is essential.” David talks about the importance of gaining experience, not becoming caught up in the crowd mentality, and understanding that the “dust never settles” when it comes to finances. There will always be risks to take, and timing can be unpredictable. But with considerable risk comes comfortable reward. For more great information on the 2017 Berkshire Hathaway Shareholder Letter, be sure to listen to this episode of Money For the Rest of Us.
[0:46] David introduces the topic for this episode, Four Investment Lessons from Warren Buffett
[2:15] Lesson #1 – Use debt prudently
[12:46] Lesson #2 – Keep your eyes open and focus on a few fundamentals
[17:17] Lesson #3 – Stick with easy decisions and avoid excessive trading
[24:00] Lesson #4 – Be willing to be early and look foolish
Feb 28 2018
Rank #19: Clues To The Next Financial Crisis
#155 How panic caused the great financial crisis and what to look for to see if it is happening again.
Apr 26 2017
Rank #20: Please Save More
#83 Why individuals need to save more for retirement and how to figure out how much more you should save. Show notes at: http://moneyfortherestofus.net/mny083-please-save/ To sign up for the Money For the Rest of Us Insider's Guide text the word INSIDER to 44222.
Nov 18 2015