Monthly Links

September Links: Picking Our Best Path

Posted by John Charles Kernodle on October 27, 2015  /   Posted in Monthly Links

It’s hard to believe that September is almost gone. School has started, football season is in full swing, and the days are getting shorter. This month’s links talk a little bit about money and a little bit about growing older.

Why More Seniors Are Forming Their Own ‘Villages’

As we get older, we face more questions about how to manage our day-to-day lives. We don’t want to be a burden on family and friends, but we also don’t want to give up the lives and routines we’re used to. A few years ago, I heard about the Beacon Hill Village. It and other groups like it support independent seniors as they get older. Using a membership fee, the village can provide a small staff to help them manage and stay in their homes longer. It’s a great concept that I think has a lot of potential in different communities.

How America Lost Track of Ben Franklin’s Definition of Success

When we say we’re successful, what do we mean? Do we speak solely about our professional accomplishments or do we include our personal lives, too? In today’s world, it’s not unusual to hear success connected to things like public popularity or visible wealth. But what if success is really about something else? What if, in the words of Benjamin Franklin, we really want people to say at our death, “You lived usefully.”

4 Reasons to Stop the S&P 500 Comparisons

We’ve probably compared our portfolio to the S&P 500 at least once. After all, the S&P is an index of U.S. stocks with a pretty steady history. But there’s a problem with this comparison. It’s not an apples-to-apples comparison. Other things like risk, liquidity, and correlation come into play. So while comparing might be fun — “Wow, I’m doing better than the S&P 500” — it’s not always meaningful.

How to Raise a Future Millionaire

We want our kids to succeed in life, but what should we be doing to help them get headed on the right path? I liked this article because it laid out some specific things we should be teaching kids to help them make smart money decisions. The suggestions probably won’t surprise you, but they’re a good reminder of the things we need to be teaching our kids when it comes to money.

Dos and don’ts to preserve your brainpower

It happens to the best of us — we get a little bit older every day. So I loved reading about the ways we can stay sharp and connected as we age. It’s simple stuff that all of us can do. Things like testing our ability to get places without GPS or protecting our hearing will have a bigger impact than you think on our ability to age well.

July Links: Summer Reads

Posted by John Charles Kernodle on October 27, 2015  /   Posted in Monthly Links

I hope you’re all having an amazing summer. This month, I wanted to share a few links to stories that caught my eye over the last few weeks. They cover a range of topics from impact investing to productivity. I think you’ll find them an enjoyable read on a summer afternoon.

When Impact Investing Stays Local

Many families have charitable giving plans, but you might be less familiar with the idea of monitoring the effect of that giving. Sometimes referred to as impact investing, people “measure what their dollars accomplish.” It seems like an obvious idea, but it hasn’t always been easy to collect data and figure out what kind of giving has the biggest impact. Now, families have more options, particularly at the local level, to help their communities and know exactly how their donations have helped.

Just Hearing Your Phone Buzz Hurts Your Productivity

We like to think that technology helps us get more done. In reality, it can end up distracting us from what we’re trying to do. Take the beeping and buzzing of our smartphones. These notifications seem convenient, even helpful. But just think about how quickly they distract us from what we were doing. Try turning off your notifications for one day and see what happens. I bet you get more done because you’re interrupted less.

Science Says You’ll Probably Regret Your Next Decision

We *think* we know ourselves pretty well. But what we think we know and the reality of what we know, don’t always match up very well. Case in point, we’re bad at predicting how a particular decision will make us feel. For instance, we predict a visit to the doctor or an announcement at work will make us feel really bad. But the outcome isn’t as bad as we thought. On the positive side, we convince ourselves that finishing off our dessert will feel so good — until we feel sick from eating too much. We can get better at making decisions, but we need to start by understanding we’re biased to overestimate and underestimate how we’ll really feel about different outcomes.

5 ways to keep your financial information safer from hackers

I know a lot of people worry about protecting their information online, particularly their financial information. This list of tips might already be a habit for you, but if you have a parent or friend who isn’t as savvy as you, I hope you’ll share these best practices. Simple steps now can prevent a big, financial headache later.

It’s official: Dimensional Fund Advisors to open East Coast HQ in Charlotte

I love that part of our team at Strathmore Capital Advisors gets to call Charlotte, North Carolina, home. From serving our clients to raising our families, there’s a lot that makes Charlotte a great place to be. It turns out that our friends at Dimensional Fund Advisors (DFA) agree with us. As you may remember, we work with DFA to build smart portfolios around expected returns. So we were really excited to learn that DFA plans to make Charlotte their East Cost headquarters. This move means great things for Charlotte, including over 300 jobs and $100 million invested in a new facility. DFA continues to be a valuable resource for Strathmore and our clients. We look forward to having them in the neighborhood.

June Links: Making Plans for the Future

Posted by John Charles Kernodle on October 27, 2015  /   Posted in Monthly Links

By sheer coincidence, most of June’s links ended up being about retirement. They cover different aspects of retirement and reflect just how many things we have to consider when we’re making plans for the future.

The Four Pillars of Retirement Savings

The financial news tends to talk a lot about how to invest our money. The talking heads say a lot less about how to save the money we need to invest. Saving money just isn’t as interesting as investing money, but in many respects it’s more important. Author and investor Charles Ellis identified four factors that will affect our total savings: earnings, age when saving starts, retirement age, and rate of return. Of those four, we only have total control over when we start saving. This might explain why the biggest financial regret for many people is failing to save money earlier in their lives.

What the Supreme Court’s fixes for retirement savings may do to your 401(k)

Many people rely on 401(k)s as a primary source of retirement income. In recent years, there’s been more discussion about the fees involved with these programs. In a recent Supreme Court decision, the justices ruled that “workers should have access to the best fee structures available for their retirement plan.” In other words, employers need to make sure that if two, comparable plans are available, the plan with the lower fee gets offered to employees. This sounds great … on paper. But if you happen to be a small business owner, these changes may have the unintended consequence of making 401(k)s too expensive to offer.

Living, and Dying, at Home

If asked, I suspect almost everyone would say they’d prefer to live in their homes for as long as possible. Unfortunately, our current system doesn’t do a great job of supporting this desire. That’s why I was thrilled to see this story about communities banding together to support each other as they age. Something as simple as providing a weekly car trip to the grocery store can help people stay in their homes longer. These groups also offered an ongoing social connection, which is so important for our mental health as we age.

Avoid the Recency Pitfall

How we see the world is driven in large part by what we’ve just experienced. This is particularly true when it comes to investing. For instance, we may hear of a “hot” stock that’s doing really well. We think to ourselves, “Now’s the perfect time to buy.” But we’re making an assumption that the stock will keep going up. It might, but it could just as easily take a dip right after you buy. That’s the problem with our recency bias. We think it’s telling us one thing, but it’s really just tempting us to chase after performance.

Will You Be Able to Work in Retirement?

Some of you may be counting down the days until you can retire. For others, you can’t imagine not working. You may worry about being bored, but for some people, they’re counting on retiring later to cover a savings shortfall. Whatever your plans, the data suggests we need to be cautious. We may not have the option to work after a certain point. A recent survey highlighted that 40 percent of people who retired earlier than planned did so for health reasons. On the bright side, however, the majority of middle-class retirees report working because they want to, not because they have to.

April Links: How to Get More Out of Life

Posted by John Charles Kernodle on April 01, 2015  /   Posted in Monthly Links

April’s links are all about you. How can you get more out of life? How might you be happier? What stories are really worth your attention?

The Anti-Bucket List
Most of us have a bucket list tucked away somewhere. But do these lists encourage us to focus on the wrong things instead of what’s right in front of us? As Leo Babauta writes, “Why put pressure on ourselves to achieve a huge list of things that aren’t that meaningful? Why feel guilty if we’re not pursuing them? Why not let them go? Life isn’t a big to-do list, nor is it about optimizing all the things we do in life.”

The Simple Secrets to Happiness
We don’t often think about it, but the little things we do every day add up and have a bigger impact than the things we do only once in a while. As a result, the habits we choose to form (or to break) may lead to greater happiness. Even better, these habits don’t need to be big changes for us to see the results.

Important Stories Worth Paying Attention To
I spend time telling you to ignore a lot of stories, but Morgan Housel from the Motley Fool pulled together a smart list of topics that are worth our attention. Even better, he puts these stories in context to help you understand why they’re important.

Someone is Always Outperforming Your Portfolio
It’s tempting to assume that if someone somewhere is doing better than us with their investments, we should make a change. But this assumption skips over what’s really important: our goals. If our financial plans are helping us meet our goals, why would we switch to someone else’s plan that doesn’t have anything to do with our goals?

November Links: How Do You Deal with Money?

Posted by John Charles Kernodle on November 01, 2014  /   Posted in Monthly Links

We’re getting close to the end of the year, and this month’s links focus on the more personal side of how we deal with money.

Why You Should Be a Risk-Taker, Morningstar
There are plenty of people who will suggest that it’s possible to get risk down to zero. We know better, but that doesn’t mean we aren’t tempted to test some of those “risk-free” investments that still promise big returns. You’ll enjoy this breakdown of risk and perhaps come away with a better understanding of what risk really means and why it’s not all bad.

“The point with risk is not to avoid it (because you can’t). But neither do you have to submit to it. The point with risk is to take it: Actively take it. Deliberately take it. Take it with purpose, in the right balance and for the right reasons.”

How the Story You Tell Yourself Can Make You Happier, Quartz
There’s a lot of debate about what we can do to make ourselves happier. Psychologist Shawn Achor suggests that it may be something simpler than where we live or where we work. According to Achor, “Happiness requires ‘changing the lens’ of how you perceive your reality.” The first step: tell yourself a positive story about your life. It’s simple, yes, but oddly very helpful. If you follow the link, you can watch a short video of Mr. Achor sharing his ideas as TEDx.

What Constitutes a Rich Life?, A Wealth of Common Sense
This short post is worth the quick, three-minute read. It reminded me that’s it’s very easy to focus on numbers and skip over why we’re doing what we’re doing.

“Having a high net worth and living a rich life are two completely different things.”

The Willpower Gene, The Atlantic
We like logical explanations for why we do things. So it wasn’t a huge surprise to see that scientists are questioning if our financial abilities are biological, and they found one – they think. The problem with this thinking is that it give people an excuse to not get better with their money:

“If you accept that an innate, or genetic predisposition to risk or to risk-aversion can explain individuals’ financial savings behavior,” Richman added, “then the fiction that financial security or wealth depends solely on genetic predisposition can be maintained.”

There will always be reasons to avoid doing potentially difficult things that are in our best interest. Genetics just happens to be the latest reason to keep putting off what we need to do.

October Links: Don’t Be Scared It’s October

Posted by John Charles Kernodle on October 01, 2014  /   Posted in Monthly Links

This month’s links are a mix of both investing and personal finance stories. They should give you something more useful to read than all the stories suggesting investors should be “scared” it’s October again.

Nobel winner Fama: Active management ‘never’ good
“If active managers win, it has to be at the expense of other active managers. And when you add them all up, the returns of active managers have to be literally zero, before costs. Then after costs, it’s a big negative sign,” Fama added.

“I Have No Idea”
“Realizing the limits of your intelligence one of the most important skills in finance. P.J.O’Rourke described economics as “an entire scientific discipline of not knowing what you’re talking about,” which is pretty accurate. When you pretend you know something you don’t, your perception of risk becomes warped. You take risks you didn’t think existed. You face events you didn’t think could occur. Understanding what you don’t know, and what you can’t know, is way more important than the stuff you actually know.”

An Inside Look at Why We Love Short-term Habit Change
“It’s great to use a project to jump-start your actions, and to focus your attention, but it’s very important to think about how you’re changing habits for the long-term, not just making some temporary effort.”

More Money, More Problems? The Dangers of Lifestyle Inflation—and How to Avoid It
“Numerous studies support the notion that as incomes rise, so does the tendency to spend, not save. A Federal Reserve report found, for instance, that less than half of Americans earning between $75,000 and $99,999 saved any money whatsoever—and as many as 16% of those within that income bracket actually went into debt.”

The world’s greatest stock picker? Bet you sold Apple and Google a long time ago
“Let’s imagine for the moment that you are the World’s Greatest Stock Picker. … Can you imagine how much wealth you could create? I have some bad news for you, kiddos: Even if you had that superpower, it would be worth surprisingly little to you. The odds are that it would not create much wealth, and it might even cost you money. How could that be possible? The short answer is your brain.”

September Links: Making Smarter Financial Decisions

Posted by John Charles Kernodle on September 01, 2014  /   Posted in Monthly Links

I know how hard it can be to tune out the news completely. After a few of you asked what you should be reading, I’ve decided to pull together a few links once a month that I believe you’ll find helpful. The links will come from many places, and a few may even come from other wealth advisors sharing great advice. However, each story will share the common goal of focusing on ways to make smarter financial decisions. My hope is to cut through the noise and deliver information that helps you stick with your plan.

Rational Exuberance
“…there is no system that produces reliably-better results than just sticking with your plan and rebalancing regularly through the ups and downs.”

Charlie Munger’s Investing Principles
“…you have to adapt your strategy to your own nature and your own talents. I don’t think there’s a one-size-fits-all investment strategy that I can give you.'”

“Gambling on sports may be more fun, but it’s definitely a more risky use of money than putting it in the stock market. In the long run, investors have the chance to make more money because there are fewer downside risks. To put it another way, the stock market is a lot more forgiving than the MGM Grand (let alone your local sports bookie).”

You Are the Problem
“Here’s the truth: The last five years will probably be the best five-year period you’ll ever experience as an investor. The last decade has been average. If you’ve struggled through this period, or keep telling yourself that buy and hold doesn’t work, or that the market is a scam, it’s your own fault. Stocks have done over the last decade what stocks have done for countless decades: offered a pretty decent return with lots of volatility mixed in the middle.”

Financial Planning and Hiking on the Half Dome

“The truth is much more prosaic. Retirement planning—indeed, all financial planning—is very tough and is difficult at every level. It takes significant personal sacrifice and being psychologically strong when our emotions are screaming at us to do otherwise. Thinking about a future that is years or even decades away is exceedingly challenging for most of us, for whom lunch is a long-range plan. But good retirement planning isn’t ‘perfectly inaccessible.'”

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