111 | Titleist or Taylormade?

The specific investments that you use are like the brand of golf ball that someone might play.

Golf purists might appreciate the nuance of different brands or have eclectic personal preferences.

Non-golfers couldn’t be less interested or equipped to even have an opinion or distinguish between two different brands.

Either way, time spent discussing golf ball brands is either wasted or better done when shooting the breeze over a beer or coffee.

To actually be good at golf you have to be able to hit fairways, hit greens, and make putts - the brand of ball enhances these skills about as much as a couple of phone books would improve a toddler’s ability to drive a car.

Over time, the majority of investments start to feel a lot more similar than different, but for some reason once we’re managing them we can’t help but start acting like they will turn us into the financial equivalent of Tiger Woods circa 2000-2001.

We review investment options, we review investment performance, we give investment advice, and even help adjust your investment allocation if needed, but we do not manage investments.

110 | All You Need is a Fob

There are more than 20,000 mutual funds and ETFs in existence right now.

Anyone who thinks that someone can evaluate them all to discover the best ones is kidding themselves - we crossed that threshold a couple of decades ago.

As a result of this boom in options, we are now more overwhelmed with decision fatigue and confusion about what matters than ever before.

But there is a silver lining.

The redundancy and accessibility of options is greater than ever before. If we can’t get a specific investment, then we can easily find it’s twin brother, sister, cousin, or best friend with the click of a button.

Managing investments used to provide critical access, but now it’s an overpaid front desk clerk who’s watching everyone use a fob to get in the door.

We review investment options, we review investment performance, we give investment advice, and even help adjust your investment allocation if needed, but we do not manage investments.

109 | Wasting Time That We Don't Have

We can’t help it, but managing investments means that we would have to dedicate a lot of resources to investments: talking about them, reporting on them, disclosing them, administering them, and having our eyes glaze over them.

That’s not something that we want to do.

We can’t spend precious time, talking "shop" about investments when we could be extending the horizon on our income streams, refining our spending in a way that drives contentment, or setting money aside in a more intentional and accessible manner.

The behind the scenes work of administration and remaining compliant to industry regulations is substantial and better outsourced to financial technology companies that have figured out how to streamline this work and charge fees that have been trending towards $0 for decades.

The management of assets is like cutting your grass with scissors when there is a lawn company offering to mow it for free - it takes too much time, requires too many steps, risks missing a couple of blades, and gets to the same outcome.

We review investment options, we review investment performance, we give investment advice, and even help adjust your investment allocation if needed, but we do not manage investments.

Additional Resources

A Primordial Take on Asset Allocation by Christine Benz

108 | It Might Not Work

It seems we have forgotten the underlying tension in investing.

It might not work.

Partially because of the phenomenal returns of the past decade.

Partially because of how slick technology has made some investing look like a video game.

Partially because of the second-by-second price quotes that make it seem like the price is more important than the profit.

Partially because of the way investing and all of our investment options are marketed to us.

It's become too easy to think investment returns are a birth right or a handout from Oprah when they are actual ownership stakes in businesses.

Businesses with employees - the you and me's of the world - who are delivering goods and services for a profit - most days.

The key word in that last sentence is most, because it's not all.

Every business doesn't make it, which means every investment doesn't work.

But this isn't any different than other parts of life.

When an author is afraid that the word processor they use to save their work might not work, what do they do?

They save a second copy.

When a football team is afraid that the quarterback they have chosen as starter might not work, what do they do?

They sign a backup.

When a traveler is afraid that a new restaurant might not work, what do they do?

They find another option.

If we’re afraid an investment in a business might not work, what do we do?

We find another one, and another, and another, and another until we’re comfortable knowing that it’s OK that one might not work.

107 | A Crumbling Pillar: Detailed Plans and Projections

Borrowing from Carl Richards, "Certainty is a promise that can't be delivered."

Whether we realize it or not, detailed plans and projections are promises of certainty in disguise.

For a time, they answered the question that investment management never could, "What does all of this financial wealth mean to me?”

Over time, they've morphed into an annual exercise of attempting to calculate the uncertainty out of the future.

Inevitably, these “products” fall woefully short of contributing to real financial well being because uncertainty and change are the only guaranteed parts of your financial life.

We can all feel it in our gut, but it's hard to have the courage to say it out loud.

No one can calculate the uncertainty out of the future.

It's tough because we want a shortcut to peace, security, contentment, and freedom, but those things don't come from a spreadsheet.

The moment we begin speculating about the numbers of the future is the moment we abstract what we're actually trying to do with our money and our life.

The pillar of the industry is crumbling and we're building a new one.

We will reflect on the past, we will build habits and tweak mindsets, we will even project a couple of years into the future (as long as it is grounded in a verifiable reality), but we will not rely on a detailed, assumption-laden projection to give us a false sense of security about the future.

106 | A Crumbling Pillar: Assets-Under-Management Fees

Paying for advice based on a percentage of assets is an enormous improvement from paying commissions and sales charges when you buy specific investment products, but it still leaves a lot to be desired.

It doesn't take a PhD to see the incongruence of charging fees for one thing and delivering the value on everything else.

There is still an awkward conflict of interest when it makes sense to save more or consolidate assets.

There is still the reality that some people pay a lot more than others for the same experience.

It takes advantage of the "out-of-sight-out-of-mind" nature of deducting fees from an account that is rarely reviewed in detail.

It leads us to believe that investments must matter more than they do, because no matter how much we try to discuss everything else, the way you’re billed tells a story that is nearly impossible to re-frame.

The pillar of the industry is crumbling and we're building a new one - our fee is a simple, flat fee that is loosely based on complexity and ability to pay, but is never based on a percentage of assets under management.

105 | The Cost of Availability

As a kid, I remember friends’ parents who were doctors and carried a pager around when they were on-call.

Maybe I’m unique, but the pager did not seem cool. Maybe it was novel, but it wasn’t cool.

Any time I saw someone interact with a pager, they were being disrupted, they were annoyed, or their stress level changed pretty quickly.

The cost of this kind of availability was extremely high - missed sporting events or recitals, baseline dread of the next notification, tension in a marriage, shuffling of schedules, disappointment, miscommunication - the list could keep going if we wanted it to.

I think most people could recognize that being available around the clock, even for a day at a time, had a high intangible cost - it was obvious to see because the person had to physically leave whatever they were doing in order to “pay the bill”.

It’s funny how in a couple of decades, we’ve transitioned to every person on the planet carrying a “pager” around.

Slowly, we’ve all opted into the novel (not cool!) doctor lifestyle without realizing that the cost of availability hasn’t changed.

We don’t have to leave the space, we don’t get an invoice, and we don’t even have to swipe or tap to pay the bill, but you better believe that the vendor is getting paid in full.

104 | Homebuying Series: No Plans To Sell

Talk to any realtor, contractor, architect, mortgage broker, financial advisor, or friend about a home and the conversation will inevitably move towards resale value.

“Buy the smallest house on a good street…so you capture good resale value.”

“Renovate the kitchen or the bathrooms… because that’s where you capture the most resale value.”

“If we were to do this renovation…would it be good for resale value?”

But…

What if you had no plans of selling?

What if the resale tail didn’t wag the building-a-life dog?

The equation begins to change.

No plans of selling provides a different kind of freedom when investing in a home.

A quirky layout is no longer a flaw that you’re afraid for others to see but instead a feature that is part of the home’s DNA and your experience in it.

A bathroom renovation might be secondary priority to a play space, because the time with kids in the house is limited and a working sink, toilet, and shower are all that kids need if they’re busy having fun.

An over-budget addition might be hard to stomach in the moment, but the dollars spent will become fuzzier with time as the relationships with neighbors deepen and milestone moments in the home multiply.

Of course, this is not a rubber stamp to funnel every dollar you have into your home.

Nor is it a recommendation to cash in all your chips at once or satisfy every single one of your heart’s bougie desires.

It’s more a granting of permission to ask more than, “How will this impact resale value?” when evaluating how you want to improve your home.

What parts of your home will you remember the most as of today?

What parts of your home do you want to remember the most in a few decades?

If you’re not planning to sell and you’re using money to discover the answer to these questions, I think it’s OK to dance with the risk of over-investing in a home.

103 | Hindsight is Not 20/20

I don’t think hindsight is 20/20.

Yes, if you have a good memory, the technical facts of the story are easier to retrace once you have seen them play out.

But remembering the precise emotions, priorities, consequences, trade offs, relational dynamics, or rationale of a decision or event does not get clearer as time passes.

I think it gets infinitely fuzzier, because you can't ever fully recreate the moment right before something happened.

Whether it’s replaying the result of a game.

Or a hard conversation.

Or a job change.

Or reflecting on a big purchase.

Or reviewing past investment decisions.

Or criticizing the decisions of leaders and individuals in March 2020 or October 2008.

Considering hindsight 20/20 discredits the past self and torments the current self.

After the fact, we know what went according to plan and what created other challenges.

After the fact, we can’t recreate the moment in a way that respects the adrenaline-, emotion-, anxiety-filled decision that was made when the outcome was actually up in the air.

After the fact, we can’t objectively re-simulate the decision or event because this time we’re able to ignore the hypothetical worst-case scenarios that didn’t happen after the first take.

Hindsight makes it too easy to woulda-shoulda-coulda our way through life wondering why we, or someone else, didn’t get it more right the first time.

Once we can acknowledge that hindsight isn’t 20/20 then it becomes a little easier to extend ourselves some grace and put the what-ifs to sleep.

102 | The Cost of Convenience

Convenience used to be the cherry on top, but it’s beginning to feel more like the ice cream itself - the primary ingredient instead of a nice bonus.

I think it’s become that way because proximity and speed are easy to measure, so in a data-first world, it's only natural to calibrate the scale to measure closer and faster.

But there is a little more going on under the surface.

Every time something is more convenient than the last time, you can’t help but fall deeper into a game that can’t be won.

It can’t be won because convenience is a relative game.

Each “improvement” further closes the gap between wanting it and getting it, but it’s a gap that can’t be completely closed.

No matter how convenient life becomes (or how much our financial resources grow!), today’s desire will never be met yesterday. And this moment’s longing will never be satisfied a minute ago.

The tricky part is that there isn’t a ledger that tallies up this cost of unmet desires.

Instead, the costs reveal themselves very slowly and in ways that are hard to see.

Daily expectations that were once reasonable and dynamic are now unrealistic and unmet.

Slightly less convenient alternatives that used to be a good substitute become silly, even ridiculous, to consider.

Patience that was once a calling card is now perpetual frustration with the system.

And “throwing someone a bone” is replaced with a desire to cancel the people who can’t keep up.

Just because it’s easy to measure doesn’t mean it’s easy to optimize. And just because there isn’t a price tag doesn’t mean it’s free.

Additional Reading

The half-life of magic by Seth Godin

101 | A Crumbling Pillar: Managing Investments

Investments are a distraction.

For decades, we've tied financial advice to investments in a way that misleads, disorients, and confuses us to what actually matters when it comes to our financial well being.

There are plenty of things to discuss when it comes to investments, but the impact and importance of those things diminishes quickly once you check a few basic boxes.

How we generate sustainable income, find contentment in our spending, and ensure accessibility in our saving drives 95% of the feelings and outcomes that we experience with money, but we've tricked ourselves into believing that income, spending, and saving are stepchildren to a sexy investing strategy.

Just because investments are the easiest thing to market, deliver, and brag about doesn't mean we have to anchor our financial well being to them.

A pillar of the industry is crumbling and we're building a new one - we review investment options, we review investment performance, we give investment advice, and even help adjust your investment allocation if needed, but we do not manage investments.

100 | Good at Something I Hate

My mom will cringe when she reads that title and we try to correct our kids when they use that word, but I’m struggling to find a synonym right now.

Honestly, I strongly disliked my first professional role after college.

I enjoyed some of the people and am still grateful for those relationships. I learned valuable skills that I still use every day. I even feel pride when I tell people about my first job because of its prestige in the accounting world.

But working in cramped conference rooms until after midnight, documenting why some innocent A/P clerk kept a less-than-perfect paper trail, and missing out on plenty of evenings with my wife and friends is something that had a shelf life from the day I started.

But here is the irony - for as much as I disliked the role, I was pretty good at it. Not a Hall of Famer, but I certainly would’ve made the playoffs every year.

Pretty quickly the nagging question was, “If I’m good at this and I hate it, how good could I be doing something I love?”.

Of course, the opportunities for promotion were substantial. The income potential was seemingly infinite. The promises of paid sabbaticals were sexy on the surface. But I never envisioned myself climbing the ladder if I was grumbling and crying all the way to the top.

I worked my last day in that role in September 2013 - I don’t think it was the 13th but it would be cool if it was. I can still remember sitting across from the partner of our group in my last week as he said, “I think you’re making a big mistake.”

Depending on your definition of “mistake”, the jury may still be out on that one.

But today it is September 13, 2023 and this is Post 100. On January 1 of this year, I set a goal of 100 posts in 12 months.

I’m not claiming they are all good, but completing a 12-month goal in less than 9 months feels like something that happens when you love what you’re doing.

There’s still a long way to go, but that long runway would have made me throw up in September 2013, and now it gets me excited.

It feels like we’re starting to answer that nagging question instead of just wondering about it.

99 | Life Below the Personal Record

At some point in any athletic pursuit, we experience some level of peak performance - the first lifetime peak is usually a season where physical ability covers over most other shortcomings.

It’s different for everyone, but often the first peak coincides with a season of life characterized by youth, unrealistically high frequency of reps, and fewer competing priorities.

Over time, the memory of the peak tends to lead us one of two directions - it can inspire and remind or it can discourage and haunt.

When we are haunted, inevitably we push ourselves to injury, grumble about the good old days, or throw in the towel because it’s no fun to play if we can’t compete with a younger self.

A lifetime of investing isn’t that different from that of an athlete.

The S&P 500 reaches a new all-time high on ~5% of its trading days. All-time highs are exhilarating, confidence-instilling, and full of dopamine - much like a new personal record.

But this also means that ~95% of its trading days, the S&P 500 is the veteran athlete wishing that it could be more like it’s younger self.

That’s a lot of days longing to beat or even match a personal record.

On the investment side of things, the haunting looks like grumbling about recent performance, reaching for extra return in a reckless manner, or deciding that you might as well stop investing before it all goes to $0.

Life below the personal record can drive us crazy not because it’s that bad, but because it’s relatively worse than where we once were.

The trick is not using brute force or discovering a fountain of youth that can take us back to a previous time.

It’s more of a mental game than that.

Some blend of recognizing that you can’t set new personal records in perpetuity, so when the times are good you can actually recognize that they are in fact the good times. Thank you, Andy Bernard.

And an understanding that the only thing that allows you to set a new personal record is your mindset while you’re living below the last one.

Additional Resources

Compounding in the Stock Market is Messy by Ben Carlson

Same Return. Different Emotions. by Money Visuals

98 | My Thoughts on Investment Properties

Once you find an actual property that is available for purchase, I think it makes sense to figure out an estimate of what you could charge for rent.

If that level of rent is acceptable to you, then I think it could be quite worthwhile to pursue as an investment.

The end.

P.S. It’s also OK if generating income isn’t the primary reason for pursuing an additional property.

97 | Communicate, Communicate, Communicate!

Everyone loves to give the advice that you just have to communicate better. “Communicate, communicate, communicate!”

At times, I have found the advice to be somewhat abstract and hard to conceptualize in a practical way.

At the core, I think the advice is trying to acknowledge the gap the often grows between our whats and hows and our whys.

For some reason, it becomes more awkward to share our whys over time. Kids don’t seem to have a problem doing it, but it doesn’t feel like it’s the same for adults.

Once we stop talking about our whys, then we’re stuck trying to connect the dots between the whats and hows that we observe.

Look no further than personal finance, to find an arena that begs us to focus on the whats and hows without regard for the whys time and time again.

Recently, I was chatting with a friend who desires to care for his mom as she moves into the next phase of life.

He has a sibling who deeply cares for his mom's well being too.

In this particular case, the friend was primarily considering whether or not it made sense to buy a house for his mom to rent from him to solve her transition need.

The sibling of the friend quickly wondered why his brother even needed to be involved at all - the mom had the resources to buy anything she could need.

To add an easy layer of possible misunderstanding, there was a significant difference in financial savviness of each sibling - one was starting with the only way he could think of that might work and one knew all the ways it could work.

Not to overstate it, but it was easy to see how a single what and how was quickly taking the stage ahead of the original why and running the risk of leading to misunderstanding, unnecessary tension, and in a worst case scenario diluted levels of trust.

Refreshing each sibling’s perspective on what they were trying to accomplish was 10x (maybe infinitely!) more productive than discussing the ideal property, the impact of interest rates, the best structure of a lease, or the down payment required.

I think the abstract advice of “communicate, communicate, communicate” is really getting at tell your why and tell it with clarity, authenticity, and truth - even when it is hard or a little awkward to do.

96 | The Cost of Doing Life

The idea of 3% waste came from a friend who read it in a tweet. I’ve searched to try to give credit, but alas, I have not found the original thinker. I imagine and hope he or she would appreciate this elaboration on the idea if they were to come across it.

The general gist is that there is a baseline level of waste in everyone’s experience with money and…

That is OK.

If you’re wasting more than 3%, you’re probably being a little aloof.

If you’re wasting less than 3%, you’re probably trying to control more than can be controlled.

But for every $100,000 in income a year, we’re talking about $3,000 that will be regretted, second-guessed, forgotten, or just have less impact than originally hoped for or expected.

The 3% figure passes my sniff test, but I’d probably call it the inevitable “cost of doing life” instead of “waste”.

We’re talking about…

The convenience meal that totally disappoints.

The monthly subscription that continues many months past the last use.

The cost of groceries at a tourist destination.

The exercise equipment optimistically purchased only to collect dust in the corner.

The price increase because you waited a few more weeks to buy something that was cheaper when you first started looking.

The hidden fee that presents itself at the 11th hour of a decision.

The list is endless, but the feelings of frustration or disappointment are often eerily similar.

I think the rule of thumb is less a hall pass to freely waste, and more of a clipper for financial hangnails that have the ability to drive us crazy and even hurt if we don’t deal with them and move on.

These things don’t have to go on a permanent ledger to remind us of our mistakes.

They are better used as a mental note that might better inform the next time, and a gentle reminder that perfection is often the enemy of very good.

95 | A Gray Skill

Generating surplus and using surplus are two totally different skill sets.

In the simplest terms, generating surplus is ensuring that your income exceeds your spending over time.

It's a black-and-white skill - it’s relatively easy to measure, the objective is clear, and the feedback is direct - you either do it or you don’t.

For some people, high levels of income serve as the cornerstone for generating a surplus. For others, high levels of intentionality in spending serve as the cornerstone for generating a surplus.

It doesn’t matter which approach you take, but at some point, you have to learn how to generate a surplus.

Once you’ve mastered generating a surplus, the process of actually using the surplus is an entirely different puzzle - a gray skill.

It’s hard to know what things or experiences are worthy of surplus funds.

It’s not always clear what will be accomplished by using the funds.

Because the objective isn’t defined for us, there is a decent chance we will lose track of it.

And whether we like it or not, using surplus is an indirect way of beginning to define “enough”.

If you can’t hone the skill of generating a surplus, it’s going to be an anxious lifetime of overdrafts, counting down to paychecks, and shuffling around debt.

If you can’t hone the skill of using a surplus, it’s going to be an anxious lifetime of always-changing goal posts, second guessing, and wondering how much will ever be enough.

Where generating a surplus seems to provide a baseline level of security, peace of mind, and margin for error to accommodate the inevitable uncertainty of the future.

Using a surplus seems to help sow the seeds of purpose, contentment, and satisfaction that we all so deeply long to experience.

Two different skill sets that get at very different things - both worth refining over time.

94 | The Story is All That Matters

It’s hard to keep track of the story.

Early in life, one dollar comes in and one dollar goes out and it’s easy to say, “This dollar paid for that thing.”

It doesn’t stay this easy forever though.

The number of transactions explodes, the perspectives change, the preferences proliferate, the people multiply, and frankly, there just isn’t enough time to do this kind of accounting.

Slowly, and then quickly, the story in our head begins to diverge from the story on paper.

“Our spending is out of control” is the story in our head when the story on paper is that it’s really only a lot of $5 dollar coffees or we don’t see eye to eye on every single spending decision or we’ve had a flurry of necessary, but large purchases recently.

“We are bad investors” is the story in our head when the story on paper is that we got a little unlucky with the precise timing of investing that $10,000 or we struggle to keep track of all our accounts or we forgot about the 7 years of gains that preceded the most recent dip.

“If only we had more income” is the story in our head when the story on paper is that if we saved a little bit more or spent a little bit more intentionally or paid off that debt or boosted our cash on hand then we could feel the peace of mind or relief that we desperately desire.

More than any innocent naïveté or technical oversight, I think most financial stress or frustration can be chalked up to the story in our head diverging from the story on paper.

The good news is that just because we can’t say “this dollar paid for that thing” doesn’t mean that we can’t bring the stories back together.

93 | See Then Spend

Two of our three children have allowance jars. They get $1 per week that is disconnected from any chore or activity within the household.

My wife noticed that the jars tend to accumulate dollars when the kids are not thinking about them, but if the jars are top of mind, then there is always something to buy.

If they see, then they spend.

This feels eerily similar to how many of us still operate our financial household in adulthood.

We look at our account balances and then decide to spend dollars if there are enough there.

Or we look at our account balances and then decide not to spend dollars because there isn’t enough there.

Both modes of operating are just like a kid with an allowance jar - see then spend.

The challenge is that in either case, the money is at risk of driving the decision more than the values.

If there is more, then spend. If there is less, then don’t spend.

I think we all want the freedom to be able to spend or not spend without having to look every single time - decisions that aren’t determined by the dollars.

Of course, I’m not granting permission to spend without ever looking - that inevitably leads to a nagging shortfall of contentment or a perpetual uneasiness about viability.

I’m more describing a special freedom that accompanies a consistent routine of reflecting on spending and saving - without judgment, shame, or blame - that begins to allow values to drive decisions instead of account balances.

We can spend, then we can see.

This freedom isn’t tied to dollars in the jar, but a willingness to exchange 1,000 account balance refreshes or 100 “missed budgets” with 1 honest reflection.

Additional Reading

The freedom loop by Seth Godin

92 | Debt as a Family Member

I once had a teacher who said that any customer who makes up 25% of your revenue is a member of your management team and a customer who makes up 50% of revenue is on your board of directors.

This concept captured the hidden costs that often accompany something that seems so good on the surface.

The big contract is awesome in all the ways that you can measure, but it’s often less awesome in the things that are hard to measure.

It seems like debt can play a similar role in our own finances.

The larger it grows the more pull it has on our decisions and the more it begins to resemble an unwelcome advisor or a demanding family member.

Debt can seem so innocent and convenient until you realize that you’re the only person that can make it go away.

Debt has a way of calcifying a certain level of income as the only one that can work for a household.

Debt loves to see the future self footing the bill for the past self.

Debt has a way of delaying plans or completely eliminating the opportunity to pursue something unique, new, or different.

Debt has a way of making peace, contentment, security, and flexibility seem always out of reach.

Debt has a way of snuffing out dreams before they’ve even crossed your mind.

Debt has a way of looking your good idea right in the eye and saying “Nice try, but I don’t think so.”

Debt is tricky because it’s a useful tool all the way up to the point that it grabs the pen and starts writing a different story than the one we would write for ourselves.