Get Rich Slowly https://www.getrichslowly.org personal finance that makes cents Thu, 21 May 2020 19:14:29 +0000 en-US hourly 1 https://wordpress.org/?v=5.4.1 Who invented the index fund? A brief (true) history of index funds https://www.getrichslowly.org/history-of-index-funds/ https://www.getrichslowly.org/history-of-index-funds/#comments Thu, 21 May 2020 18:30:02 +0000 https://www.getrichslowly.org/?p=240915 Pop quiz! If I asked you, "Who invented the index fund?" what would your answer be? I'll bet most of you don't know and don't care. But those who do care would probably answer, "John Bogle, founder of The Vanguard Group." And that's what I would have answered too until a few weeks ago.

But, it turns out, this answer is false.

Yes, Bogle founded the first publicly-available index fund. And yes, Bogle is responsible for popularizing and promoting index funds as the "common sense" investment answer for the average person. For this, he deserves much praise.

But Bogle did not invent index funds. In fact, for a long time he was opposed to the very idea of them!

John Bogle did not invent index funds

Recently, while writing the investing lesson for my upcoming Audible course about the basics of financial independence, I found myself deep down a rabbit hole. What started as a simple Google search to verify that Bogle was indeed the creator of index funds led me to a "secret history" of which I'd been completely unaware.

In this article, I've done my best to assemble the bits and pieces I discovered while tracking down the origins of index funds. I'm sure I've made some mistakes here. (If you spot an error or know of additional info that should be included, drop me a line.)

Here then, is a brief history of index funds.

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Pop quiz! If I asked you, “Who invented the index fund?” what would your answer be? I'll bet most of you don't know and don't care. But those who do care would probably answer, “John Bogle, founder of The Vanguard Group.” And that's what I would have answered too until a few weeks ago.

But, it turns out, this answer is false.

Yes, Bogle founded the first publicly-available index fund. And yes, Bogle is responsible for popularizing and promoting index funds as the “common sense” investment answer for the average person. For this, he deserves much praise.

But Bogle did not invent index funds. In fact, for a long time he was opposed to the very idea of them!

John Bogle did not invent index funds

Recently, while writing the investing lesson for my upcoming Audible course about the basics of financial independence, I found myself deep down a rabbit hole. What started as a simple Google search to verify that Bogle was indeed the creator of index funds led me to a “secret history” of which I'd been completely unaware.

In this article, I've done my best to assemble the bits and pieces I discovered while tracking down the origins of index funds. I'm sure I've made some mistakes here. (If you spot an error or know of additional info that should be included, drop me a line.)

Here then, is a brief history of index funds.

What are index funds? An index fund is a low-cost, low-maintenance mutual fund designed to follow the price fluctuations of a stock-market index, such as the S&P 500. They're an excellent choice for the average investor.

The Case for an Unmanaged Investment Company

In the January 1960 issue of the Financial Analysts Journal, Edward Renshaw and Paul Feldstein published an article entitled, “The Case for an Unmanaged Investment Company.”

The case for an unmanaged investment company

Here's how the paper began:

“The problem of choice and supervision which originally created a need for investment companies has so mushroomed these institutions that today a case can be made for creating a new investment institution, what we have chosen to call an “unmanaged investment company” — in other words a company dedicated to the task of following a representative average.”

The fundamental problem facing individual investors in 1960 was that there were too many mutual-fund companies: over 250 of them. “Given so much choice,” the authors wrote, “it does not seem likely that the inexperienced investor or the person who lacks time and information to supervise his own portfolio will be any better able to choose a better than average portfolio of investment company stocks.”

Mutual funds (or “investment companies”) were created to make things easier for average people like you and me. They provided easy diversification, simplifying the entire investment process. Individual investors no longer had to build a portfolio of stocks. They could buy mutual fund shares instead, and the mutual-fund manager would take care of everything else. So convenient!

But with 250 funds to choose from in 1960, the paradox of choice was rearing its head once more. How could the average person know which fund to buy?

When this paper was published in 1960, there were approximately 250 mutual funds for investors to choose from. Today, there are nearly 10,000.

The solution suggested in this paper was an “unmanaged investment company”, one that didn't try to beat the market but only tried to match it. “While investing in the Dow Jones Industrial average, for instance, would mean foregoing the possibility of doing better than average,” the authors wrote, “it would also mean tha the investor would be assured of never doing significantly worse.”

The paper also pointed out that an unmanaged fund would offer other benefits, including lower costs and psychological comfort.

The authors' conclusion will sound familiar to anyone who has ever read an article or book praising the virtues of index funds.

“The evidence presented in this paper supports the view that the average investors in investment companies would be better off if a representative market average were followed. The perplexing question that must be raised is why has the unmanaged investment company not come into being?”

The Case for Mutual Fund Management

With the benefit of hindsight, we know that Renshaw and Feldstein were prescient. They were on to something. At the time, though, their idea seemed far-fetched. Rebuttals weren't long in coming.

The May 1960 issue of the Financial Analysts Journal included a counter-point from John B. Armstrong, “the pen-name of a man who has spent many years in the security field and in the study and analysis of mutual funds.” Armstrong's article — entitled “The Case for Mutual Fund Management” argued vehemently against the notion of unmanaged investment companies.

The case for mutual fund management

“Market averages can be a dangerous instrument for evaluating investment management results,” Armstrong wrote.

What's more, he said, even if we were to grant the premise of the earlier paper — which he wasn't prepared to do — “this argument appears to be fallacious on practical grounds.” The bookkeeping and logistics for maintaining an unmanaged mutual fund would be a nightmare. The costs would be high. And besides, the technology (in 1960) to run such a fund didn't exist.

And besides, Armstrong said, “the idea of an ‘unmanaged fund' has been tried before, and found unsuccessful.” In the early 1930s, a type of proto-index fund was popular for a short time (accounting for 80% of all mutual fund investments in 1931!) before being abandoned as “undesirable”.

“The careful and prudent Financial Analyst, moreover, realizes full well that investing is an art — not a science,” Armstrong concluded. For this reason — and many others — individual investors should be confident to buy into managed mutual funds.

So, just who was the author of this piece? Who was John B. Armstrong? His real name was John Bogle, and he was an assistant manager for Wellington Management Company. Bogle's article was nominated for industry awards in 1960. People loved it.

The Secret History of Index Funds

Bogle may not have liked the idea of unmanaged investment companies, but other people did. A handful of visionaries saw the promise — but they couldn't see how to put that promise into action. In his Investment News article about the secret history of index mutual funds, Stephen Mihm describes how the dream of an unmanaged fund became reality.

In 1964, mechanical engineer John Andrew McQuown took a job with Wells Fargo heading up the “Investment Decision Making Project”, an attempt to apply scientific principles to investing. (Remember: Just four years earlier, Bogle had written that “investing is an art — not a science”.) McQuown and his team — which included a slew of folks now famous in investing circles — spent years trying to puzzle out the science of investing. But they kept reaching dead ends.

After six years of work, the team's biggest insight was this: Not a single professional portfolio manager could consistently beat the S&P 500.

Mihm writes:

As Mr. McQuown’s team hammered out ways of tracking the index without incurring heavy fees, another University of Chicago professor, Keith Shwayder, approached the team at Wells Fargo in the hopes they could create a portfolio that tracked the entire market. This wasn’t academic: Mr. Shwayder was part of the family that owned Samsonite Luggage, and he wanted to put $6 million of the company’s pension assets in a new index fund.

This was 1971. At first, the team at Wells Fargo crafted a fund that tracked all stocks traded on the New York Stock Exchange. This proved impractical — “a nightmare,” one team member later recalled — and eventually they created a fund that simply tracked the Standard & Poor’s 500. Two other institutional index funds popped up around this time: Batterymarch Financial Management; American National Bank. These other companies helped promote the idea of sampling: holding a selection of representative stocks in a particular index rather than every single stock.

Much to the surprise and dismay of skeptics, these early index funds worked. They did what they were designed to do. Big institutional investors such as Ford, Exxon, and AT&T began shifting pension money to index funds. But despite their promise, these new funds remained inaccessible to the average investor.

In the meantime, John Bogle had become even more enmeshed in the world of active fund management.

In a Forbes article about John Bogle's epiphany, Rick Ferri writes that during the 1960s, Bogle bought into Go-Go investing, the aggressive pursuit of outsized gains. Eventually, he was promoted to CEO of Wellington Management as he led the company's quest to make money through active trading.

The boom years soon passed, however, and the market sank into recession. Bogle lost his power and his position. He convinced Wellington Management to form a new company — The Vanguard Group — to handle day-to-day administrative tasks for the larger firm. In the beginning, Vanguard was explicitly not allowed to get into the mutual fund game.

About this time, Bogle dug deeper into unmanaged funds. He started to question his assumptions about the value of active management.

During the fifteen years since he'd argued “the case for mutual fund management”, Bogle had been an ardent, active fund manager. But in the mid-1970s, as he started Vanguard, he was analyzing mutual fund performance, and he came to the realization that “active funds underperformed the S&P 500 index on an average pre-tax margin by 1.5 percent. He also found that this shortfall was virtually identical to the costs incurred by fund investors during that period.”

This was Bogle's a-ha moment.

Although Vanguard wasn't allowed to manage its own mutual fund, Bogle found a loophole. He convinced the Wellington board to allow him to create an index fund, one that would be managed by an outside group of firms. On 31 December 1975, paperwork was filed with the S.E.C. to create the Vanguard First Index Investment Trust. Eight months later, on 31 August 1976, the world's first public index fund was launched.

Bogle's Folly

At the time, most investment professionals believed index funds were a foolish mistake. In fact, the First Index Investment Trust was derisively called “Bogle’s folly”. Nearly fifty years of history have proven otherwise. Warren Buffett – perhaps the world's greatest investor – once said, “If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle.”

In reality, Bogle's folly was ignoring the idea of index funds — even arguing against the idea — for fifteen years. (In another article for Forbes, Rick Ferri interviewed Bogle about what he was thinking back then.)

Now, it's perfectly possible that this “secret history” isn't so secret, that it's well-known among educated investors. Perhaps I've simply been blind to this info. It's certainly true that I haven't read any of Bogle's books, so maybe he wrote about this and I simply missed it. But I don't think so.

I do know this, however: On blogs and in the mass media, Bogle is usually touted as the “inventor” of index funds, and that simply isn't true. That's too bad. I think the facts — “Bogle opposed index funds, then became their greatest champion” — are more compelling than the apocryphal stories we keep parroting.

Note: I don't doubt that I have some errors in this piece — and that I've left things out. If you have corrections, please let me know so that I can revise the article accordingly.

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Great lessons from great women https://www.getrichslowly.org/great-women/ https://www.getrichslowly.org/great-women/#comments Sun, 10 May 2020 07:30:29 +0000 https://www.getrichslowly.org/?p=241072 A decade ago, J.D. shared some great lessons from great men. He had a wealth of material to draw from: biographies of historical figures from centuries ago, classic business texts, and the earliest self-help books.

If you want to compile lessons from great women, however, you don’t have the same sources, because women have not been considered “great” for much of history, and thus they’ve not been asked for their opinions on most things — certainly not financial matters! Multiply that times ten for women of color.

Today, I'd like to share some great lessons from great women. But the wisdom I’ve collected here comes primarily from media sources and speeches. It’s no less wise than the wisdom from books written by great men, and it applies to everyone of all genders, although it’s informed in many cases by much tougher life circumstances than the white men who lent their thoughts to this post’s counterpart.

Here are t]]> A decade ago, J.D. shared some great lessons from great men. He had a wealth of material to draw from: biographies of historical figures from centuries ago, classic business texts, and the earliest self-help books.

If you want to compile lessons from great women, however, you don’t have the same sources, because women have not been considered “great” for much of history, and thus they’ve not been asked for their opinions on most things — certainly not financial matters! Multiply that times ten for women of color.

Today, I'd like to share some great lessons from great women. But the wisdom I’ve collected here comes primarily from media sources and speeches. It’s no less wise than the wisdom from books written by great men, and it applies to everyone of all genders, although it’s informed in many cases by much tougher life circumstances than the white men who lent their thoughts to this post’s counterpart.

Here are ten inspiring bits of wisdom that I’ve learned from great women.

Do the Work

“There are two kinds of people, those who do the work and those who take the credit. Try to be in the first group; there is less competition there.”Indira Gandhi, India’s first (and only) female prime minister

We are trained to look for shortcuts in everything. More than that, we're surrounded by people who want the glory and the money associated with having done something without actually doing the thing.

But real success – and with it a sense of true accomplishment and fulfillment – only comes if we actually do the work. Success without having done the work feels hollow. And the belief that success should come instantly and with glory puts us in the wrong mindset to achieve big things.

I’d tweak Indira’s quote just a little, though, to say that it’s fine to claim credit – in fact you should! – but only after you’ve actually done the work.

Work first, credit second.

Define Success for Yourself

“To me success means effectiveness in the world, that I am able to carry my ideas and values into the world — that I am able to change it in positive ways.”Maxine Hong Kingston, author

Our society tends to have a one-dimensional definition of success: To be successful is to have power, status, and money. While those things might satisfy some of us, it’s simply not true that everyone will feel equally fulfilled by having them, never mind that our current economy simply won’t allow most people to achieve those things.

Instead, let’s follow Maxine’s advice and define success for ourselves. She defines it as effectiveness at carrying her ideas and values into the world, which is true for me, too, but you get to choose your own definition.

Mistakes Aren’t Failure

“You know, failure hurts. Any kind of failure stings. If you live in the sting, you will undoubtedly fail. My way of getting past the sting is to say no, ‘I’m just not going to let this get me down.’”Sonia Sotomayor, the first Latina justice on the U.S. Supreme Court

“Failure is an important part of your growth and developing resilience. Don’t be afraid to fail.” – Michelle Obama

It’s natural to be afraid of failure. And despite the recent Silicon Valley-led trend of “failing fast” (in which failure is accepted but is also supposedly painless), Sonia and Michelle understand that failure sucks. There’s no point in sugar-coating it.

If you invest yourself in something and it doesn’t work out, it’s inevitable that that’s going to hurt. But what matters is what you do next. Do you wallow in that hurt? Or do you figure out what you can learn from that failure, and refuse to let it stop you?

Be like these great women and carry on, more resilient than ever.

Embrace Fear

“If your dreams do not scare you, they are not big enough.”Ellen Johnson Sirleaf, President of Liberia and Nobel Peace Prize winner

Speaking of that fear of failure, not only can we not let failure stop of from moving forward, we can’t let the fear of it stop us from even trying in the first place.

Fear can be a helpful guide to tell us that we’re getting closer to our highest purpose, and to doing something that really matters. If you’re never scared by something you’re setting out to accomplish, it doesn’t mean that you’re especially brave. It means you’ve never challenged yourself.

Real Wealth Is Community

“My object in life is not simply to make money for myself.”Madam C. J. Walker, the first self-made African-American millionaire

We don’t talk enough about the incredible life of Madam C.J. Walker, an entrepreneur who was determined to build her own wealth, but also to lift as she climbed and enrich others in her community along the way. Fortunately, you can now learn more about her in the Netflix series Self Made.

Walker grew up in terrible poverty, like most African-Americans of her day, and knew she wouldn’t be satisfied if she only enriched herself without making things better for her community. It’s a lesson we can all take to heart, asking how we can use our own opportunities and advantages to create opportunities for others, especially for those who’ve historically faced more barriers.

Generosity and an Abundance Mindset Will Serve You Well

“If you look at what you have in life, you’ll always have more. If you look at what you don’t have in life, you’ll never have enough.”Oprah Winfrey

“No one has ever become poor by giving.”Anne Frank

Something I wish I’d understood earlier in life is the destructive power of a scarcity mindset (in which you focus on what you don’t have and feel compelled to hoard money) rather than an abundance mindset (in which you focus on what you do have and therefore don’t need to hold on to it so tightly).

Psychological research tells us that giving of ourselves, both our time and money, makes us feel better about ourselves, more grateful for what we have, and happier overall. And that’s in addition to strengthening our communities and helping those less fortunate at the same time.

Generosity is a muscle you have to build, so start small if you have to, but give whenever you can.

Pursue the Things You Love Most

“You can only become truly accomplished at something you love. Don’t make money your goal. Instead, pursue the things you love doing, and then do them so well that people can’t take their eyes off you.”Maya Angelou, author, poet, and civil rights activist

I actually kind of hate the “follow your passion” career advice that so many extol, because it’s simply not universally applicable, and it sets up an unhelpful divide between those who are able to go into a career path about which they’re passionate, and those who have to do the thankless jobs that we’re finally recognizing as essential in the era of COVID-19.

But your career is not the entirety of your existence. And in your life as a whole, I absolutely believe in letting what you love guide you, without regard for money.

Being accomplished at something doesn’t have to mean getting a paycheck to do it, nor does it require public recognition. It could be something you do privately for your own enjoyment and nothing else. And doing it without regard for money is an important piece, because we make decisions differently when we’re profit-motivated.

Allow yourself at least one thing you love in life in which money plays no part.

Claim Your Power

“Power is not given to you. You have to take it.”Beyoncé

“We teach girls to shrink themselves, to make themselves smaller. We say to girls: You can have ambition, but not too much. You should aim to be successful but not too successful, otherwise you will threaten the man. If you are the breadwinner in your relationship with a man, pretend that you are not, especially in public, otherwise you will emasculate him.”Chimamanda Ngozi, author and activist

“We as women should shine light on our accomplishments and not feel egotistical when we do. It's a way to let the world know that we as women can accomplish great things!”Dolores Huerta, founder of the United Farm Workers

“Women’s empowerment” is another idea I kind of hate, because it suggests we are being granted some small amount of power by those who already possess it, in the amounts they choose to grant.

But those in power never asked permission or waited patiently to be gifted what they felt was theirs. They didn’t shrink themselves to make others feel better about themselves. They didn’t hesitate to shout their accomplishments because of how it might make them look. They took that power and stood in it — without shame.

So, instead of “being empowered”, we should claim our own power. (And to those who’ve historically had those advantages, don’t worry – “power” isn’t a zero-sum game. More people having power doesn’t lessen your own.)

Use your voice, cheer your accomplishments, and live to your full potential.

People Are More Important Than Anything

“People first, then money, then things.”Suze Orman

“Remember, ‘No one’s more important than people’! In other words, friendship is the most important thing—not career or housework, or one’s fatigue—and it needs to be tended and nurtured.”Julia Child

We can argue about whether Suze Orman is a great woman or not, but she certainly expressed this sentiment most succinctly: People are the most important thing.

If your wealth or your success comes at the expense of your relationships, then all the money in the world won’t make you happy. And countless studies confirm this: Those with the strongest relationships live the longest and have the most high-quality-of-life years, they have the greatest sense of purpose, and they’re the happiest.

Put the people in your life first, ahead of your career and hustle, if you care about what your life adds up to and not just what your financial numbers add up to.

Know What You Stand For

“Stand for something or you will fall for anything. Today’s mighty oak is yesterday’s nut that held its ground.”Rosa Parks, American civil rights activist

This may seem like it’s not a money lesson, but it absolutely is. We’re faced with scores of choices every day that have real-world implications for other people and the planet.

Let’s say you decide you want to earn passive income through rental real estate. Do you want to be a slum lord who does the bare minimum maintenance on your properties and evicts people the second rent is late? Or do you want to recognize that your property is someone’s home and maintain it accordingly, and cut them some slack if they have trouble paying?

Making no decision is a decision in itself, so make your choice consciously. Know what you stand for, and recognize that your money is the single biggest expression of your values.

Final thoughts: The women who gave us these lessons are a huge inspiration to me, and their fights for justice have paved the way for future generations to struggle less. Let’s carry their lessons into the world and do great things!

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What’s the best long-term investment? https://www.getrichslowly.org/best-long-term-investment/ https://www.getrichslowly.org/best-long-term-investment/#comments Mon, 04 May 2020 07:30:06 +0000 https://www.getrichslowly.org/?p=240979 What's the best long-term investment? Because you're a money nerd (and a GRS reader), I hope your answer to this question was, "Stocks!" If the future is anything like the past, that's the correct answer. History has shown that stocks are the best long-term investment -- and by a wide margin.

Unfortunately, most Americans believe otherwise.

As a part of its annual Economy and Personal Finance survey (conducted during the first two weeks of April), Gallup News asked 1017 American adults, "Which of the following do you think is the best long-term investment: bonds, real estate, savings accounts or CDs, stocks or mutual funds, or gold?"

Here's how people answered:

  • 35% of respondents said that real estate is the best-long term investment
  • 21% said that stocks or mutual funds are the best long-term investment
  • 17% said that savings accounts or certificates of deposit are the best long-term investment
  • 16% said gold is the best long-term investment
  • 8% said bonds are the best long-term investment

Americans' views on the best long-term investment

While acknowledging that past results are no guarantee of future performance -- let's take a look at why I think Americans haven't got a clue when it comes to figuring out the best long-term investment strategy.

The Rate of Return on Everything

The August 2019 issue of The Quarterly Journal of Economics included a paper entitled "The Rate of Return on Everything, 1870-2015". Over an astounding 74 pages of discussion, the authors attempt to analyze the long-term (145-year) rate of return on a variety of assets around the world.

The paper examines four popular investment vehicles:

  • Bills, by which the authors mean Treasury bills, are short-term government bonds. At present, these are a good proxy for the rates you can earn with a high-yield savings account. (I don't think this is always the case, though.)
  • Bonds, which in this case refers to ten-year government bonds (such as a 10-year Treasury note).
  • Equity, which is another way to describe common stock. Here, the authors are measuring overall stock market performance.
  • Housing, including rental properties.

We'll look at each of these in greater detail in a moment (and we'll look at gold too), but for now let's look at this paper's overall findings. While the authors looked at data for many countries, I'm only going to share results for the U.S. The following table shows the rates of return for these different asset classes over three different time periods. (Remember that, for our purposes, Bills are a stand-in for savings accounts.)

Long-term returns on certain asset classes

From this table, it's clear that equities (i.e., stocks) have been the highest return investments over long periods of time. Nothing else comes close. (Outside the U.S., this isn't always true.)

Now, while stocks provide the best long-term returns, they also come with the greatest volatility. Here's a a chart (Figure VII) from the paper that shows just how crazy the ride with stocks can be. (Also note how closely equities and real estate tracked each other until the Great Depression.)

Equity returns vs. real-estate returns

It's this volatility that scares so many people away from the stock market. They're afraid that a sharp decline can come at any time. And that's true. But what's also true is that a prolonged bull market can occur at anytime, as we experienced from March 2009 to February 2020! If you're a long-term investor, you don't give a fig about short-term market movement.

Let's dive deeper into the long-term investment returns provided by the asset classes in the Gallup poll: real estate, stocks, savings accounts, gold, and bonds.

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What's the best long-term investment? Because you're a money nerd (and a GRS reader), I hope your answer to this question was, “Stocks!” If the future is anything like the past, that's the correct answer. History has shown that stocks are the best long-term investment — and by a wide margin.

Unfortunately, most Americans believe otherwise.

As a part of its annual Economy and Personal Finance survey (conducted during the first two weeks of April), Gallup News asked 1017 American adults, “Which of the following do you think is the best long-term investment: bonds, real estate, savings accounts or CDs, stocks or mutual funds, or gold?”

Here's how people answered:

  • 35% of respondents said that real estate is the best-long term investment
  • 21% said that stocks or mutual funds are the best long-term investment
  • 17% said that savings accounts or certificates of deposit are the best long-term investment
  • 16% said gold is the best long-term investment
  • 8% said bonds are the best long-term investment

Americans' views on the best long-term investment

While acknowledging that past results are no guarantee of future performance — let's take a look at why I think Americans haven't got a clue when it comes to figuring out the best long-term investment strategy.

The Rate of Return on Everything

The August 2019 issue of The Quarterly Journal of Economics included a paper entitled “The Rate of Return on Everything, 1870-2015”. Over an astounding 74 pages of discussion, the authors attempt to analyze the long-term (145-year) rate of return on a variety of assets around the world.

The paper examines four popular investment vehicles:

  • Bills, by which the authors mean Treasury bills, are short-term government bonds. At present, these are a good proxy for the rates you can earn with a high-yield savings account. (I don't think this is always the case, though.)
  • Bonds, which in this case refers to ten-year government bonds (such as a 10-year Treasury note).
  • Equity, which is another way to describe common stock. Here, the authors are measuring overall stock market performance.
  • Housing, including rental properties.

We'll look at each of these in greater detail in a moment (and we'll look at gold too), but for now let's look at this paper's overall findings. While the authors looked at data for many countries, I'm only going to share results for the U.S. The following table shows the rates of return for these different asset classes over three different time periods. (Remember that, for our purposes, Bills are a stand-in for savings accounts.)

Long-term returns on certain asset classes

From this table, it's clear that equities (i.e., stocks) have been the highest return investments over long periods of time. Nothing else comes close. (Outside the U.S., this isn't always true.)

Now, while stocks provide the best long-term returns, they also come with the greatest volatility. Here's a a chart (Figure VII) from the paper that shows just how crazy the ride with stocks can be. (Also note how closely equities and real estate tracked each other until the Great Depression.)

Equity returns vs. real-estate returns

It's this volatility that scares so many people away from the stock market. They're afraid that a sharp decline can come at any time. And that's true. But what's also true is that a prolonged bull market can occur at anytime, as we experienced from March 2009 to February 2020! If you're a long-term investor, you don't give a fig about short-term market movement.

Let's dive deeper into the long-term investment returns provided by the asset classes in the Gallup poll: real estate, stocks, savings accounts, gold, and bonds.

Real Estate (35% of Respondents)

Real estate as a long-term investment is complicated. Yes, it absolutely can be a great option, but not in the way most Americans imagine.

When you talk to the average person about investing in real estate — or when you poll them about best long-term investments — they're probably thinking of homeownership, not rental or commercial properties. From my experience, most people think of buying a home as a path to wealth. Unfortunately, this is mostly just propaganda from the real-estate industrial complex.

During the past two decades, residential real estate has indeed provided good returns — if you've timed your moves right. I've been lucky. I've bought and sold at the right time, so I've done well during the past twenty years. But I'm sure we all know people who suffered during when the housing bubble burst in 2008. (My brother is a prime example. He lost two homes at the time.)

The past two decades have been unusual, however.

Yale economics professor Robert Shiller has become the authority on the history of home prices in the U.S. At his website, he provides a spreadsheet that shows home prices from 1890 to present. Here's a graph from that spreadsheet.

Robert Shiller historical home price data

Historically, home prices have tended to remain relatively flat for long periods of time. Most investment pros seem to figure that residential real estate offers about a 1% annual rate of return. And, in fact, in the “Rate of Return on Everything” paper, the authors calculate that in the United States, while the real return on real estate has been been 6.10% since 1870, the return on home prices has been only 0.90%.

Wait, what?

In the paper, housing returns include two discrete components: property appreciation and rental returns. When the authors say that real estate has offered a long-term investment return of 6.10%, what they mean is:

  • Home prices have increased at an average of 0.90% over the long term, and
  • Rental income (both actual and imputed) has provided the remainder of that return.

So, rental real estate can provide excellent long-term returns, although those returns are generally not as high as the returns you could enjoy in the stock market. But homeownership? Historically, homeownership is not a profitable long-term investment strategy. Yet when we return to the Gallup poll in which 35% of Americans believe that real estate is currently the best long-term investment strategy, homeownership is probably what they're talking about.

There are plenty of reasons to own, but wealth isn't one of them.

Are you interested in rental properties? Take a look at our guide on how to get started in real estate investing, which was written by the knowledgeable Coach Carson.

Stocks and Mutual Funds (21% of Respondents)

While I'm pleased that 21% of respondents in the Gallup survey believe that stocks and mutual funds are the best long-term investment right now, I'm also disappointed that this number is so low.

Over and over and over again, the data has shown the same thing: If you're investing for the future, stocks are the best choice. This is especially true after the market has dropped.

I know market downturns can be scary, but here's the thing: Volatility is one of the fundamental features of stocks. On average, the stock market returns 10% per year (around 7% when adjusted for inflation). But average is not normal.

Recent history is typical. The following table shows the annual return for the S&P 500 over the past twenty years (not including dividends):

S&P 500 annual returns

The S&P 500 earned an average annualized return of 6.06% for the twenty-year period ending in 2019. But zero of these years generated stock market returns close to the average for that time span. (2007 came closest to average with a return of 3.53% — still more than 2.50% off the average.)

Short-term market movements aren’t an accurate indicator of long-term performance. What a stock or fund did last year doesn’t tell you much about what it’ll do during the next decade. The “Return on Everything” paper found that stocks enjoyed average long-term returns of about 9% after inflation. Other academic studies put this number at closer to 7%. Whichever number you use, the long-term returns on stocks are still higher than any of the other options in the Gallup poll.

It's important to note that when I'm talking about the long-term returns on stocks and mutual funds, I'm talking about the returns of the market as a whole. Individual stocks can experience radically different fates. Fortunately, index funds effectively allow you to own the entire market, which means you don't have to worry about picking the “right” stocks. For more info, see our guide on how to invest.

Savings Accounts and Certificates of Deposit (17% of Respondents)

There's not much to say about the long-term performance of investments that come with a fixed rate of return. Generally speaking, what you see is what you get.

If you take out a five-year certificate of deposit at a 1.60% APY — which is a current “good” rate — then you're going to earn 1.6% on your money every year. It's a sure thing. Unfortunately, it's also about the same as the current rate of inflation, which means that you're real return is effectively zero. You're not gaining anything, but you're not losing anything either.

As you know, savings accounts usually offer lower rates than CDs. According to the FDIC, the current national average for savings accounts is 0.07%. (Their data shows the current national average for a five-year CD is 0.58%.) If you use a high-yield online savings account, you can find interest rates close to what you'd earn on a certificate of deposit.

Here, for instance, are a couple of current top offers:

So, CDs and savings accounts don't offer very high returns right now. In fact, interest rates have been low for a decade. Looking at historical interest rate data, deposit accounts have never made sense for long-term investing. And the only time they make sense for short-term investing is during periods of high inflation. (These accounts always make sense for an emergency fund or an opportunity fund, though.)

Going back to the Gallup poll, 17% of Americans believe that savings accounts and CDs are currently the best long-term investments. Let me make a (not-so) bold prediction: These folks are wrong. Sticking your money in savings is like treading water. You won't drown, but you're not going to get anywhere either.

Gold (16% of Respondents)

Last week, I shared a rant about why investing in gold isn't a smart long-term plan. Because this article isn't actually about gold, today I'll be brief.

You'll note that the academic paper I cited earlier — the one with the info about the rates of return for “everything” — didn't include gold or other precious metals. Do you know why? Because despite what some people will tell you, investing in gold is a lousy long-term strategy.

In his book Stocks for the Long Run, finance professor Jeremy Siegel breaks out the long-term performance of a variety of asset classes. His conclusions are similar to (but not the same) as those in the “Return on Everything” paper. Siegel found that between 1871 and 2012, gold provided a real return of 1.0%. Since 1946, that return has been 2.0%.

Can gold outperform stocks over the short term? Yes, absolutely! According to Siegel, gold provided an 11.8% real return between 2000 and 2012. Stocks appreciated only 0.3% during that span. But since 2012? Well, the price of gold hasn't increased at all while the S&P 500 has more than doubled. (More on this at the end of the article.)

Let's return to the Gallup poll that inspired this article. Is gold the best long-term investment right now? Apparently 16% of Americans believe so. I find this foolish.

At the moment I write this, gold is selling for $1714.62 an ounce. This isn't a record price, but it's high. (Gold's nominal peak price was $1889.70 per ounce on 22 August 2011. Gold's inflation-adjusted high was about $2500 per ounce back in 1973.) I find it difficult to believe — impossible, really — that buying gold near its peak is a smart long-term play, especially given its history of low returns over long time spans. If these 16% of Americans are buying gold as a long-term investment, I suspect they're going to be sorely disappointed.

Gold can have uses in an investment portfolio. Long-term growth isn't one of them.

Bonds (8% of Respondents)

Humble bonds brought up last place in the Gallup poll of best long-term investments. Only 8% of Americans chose them as the best place to put money for the long run. Honestly, I can't argue with this result — and that's not simply because I don't know a lot about bonds!

At the moment, if you were to purchase a 30-year U.S. government bond, it'd pay you a fixed rate of 2%. A ten-year bond would pay 1.5%.

Obviously, these rates are slightly better than you could achieve with a high-yield savings account. They're about double the long-term average for home price appreciation. And they're about the same long-term return you'd expect from gold.

That's not always the case, of course.

The “Rate of Return on Everything” paper found that bonds yield long-term inflation-adjusted returns of just under three percent per year. (Since 1980, bonds have achieved returns averaging 5.90%, which is slightly better than rental properties during that timespan.)

Jeremy Siegel's bond numbers are similar. He shows they earned an average of 3.0% per year between 1871 and 2012. He says that since 1926, bonds have yielded an average of 2.6%. Since 2000, that return is 6.5%.

But for now? Today? Bonds aren't a great option.

The Best Long-Term Investment

To its credit, Gallup seems to be aware that their poll doesn't reflect the actual value of long-term investments; it simply reflects the attitudes of the people they surveyed.

In August 2011, Gallup published results of a similar poll. At that time, a shocking 34% of people said that gold was the best long-term investment. Only 17% believed that stocks were the best long-term investment.

2011 survey about the best long-term investment

“Men, seniors, middle-income Americans, and Republicans are more enamored with gold,” Gallup wrote at the time. “That one in three Americans see gold as the best long-term investment may indicate a bubble in the value of this precious metal — something that may be corroborated if gold continues to plunge.”

In fact, gold was entering a bubble during 2011. (And it appears to be entering one now.) Here's a little table I whipped up to compare the values of each investment in the Gallup survey — now and in 2011. (The table is a little goofy since there's no consistent unit of measure, but you get what I'm going for.)

Changes in value since 2011

So, in the 8-1/2 years since Gallup noted the goldbugs were out in force:

  • The price of gold has essentially remained unchanged. (In reality, it dropped sharply in 2013, but has been climbing for the past eighteen months.)
  • Real estate has done well since August 2011. Home prices in the U.S. have increased by an average of 50%. (This is abnormal, though, and makes me worried that we're once again in a housing bubble.)
  • The S&P 500 has jumped by 141% in the past 8-1/2 years. You might argue we're in a stock bubble too, and I'd buy that argument. But still: This is nearly triple the return of housing.
  • Meanwhile, if you'd purchased a 5-year CD or a 10-year Treasury bill, your rates would have been locked in at 1.47% and 3.14%, respectively.
  • So, how have the five investment types in the Gallup poll performed over 8-1/2 years?

    Stocks were the clear winner. Real estate came second, bonds were third, and savings accounts were fourth. Gold — the runaway “best long-term investment” answer in August 2011 — was the worst possible choice. If you had bought gold as a long-term investment in 2011, you would have actually lost purchasing power in the interim due to erosion from inflation.

    Now, I realize that 8-1/2 years isn't really long-term. It's sort of medium-term. Twenty years or thirty years is long-term. But, if anything, I expect that in 2031, we'll be able to look back and see that these results become even more pronounced. Gold will still be treading water — because that's what it does — and stocks will have gained even more.

    What about Bitcoin and other cryptocurrencies? Well, cryptocurrencies are not investment vehicles — or shouldn't be. They're currencies, mediums of exchange. (And they're barely even that.) If you put money into Bitcoin in attempt to earn a profit, you're not investing. You're speculating. You may indeed experience gains, and that's great. But don't fool yourself that what you've done qualifies as investing.

    Here's the bottom line on this Gallup poll: Generally speaking, Americans have no idea which is the best long-term investment because they don't understand history and they don't understand investing.

    Surveys like this are more like thermometers. They reveal the current “temperature” of whatever's being surveyed (investment options, in this case). They don't actually provide factual information that you should act on. Just because more than one-third of Americans believe that real estate is the best way to investment money long term, that doesn't mean they're right.

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All that glitters: Why I’m not investing in gold https://www.getrichslowly.org/investing-in-gold/ https://www.getrichslowly.org/investing-in-gold/#comments Tue, 28 Apr 2020 19:45:06 +0000 http://getrichslowly.org/blog/?p=78082 Over the past month, I've read a lot of articles about the virtues of investing in gold. Especially in Facebook forums, there's a lot of talk about how gold makes a great long-term investment. (Fortunately, I haven't seen any comments like this in the GRS community on Facebook.)

Whenever the economy gets turbulent, the goldbugs come out in force. They shout from the hilltops that the world is doomed and that the only safe haven is gold. And I'll admit, their arguments can sound pretty convincing.

When I started this site in 2006, I felt unqualified to comment on gold. I hadn't read much about it, and I didn't feel educated enough to offer an opinion. That's changed.

Now, after fifteen years of reading and writing about money, I know enough about economic history and I know enough about gold as an investment to have what I believe is a (somewhat) educated response to this subject. And that response is this: Gold makes a lousy long-term investment.

Today, let's have a discussion about the pros and cons of investing in gold while using my own opinion as a starting point. (And note that this article contains my opinion. It's backed up by some facts, but it's still my opinion. Don't take everything that follows as gospel.)

Put simply: I'm not a fan of precious metals. I have 0% of my investment dollars in gold and silver, and I expect that to hold true for the foreseeable future. It's my opinion that gold is a bad investment right now. Let me explain my reasoning.

Before we dive into the meat of this article, it's important to understand that I'm not an economist, and I'm not a gold expert. But for the past fifteen years, I've made a career out of personal finance, and gold is one tiny part of that subject. The core of this article was originally published here on 10 May 2011, the last time the goldbugs were out in force. This update contains substantial revisions. Also, please note that many of the comments on this article are from its original publication in 2011.

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Over the past month, I've read a lot of articles about the virtues of investing in gold. Especially in Facebook forums, there's a lot of talk about how gold makes a great long-term investment. (Fortunately, I haven't seen any comments like this in the GRS community on Facebook.)

Whenever the economy gets turbulent, the goldbugs come out in force. They shout from the hilltops that the world is doomed and that the only safe haven is gold. And I'll admit, their arguments can sound pretty convincing.

When I started this site in 2006, I felt unqualified to comment on gold. I hadn't read much about it, and I didn't feel educated enough to offer an opinion. That's changed.

Now, after fifteen years of reading and writing about money, I know enough about economic history and I know enough about gold as an investment to have what I believe is a (somewhat) educated response to this subject. And that response is this: Gold makes a lousy long-term investment.

Today, let's have a discussion about the pros and cons of investing in gold while using my own opinion as a starting point. (And note that this article contains my opinion. It's backed up by some facts, but it's still my opinion. Don't take everything that follows as gospel.)

Put simply: I'm not a fan of precious metals. I have 0% of my investment dollars in gold and silver, and I expect that to hold true for the foreseeable future. It's my opinion that gold is a bad investment right now. Let me explain my reasoning.

Before we dive into the meat of this article, it's important to understand that I'm not an economist, and I'm not a gold expert. But for the past fifteen years, I've made a career out of personal finance, and gold is one tiny part of that subject. The core of this article was originally published here on 10 May 2011, the last time the goldbugs were out in force. This update contains substantial revisions. Also, please note that many of the comments on this article are from its original publication in 2011.

The Gold Standard

Many folks dislike our current monetary system because it's based on fiat currency. That is, a dollar is worth an arbitrary amount because the government says so. It's not based on anything concrete. Plus, the government can add and remove cash from the money supply at will, which affects the dollar's value.

U.S. dollars — and other world currencies — were once backed by gold. Under the Gold Standard, you could ask a bank to convert your paper money to gold at the legal rate (whatever that might be). In order for the government to print more money, they had to have the gold to back it.

Proponents of the “Gold Standard” argue that since the U.S. abandoned it in 1933, the dollar is more susceptible to inflation. That's true. But the Gold Standard didn't eliminate inflation, and it created other problems besides.

I am not an economist, and I struggle when it comes to economic theory, but my understanding is that much of the run-up to and aftermath of the Great Depression was thought to have been caused by the Gold Standard. Under the Gold Standard, currencies were much more susceptible to speculation and devaluation, which could lead to runs on the banks. That's why the U.S. abandoned it. And it wasn't only the United States that did so. Not a single country in the world uses the Gold Standard anymore. Until recently, most economists and politicians considered it a deserved relic.

Note: Though it's long, this 2004 speech from Ben Bernanke about money, gold, and the Great Depression is interesting, and explains why we're not likely to ever return to a Gold Standard in the U.S.

The Intrinsic Value of Gold

Some proponents of gold like it because they say it has intrinsic value. That is, they say that gold has value in and of itself. (Kevin McElroy does a good job explaining this concept at The Street.)

Goldbugs would have you believe that when diaster strikes — we enter a post-oil economy, we're nuked by terrorists, dinosaurs escape from Isla Nublar, or a new virus wipes out half the world population — that paper money will be worthless and we'll all be trading in gold. Because of its intrinsic value, it'll become a form of currency. I'm not convinced.

Let's say I'm a shopkeeper. I have a minimart and I have a shotgun to defend my stock from looters. If we're in some sort of post-crisis world where dinosaurs roam the earth, I doubt I'll want your gold. It'll be just as worthless (or as valuable) as paper money. Why? Because in reality, gold too is fundamentally a fiat currency. That is, people have assigned it an arbitrary value. That value vanishes in a crisis, just as the value of paper money does.

If I'm a shop owner in this situation — or I'm your neighbor with a vegetable garden — I'm going to be want to be paid with something real, something like a carton of eggs or some shells for my shotgun.

In other words, I don't think much of gold's intrinsic value. To me, assigning value to gold is just as arbitrary as assigning value to anything else. If we're in a real crisis, I'm not convinced that gold's going to save the day. This is just one more reason I'm not investing in gold. (Again, this is my opinion. You may disagree.)

Tip: For a more coherent and educated take on this subject, read this essay on why gold does not have intrinsic value.

My first two objections to owning gold are based purely on theory. Nobody knows for sure what would happen if we returned to the Gold Standard. If dinosaurs roamed the earth, we'd have more important things to worry about than the form of our currency. But I have other, more concrete objections to investing in gold right now.

Investing in Gold During a Bubble

As I write this, gold is hovering at about $1700 per ounce, which is just off its recent peak of $1756.70 two weeks ago. But that's not only its recent high; that's also nearing all-time highs for the stuff. (As near as I can calculate, gold's inflation-adjusted high was about $2250 per ounce back in January 1980.)

Here's a chart (generated at Macrotrends) that shows historical gold prices:

Historical gold prices, raw data

And here's the same info, but with inflation-adjusted prices:

Historical gold prices, inflation adjusted

Modern gold prices bottomed out in 1999. Prices stood at $262 per ounce in April 2001 (an inflation-adjusted $380). Between then and May 2011 — when I first wrote this article — gold enjoyed impressive returns of over 20% nearly every year. At that time, the goldbugs were loudly shouting, “Now is the time to buy.” Peter Schiff, perhaps the loudest goldbug of them all, was predicting prices of $5000 per ounce in the near future.

“I'm skeptical,” I wrote at the time. “I think gold is more likely to see $500 an ounce in the next decade than $5000 an ounce.”

Who was closer to correct? Peter Schiff, a self-proclaimed expert on the subject? Or me, a guy with no special knowledge about gold, but a healthy skepticism of shysters and charlatans?

For a couple of years, gold hovered between $1600 and $1700 per ounce. But then it crashed. By December 2015, gold prices had dropped to $1070 per ounce. Gold bounced between $1200 and $1300 an ounce until about a year ago, at which time it began its climb back to $1700, which is where it sits today.

In hindsight, I think it's clear that we were in a gold bubble in 2011. And I think we're entering one (or already in it) today. We've seen several price bubbles in the U.S. over the past twenty years.

  • First, the boom in tech stocks in the late 1990s.
  • Then, the run-up of housing prices in the mid 2000s.
  • Next, the second stock bubble at the end of the last decade.
  • Finally, the gold bubble that I just described.

Plus, you could argue that during recent years we've been in another stock-market bubble, and I wouldn't necessarily disagree.

During these bubbles, the proponents of each investment made compelling cases for why “this time is different!” More people bought gold and stocks and homes, which drove prices up, which made the investments look more appealing, which meant more people bought, which drove prices up until…

The bubble burst.

The bubble always bursts.

During the bubble, there are plenty of snake-oil salesmen with silvery tongues who will try to convince you that this isn't actually a bubble, that this is where prices are meant to be. Many of these people actually believe what they say. (Though, to be clear, some don't. Some know exactly what they're doing.)

After the bubble, there are a lot of people wondering what happened to their wealth.

Right now, in April 2020, the price of gold is high because the demand for gold is high. Over the past year — and especially, during this coronavirus pandemic — our country's economic policies have created a fear of the future, which means many people are clinging to gold as a sort of insurance. Gold prices are rising. How high will they go?

Peter Schiff is once again enjoying some time in the spotlight, proclaiming that gold will hit $5000 an ounce. He's been singing this tune for almost fifteen years now. I'm not sure why people continue to listen. Long term, I think gold prices are more likely to drop than they are to rise. (But I do think gold will climb — or, at least, stay steady — for a year or two.)

But, hey — I could be wrong. Maybe the gold bubble isn't a bubble. Maybe prices won't come crashing down again. You need to decide that for yourself. Right now, I'm willing to bet on the side of history.

Bonus!

You have no idea how much work goes into a post like this. I do hours of research and write thousands of words before cutting back to the essentials. And with topics involving lots of data, I go down all sorts of rabbit holes while playing with numbers.

For instance, on a whim, I decided to check the effect of the last few Presidential administrations on the price of gold. This is mostly meaningless, but it's still interesting to see.

Gold price change during Presidential terms

The Carter numbers are odd. Nearly all of that 322% increase came during the last few months of his administration. Again, I'm not saying this data has any meaning. I just find it fascinating. If you want to fritter away time by playing with numbers, you may find this page of historical gold prices handy.

(And that's an hour of my time wasted that could have been used to write another article about clipping coupons or budgeting.)

Gold as a Long-Term Investment

For me, the most compelling case against investing in gold can be found in the historical record. Goldbugs like to praise the stuff because it’s a “hedge against inflation”. Gold tends to retain its value as prices rise. That’s true — but long term, that’s all that it does.

There are other things that tend to keep their value during inflation, if that’s what you want. Real estate, for one. And TIPS (Treasury inflation-protected securities, a type of bond). And maybe even savings accounts.

If you want to fight inflation, there are better options. In his book Stocks for the Long Run, Jeremy Siegel crunched the numbers to find the historical performance of several common investments. The results? Between 1926 and 2012:

  • Gold had a real return (meaning: “after-inflation return”) of about 2.1%.
  • Bonds returned about 5.7%, or about 2.6% after inflation.
  • Stocks returned an average of about 9.6% per year, and a real return of about 6.4%.
  • And, according to this academic paper, home prices have appreciated at about 0.9% per year over the past 150 years.

Of course, past returns are no guarantee of future results. Perhaps Schiff is right. Perhaps over the next thirty years, gold will average an annual return of 6.4% and stocks an average return of 2.1%. Nobody knows for sure. But my bet is on the side of history.

Before I leave this section, I want to share a quote from Siegel's Stocks for the Long Run:

Ironically, despite the inflationary basis of a paper money system, well-preserved paper money from the early nineteenth century is worth many times its face value on the collectors' market, far surpassing gold bullion as a long-term investment. An old mattress found containing nineteenth-century paper money is a better find for an antiquarian than an equivalent sum hoarded in gold bars!

There's no real take-away from that, I suppose. It's just funny.

My Father Invested in Gold

You might think that the current gold fever is the first of its kind. Actually, it's not. Gold fever seems to strike every decade or so, whenever there's a run-up in prices. (That's the irony. Nobody's excited about investing in gold when prices are low. They're only excited when prices are high. Need I mention how foolish this is as an investment strategy?)

The first time I remember being exposed to gold fever was when I was a boy.

My father became a goldbug during the economic crisis of the late seventies and early eighties. He was convinced prices were going to soar permanently, so he started investing in gold. The things he said then are just like the things I hear the goldbugs saying today. It's like history repeating itself.

Though he could barely afford to put food on the table, during 1980 Dad found a way to buy ten gold coins at roughly $500 each. (Plus whatever commission he paid.) He loved to show them to us kids: “Look at my pretty pieces of metal.” Dad had no savings or investments, so these coins were his nest egg.

The eggs turned out to be rotten.

As I recall, Dad sold a few of the coins almost immediately because we needed the money to buy food and clothing. No worries. The price of gold had risen, so he made a little profit. But he held the rest of his “pretty pieces of metal” until the mid 1980s, when he decided to start the custom box company. Then he sold the coins for just over $300 an ounce. He lost about a thousand dollars on what he thought was a sure thing. The sure thing turned out to be a bubble.

Further reading

Fore more interesting stories about investing in gold, check out:

If you know of good articles about investing in gold, please share them in the comments.

Should YOU Invest in Gold?

For all of these reasons, I'm not investing in gold. Not right now. Not at these prices. Does that mean you should avoid investing in gold? Not at all. It means you should do your own reading and research and find out what the best decision is for you. Don't just take my word for it, but don't be persuaded by a bunch of ads on radio or TV, either.

Whether you're for or against gold as an investment option, I encourage you to read rational, well-written articles from the other side. Try to figure out where they're coming from. Does the opposition make some good points? After reading another opinion, do you think there might be times that you could see their point of view?

In my case, I'm not completely against investing in gold. In fact, I'm persuaded that it generally makes sense to have some in your investment portfolio as part of a strategy of diversification. In time, I plan to add a little. Eventually. (But not now, not when prices are at record highs.) However, with one exception — see the sidebar below — I can't imagine ever devoting more than five percent of my portfolio to the stuff. (And even that seems high.)

My opinion is that we really are entering another gold bubble, and that the bubble will eventually burst. When it does, I may buy a bit of gold. Until then, I'm happy to watch the roller coaster ride from the outside.

The Permanent Portfolio

One investment strategy that I find appealing uses a lot of gold. This is the permanent portfolio, as developed by Harry Browne. The permanent portfolio calls for a fixed asset allocation:

  • 25% in U.S. stocks, to provide a strong return during times of prosperity
  • 25% in long-term U.S. Treasury bonds, which do well during prosperity and deflation
  • 25% in cash (a money-market fund) to hedge against recession
  • 25% in gold to provide protection during periods of inflation

If I were to choose any other investment plan than the one I have, it'd be this one. I find the arguments compelling, and wouldn't be surprised if five years from now, I've adopted this strategy.

For more on the permanent portfolio — including how to invest in gold — check out Craig Rowland's book, The Permanent Portfolio: Harry Browne's Long-term Investment Strategy. (Caveat: I wrote the foreword to this book but have no financial stake in it.)

Reminder: This is another one of those topics that tends to inspire passionate debate. It's fine to disagree with each other (and with me), but please keep it civil. Sound fair?

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How to get started with difficult tasks https://www.getrichslowly.org/how-to-get-started/ https://www.getrichslowly.org/how-to-get-started/#comments Thu, 23 Apr 2020 18:20:21 +0000 https://www.getrichslowly.org/?p=240967 Yesterday in the /r/financialindependence community on Reddit, /u/mkengland asked a seemingly innocent question:

What made you stop planning/researching financial independence and actually start?

Was there a tipping point for you where you finally felt ready to start your FI journey? What made you finally take the plunge, open that first IRA/brokerage account/etc., and throw your money into the market?

[...]

I'm waffling over details, though...and can't seem to just DO IT.

This question seems innocuous, right? Yet, I've been thinking about it for the past 24 hours.

I hear questions like this relatively often. People want to know how to get started with saving and investing. Or with debt reduction. Or they want to know how to get started with budgeting. And, in fact, it's the sort of question I had too back when I started my own journey away from debt and toward financial freedom. It all seems so overwhelming! Where do you begin?

Trust me, I know how easy it is to over-complicate things. My ex-wife used to call me Overanalytical Man due to my superhuman ability to overthink even the simplest subject. Although I do this less often (and less severely) than I used to, it's still a problem that plagues me.

Today, let's talk about what I've learned about how to get started with difficult tasks.

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Yesterday in the /r/financialindependence community on Reddit, /u/mkengland asked a seemingly innocent question:

What made you stop planning/researching financial independence and actually start?

Was there a tipping point for you where you finally felt ready to start your FI journey? What made you finally take the plunge, open that first IRA/brokerage account/etc., and throw your money into the market?

[…]

I'm waffling over details, though…and can't seem to just DO IT.

This question seems innocuous, right? Yet, I've been thinking about it for the past 24 hours.

I hear questions like this relatively often. People want to know how to get started with saving and investing. Or with debt reduction. Or they want to know how to get started with budgeting. And, in fact, it's the sort of question I had too back when I started my own journey away from debt and toward financial freedom. It all seems so overwhelming! Where do you begin?

Trust me, I know how easy it is to over-complicate things. My ex-wife used to call me Overanalytical Man due to my superhuman ability to overthink even the simplest subject. Although I do this less often (and less severely) than I used to, it's still a problem that plagues me.

Today, let's talk about what I've learned about how to get started with difficult tasks.

Action Not Words

Generally speaking, things aren't as complicated as I (or you) want to make them out to be. Most problems can be solved with simple solutions. It's how we implement these solutions that adds layers of complexity.

A healthy weight, for instance, really is as simple as “calories in, calories out”. Yes, I realize there's a lot of debate about this subject in recent years. And yes, I understand there's additional nuance and complexity to the discussion. But that doesn't change the fundamentals: If you want to lose weight, you have to burn more calories than you consume.

Likewise, all of personal finance boils down to one simple rule: To build wealth, you must spend less than you earn. End of story. This is the fundamental rule of personal finance, and all of the books and blogs and TV shows about money — all of the added layers of complexity — are simply clothes draped across this basic body.

When I see questions like “How do I get started toward financial independence? It all seems so complicated!”, my mind immediately goes to this. How do you get started? By spending less than you earn. Want to get out of debt? Spend less than you earn. Want to save for a down payment on a house? Spend less than you earn. It all comes back to this one idea.

Any move that increases your income or decreases your spending is a step in the right direction.

In a way, allowing perceived complexity to prevent you from doing the right thing is a variation of the optimization trap. The optimization trap is the belief that small tweaks make more difference than they actually do. Optimizing small things (clipping coupons, say) is often a way for people to feel like they're doing something meaningful when they're actually avoiding big, scary moves that could truly make a difference (downsizing their home, for example).

When people like me overcomplicate things at the start, we're doing so for similar reasons. We're nervous about making big changes. We're complacent. We're comfortable with our lives at the moment, so instead of doing the things we know need to be done, we spin our wheels while focusing on details that don't matter.

Right now, for instance, I am fat. There's no way to sugarcoat it. I've been gaining weight for several years now, and thanks to this quarantine, I've reached peak J.D. (in terms of size, anyhow). I know what I need to do to get fit again — eat less, exercise more — but I find it very easy to allow stupid details to prevent me from doing the right thing. “My bike needs a new tire. I don't have weights at home and the gyms are closed. I don't like vegetables. I don't know which tool to use to track my calories.”

All of these details are bullshit that distracts me from the fundamental problem: I need to burn more calories than I consume, and I'm not doing that.

If I want to get started with weight loss, I must achieve (and maintain) a calorie deficit. If /u/mkengland wants to reach financial independence, (s)he must spend less than (s)he earns. In both cases, thinking and deliberating does nothing. To achieve our goals, we must take action.

Start Where You Are

For overthinkers like me, action is key. Instead of finding the perfect time and place to start, we should start anywhere. Screw perfection! When starting a long journey, a perfect first step isn't critical. If you stumble at the start of a sprint, you're likely to lose the race. But if you stumble at the start of a marathon, it makes no difference. All that matters is that you've begun running.

As my friend Paula Pant once told me, “An imperfect plan you follow is better than a perfect plan you don't.”

One of the core tenets of the Get Rich Slowly philosophy is that the perfect is the enemy of the good. Too many people never start putting their finances in order because they don't know what the “best” first step is. Most of the time, “best” is irrelevant in this context. Don't worry about getting things exactly right — just choose a good option and do something to get started.

Here's a non-financial example from my own life.

As you know, Kim and I moved into our country cottage nearly three years ago. For the first couple of years, our time and money and attention were focused on home renovations. There were a lot of repairs that had to be made. Last year, we took a break. But this year? Thanks in part to the coronavirus quarantine, we've begun tackling our yard.

We have an acre of land. About half of it is seldom-used forest that slopes down the hill to a creek. But the other half is our fenced yard. It's a gorgeous park-like setting — or could be, if it were maintained. But the previous owners let things get out of control, and we've done little more than tread water since we bought the place. We've kept things from getting worse, but haven't done anything to make things better.

Here's a February photo of one corner of our yard:

One small corner of our yard

This year, though, Kim and I have resolved to make our park-like setting actually park-like. That'll require a lot of work. Like, hundreds of hours. In February, we toured the yard to talk about what we needed to do. We each made a list as we walked along. When we finished, we were both overwhelmed.

“There's so much,” Kim said. “Where do we start?”

“I don't know,” I said. “I guess we start with whatever feels most pressing.” We drafted a short prioritized list of projects…and then never followed it. (Seriously. The top thing on our list remains undone two months later haha.)

Instead, here's how things went down.

On her first day laid off from work, Kim went outside to play with the dog and the cats. She got distracted by some weeds in the “tea garden”, so she paused to pull them. This led her to prune the climbing rose. Then she hauled the yard debris to the bottom of the hill, where she found more yard debris that needed to be cleaned up. And so on. Before she realized it, she'd put in a full day of work. But it wasn't the work we'd planned.

What we've found is that if we go outside, we'll see something that needs to be done. If we do that thing, a second step will become self-evident — or we'll see something else that needs done nearby. In other words, if we simply put ourselves in motion, if we do anything that contributes to our future vision of the yard, we'll continue to work on the yard, continue to be productive, until we're tired and done for the day. It doesn't matter which chore we choose. All that matters is that we choose a chore.

Kim has been home for maybe six weeks now. (Who knows anymore? My sense of time has warped.) In those six weeks, we've made huge strides. Sure, there's still much left to do, and we know it. But every day, we do a little more. Our yard has already been transformed, and it's only going to get better as we continue to do more work.

This is a current panorama of the entire yard (click to open larger image in new window):

Our yard at the moment

Here's the (very obvious) moral of this story: Start where you are. Do what you can with what you have. Don't concern yourself with “right” or “best” options. Choose a good option and get going.

When tackling a big project — whether that's renovating a yard, digging out of debt, or saving for early retirement — it matters less how you begin than that you begin.

How to Get Started

I grew up Mormon. One of the songs we sang in Primary (a.k.a. Sunday School) was called “Do What Is Right”. I think of it often, even today. Here's the chorus:

Do what is right; let the consequence follow.
Battle for freedom in spirit and might;
And with stout hearts look ye forth till tomorrow.
God will protect you; then do what is right!

“Do what is right; let the consequence follow.” Yes! Exactly! Nowadays, I've incorporated this idea into my personal philosophy.

On my office computer, I have a sticky note: PROCESS NOT OUTCOME. This is a reminder to myself that I cannot control outcomes. I can only control effort.

If I do what is right — that is, if I do what is necessary to achieve what I want — and if I do my best, then I've done my part. By doing what's right and doing my best, I'll likely get the results I'm after. But if the results aren't what I wanted? Well then, I can live in peace. I know I did what I could, and I'm fine with that.

I can control my effort and actions, but I cannot control the results.

This “PROCESS NOT ACTION” reminder is important to me, and not only because I'm Overanalytical Man. I'm also paralyzed by self-doubt. It's easy for me to not take action because I'm afraid.

So, when I take on a big project like the course I just wrote for Audible, I often find it tough to get started. Before I even begin, I'm already imagining how painful it will be to read reviews from people who hate my work.

“PROCESS NOT OUTCOME” is a reminder that if I work hard and provide good info, then I've done my part. I can only control what I put into a project, not what others think of it.

So, let's return to the Reddit question that inspired this all. How do you get started with difficult tasks? Easy. By doing anything that moves you toward your goal.

Don't make things more complicated than they have to be. Identify fundamental principles and pursue them. Especially at the start, don't worry about making perfect choices or about optimization. Simply start. Take action. You can optimize later.

Do what is right. Do your best. Let the consequence follow.

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Which financial apps, products, and services should we review? https://www.getrichslowly.org/which-financial-products-to-review/ https://www.getrichslowly.org/which-financial-products-to-review/#comments Mon, 20 Apr 2020 20:17:27 +0000 https://www.getrichslowly.org/?p=240918 Every Monday morning, Tom and I have a Zoom call to discuss the coming week's priorities for this site. For the past couple of months, we've been focused on behind-the-scenes stuff as we prepared to launch the redesign. (That, and I was working on my course for Audible.) Now that the redesign is (mostly) finished, we've begun talking about content. What sorts of articles do we want to write in coming weeks?

"You know," Tom said this morning, "it wouldn't kill you to write about the financial tools you use. You love your credit card, right? And you use Personal Capital? If you were to write about this stuff, we could make more money."

As I've mentioned many times, Get Rich Slowly earns little compared to other sites its size -- especially other financial sites its size. Expected earnings for GRS are probably on the order of $20,000 per month; we bring in about $5000. (And right now, because of the coronavirus, our revenue is lower than this even.)]]> Every Monday morning, Tom and I have a Zoom call to discuss the coming week's priorities for this site. For the past couple of months, we've been focused on behind-the-scenes stuff as we prepared to launch the redesign. (That, and I was working on my course for Audible.) Now that the redesign is (mostly) finished, we've begun talking about content. What sorts of articles do we want to write in coming weeks?

“You know,” Tom said this morning, “it wouldn't kill you to write about the financial tools you use. You love your credit card, right? And you use Personal Capital? If you were to write about this stuff, we could make more money.”

As I've mentioned many times, Get Rich Slowly earns little compared to other sites its size — especially other financial sites its size. Expected earnings for GRS are probably on the order of $20,000 per month; we bring in about $5000. (And right now, because of the coronavirus, our revenue is lower than this even.)

Our low earnings are largely because there are certain things I refuse to do here. I'm okay with ads, but I'm not okay with video ads. (Even the “sticky” bottom banner ad bugs me. I hope one day to axe it.) I refuse to publish “paid posts”. I don't like “listicles” that act as thinly-veiled money grabs. And I've been reluctant to run many reviews (aside from book reviews).

But for the past eighteen months, Tom has been patiently making the case that reviews of products and services don't have to cross that thin green line. Done properly, they can be a win-win. They can provide readers with good info while also generating a little income. The key is to keep the reviews honest, to not praise and promote something simply because we get paid for sign-ups.

“People want reviews,” Tom says. “They find them helpful.”

As if to bolster Tom's argument, we've been fielding a lot of questions lately about various products and services. Here, for instance, is a recent post from the Get Rich Slowly community on Facebook. One woman wants to know more about Acorns, an app designed to help you “invest your spare change”.

Request for Acorns review

Based on this — and other reader interactions — it's clear that people do want to know about apps and tools and service. Avoiding these reviews doesn't necessarily serve my audience the way I think it does.

One problem is that, so far, I haven't actually used most modern apps. I've dabbled with YNAB. I do use Personal Capital, but only for a couple of specific things. But most of my money management is still done with Quicken 2007. I don't use an app to invest. When I buy and sell stocks — which isn't often — I do so directly through the Fidelity website. And while I do indeed love my credit card (and probably ought to publish a review of it), I can't see myself applying for and reviewing a whole bunch of other cards.

Anyhow, I've accepted the premise that Get Rich Slowly should review more financial products and services. Done right, these reviews don't have to be shady. I see now that they can be useful. While my own financial life might not be very modern, that doesn't mean that yours has to be outdated too.

Here's where I'm turning to you, my friends. I need your help.

  • What financial products and services do you currently use? Of these, which do you most recommend? And which do you use out of habit — or because you haven't been able to find anything better?
  • What financial products and services are you curious about? What tools have you been wanting to learn about?
  • If you read other money sites, which ones do you trust for reviews — and why? Can you point to some examples of people who do reviews right?

Instead of being stuck in the past, it's time for this old dog to learn some new tricks. When I started GRS, financial apps weren't even a thing. The web was young(-ish). Smart phones were in their infancy. People didn't manage their money online. Today is different.

Now, there's a plethora of apps and sites and tools out there, and sometimes it's tough to know which are useful — and which are not. While there's no danger that Get Rich Slowly will ever turn into a review site, I concede that doing some reviews could help people sort the wheat from the chaff. And as we prepare to ramp up the publishing schedule around here — yay! — it'd be helpful to have a list of financial tools that readers want us to write about.

So, help us decide which products and services merit a closer look!

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Please don’t adjust your dials. https://www.getrichslowly.org/please-dont-adjust-your-dials/ https://www.getrichslowly.org/please-dont-adjust-your-dials/#comments Tue, 14 Apr 2020 01:42:32 +0000 https://www.getrichslowly.org/?p=240353 Hey, friends. Some good news!

First up, I finished my "intro to FIRE" course course for Audible and turned in the manuscript. Once the script is approved, I'll head to the recording studio. Not sure about any projected release date, but we're moving along.

At the same time, it looks like development on the brand-new Get Rich Slowly site design is done. Well, mostly so. There are still a handful of tweaks we'd like to make — but we'd like to do them after the new site is public. To that end, we intend to push the new design live in the next 24 hours or so. This shouldn't cause any hassles...but you never know. Hey, friends. Some good news!

First up, I finished my “intro to FIRE” course course for Audible and turned in the manuscript. Once the script is approved, I'll head to the recording studio. Not sure about any projected release date, but we're moving along.

At the same time, it looks like development on the brand-new Get Rich Slowly site design is done. Well, mostly so. There are still a handful of tweaks we'd like to make — but we'd like to do them after the new site is public. To that end, we intend to push the new design live in the next 24 hours or so. This shouldn't cause any hassles…but you never know.

Once the new site is up, please please please give us feedback. We need to know what works and what doesn't.

Behind the scenes, Tom and I are both very excited about the future of Get Rich Slowly. We've been doing so much background stuff for the past year that the actual front-end has been a little neglected. That's about to end.

HOWEVER…there's also a bit of bad news.

For the past few weeks, while she's been furloughed from work, Kim has been handling all of the home and yard chores while I finished my course. She's excited for me to be finished so that I can lend a hand.

As part of that, we went to Home Depot this morning to buy a wood chipper. When we went to load it into her new RAV4, my left elbow went *crunch*, then my bicep and forearm instantly became sore and tight. Kim insisted on driving me to urgent care (because we Roths don't do that kind of thing — we just suffer for weeks). X-rays found nothing wrong, so the doctor put me in a sling and put me on muscle relaxers. I'm supposed to use my arm “75% less than normal” for the next few days. If things don't improve then they want an MRI.

So, while I'm mentally ready to go, and while the new design will roll out shortly, actual new articles may be a little slower to follow than I'd planned. But they're coming.

I hope all of you are doing well. And I hope you like the new layout. Once we have all the kinks worked out, it should be much more usable for everyone. Bring on GRS 4.0!

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By the numbers: First quarter 2020 https://www.getrichslowly.org/march-2020-numbers/ https://www.getrichslowly.org/march-2020-numbers/#comments Tue, 07 Apr 2020 19:41:30 +0000 https://www.getrichslowly.org/?p=240338 Carole Baskin killed her husband!

Why, hello.

After nearly three weeks of hiatus, it's time to get things back to normal around this joint! Has anything happened while I was away?]]> Carole Baskin killed her husband!

Why, hello.

After nearly three weeks of hiatus, it's time to get things back to normal around this joint! Has anything happened while I was away?

Despite the ongoing coronavirus crisis, I'm ready to resume writing about personal finance. I've (nearly) completed my “intro to FIRE” project for Audible and The Great Courses — we're now in the editing stage — Kim and I (and our beasts) are healthy, and I have plenty to say about money.

Let's do this thing!

A Little Housekeeping

To start, let me say that I'm aware some folks have experienced trouble actually seeing new articles here at Get Rich Slowly. I've received several reports that things have “stuck” on the cybersecurity basics article from mid February. Some people cannot see new articles or comments.

Obviously, people with this problem aren't going to see this post, so I can't ask them to drop me a line. But if you were experiencing this issue and know anything that might help us resolve it, please let me know. Tom and I are baffled by the situation.

We did change hosting companies around the time the trouble began. We switched servers, and that seems to have created some sort of caching issue. Maybe? Like I say, we're not sure.

While I've been hard at work on my Audible course, my business partner Tom has been messing with things behind the scenes here at GRS. At long last, we think we're close to launching our redesign, which has been in the works since I repurchased this site 2-1/2 years ago. If everything goes well — and it is, so far — the new design should go live by the site's 14th anniversary next Wednesday.

Here's a preview of the new logo and the new home page:

Site redesign

It's possible (likely, even) that we'll have some bugs when we launch the redesign. I'm counting on all of you to help us find them and squash them!

With that housekeeping out of the way, let's talk about how the first quarter of 2020 went for my finances. Short answer: Aside from the stock market (which I cannot control), things were pretty darn good!

First Quarter Finances

Here's a look at some of my spending numbers from the past three months and the first quarter of each of the past four years. Please note that this isn't all of my spending. It's just spending on select categories. Also, this is my spending and doesn't include Kim's purchases. Tracking numbers (whether for fitness or finance) drives her nuts so she doesn't do it. That means there's no way to know for sure how much we spend on things as a family.

First quarter numbers

January and February had relatively similar spending. Why was March so high? For three reasons.

  • The $450 annual fee for my Chase Sapphire Reserve card came due.
  • We bought a new mattress for $2450.10. (More about this soon, I hope. It was a process!)
  • We renewed our tickets to Broadway in Portland for next season. That cost $1473.50.

Without these three expenses, my spending for March was only $2433.44. That's great! Too bad I can't just ignore major purchases like mattresses and theater tickets haha.

When taken as a whole, my first quarter spending was down 21.4% from the same period last year. It was down nearly $6000 (31.1%) from first quarter spending in 2017! That's some fine progress.

Here are some thoughts on individual categories:

  • I am very very happy with my decline in spending on alcohol. As you can see (if you look at the “sin” category), I drank nothing in January. And most of that $233.92 in February went to the pot tincture I take most nights before bed. I bought two bottles of it. (Pot is legal in Oregon.) In fact, it's only since the coronavirus quarantine that my alcohol consumption has increased. Even so, I'm not drinking nearly as much as I have in previous years.
  • My big goal for this year is to reduce my food spending. The pandemic is helping with that. You can't go out to eat if all of the restaurants are shut down! Still, I find it curious that I spent roughly the same on food in March as in previous months despite only going out to eat twice. There's no doubt we've been buying more groceries. My food spending for the quarter was half what it was in 2017. Nice.
  • Last year, I made a focused effort to reduce my iTunes spending. That's clearly reflected in the spreadsheet. I'm definitely spending more on iTunes in 2020 than I did in 2019, but it's less than in previous years. One change I've made is to rent more movies. What's the point of buying Frozen II if it's unlikely I'll ever watch it again?
  • Lastly, I find the utilities trend interesting. You see, in 2017, we still lived in the condo. Some of our utilities were covered by our outrageous HOA fees. In 2018, we were in this new house but had not yet installed the hot tub. For the past two years, the utility fees include heating the spa. It looks like (during the winter) we're paying an extra $150 per quarter or about $50 per month to keep our water warm.

The big news, of course, has been the flash crash of the stock market. The S&P 500 lost one-third of its value in a month — and has since bounced back 20%. (Which means it's still down 20% from its peak. Funny how math works.)

I've seen far far too many posts in Facebook groups about people wondering when they should sell. This makes me tense. If you're a long-term investor, you shouldn't sell during a downturn! This is the opposite of what you should do. If your wealth snowball is meant to be used twenty years from now — or even ten years — what do you care that the market is down right now?

Anyhow, the market drop has certainly melted some of my personal wealth snowball. At the end of 2019, my net worth totalled $1,437,543. At the end of March, it was $1,234,053, a decline of $203,490 (-14.2%).

Actually, I AM going to recover from this

The End of the World

So, the first quarter went well for me financially despite the stock market drop. I'm pleased with my current level of spending all the way around. I've been so deeply focused on my work on the Audible course that I really haven't done anything else. Seriously. I've blocked out the world for the past three weeks.

In the evening, I've been indulging myself by reading and watching post-apocalypse fiction. It's one of my favorite genres. And our current situation makes this material feel more relevant than ever.

One of my favorite books, for instance, is the 1949 novel Earth Abides by George R. Stewart, which takes a realistic look at the aftermath of a global pandemic that wipes out nearly all of humanity. It sounds dreary, but the book is actually hopeful, optimistic. Hardly anyone knows Earth Abides, and it's a shame. It's great.

I've also been watching movies about the end of the world, including The World, the Flesh, and the Devil (1959), which I'd never heard of before. It's fascinating.

After a radiation catastrophe destroys most life on Earth, one man finds himself alone in New York City. Eventually, he meets a woman. Adam and Eve, right? The trouble is he's black and she's white. They're in love but cannot consumate their relationship because of the race issue — despite the fact that nobody else is left. When a third survivor appears — a white man — things get complicated quickly.

Judged by today's standards, this film is pretty tame. But in 1959, it must have been bold stuff. Personally, I think it's a pretty powerful indictment of the racist standards of the time. (And it takes a few stabs at sexism, too.)

Oh, and like everybody else, Kim and I watched the awe-inspiring train wreck that is Tiger King. Holy cats!

Okay, that's enough for now. I need to begin editing the lessons for my Audible course. After that, I'll go help Kim tackle the yard. There's tons to do! But over the next few days, we'll resume a more normal publication schedule around here. And, as I said, look for the launch of the GRS redesign in about a week. Take care!

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My life philosophy: 51 lessons from 51 years https://www.getrichslowly.org/my-life-philosophy/ https://www.getrichslowly.org/my-life-philosophy/#comments Wed, 25 Mar 2020 12:00:31 +0000 http://getrichslowly.org/?p=236898 Happy birthday to me!

Today, I turn fifty-one. Holy cats, that's old! It's also a very, very strange time in this world. Kim and I had planned to celebrate by spending the weekend with my brother somewhere else in Oregon. With the coronavirus crisis in full swing, that's not going to happen. Oregonians have been ordered to stay at home with family unless absolutely necessary. So, we'll celebrate today with the dog and cats.

As I do every year here at Get Rich Slowly, I'm going to commemorate my birthday by sharing some of the most important things I've learned during my time on Earth. These are the core pieces of my life philosophy.

I'm no wiser or smarter than anybody else. And I'm certainly no better. But I am an individual. I'm my own person with my own personal preferences and personal experiences. These have all jumbled together over the past fifty years to give me a unique perspective on life (just as you have a unique perspective on life). To quote my favorite poem:

Much have I seen and known; cities of men
And manners, climates, councils, governments,
Myself not least, but honour'd of them all;
And drunk delight of battle with my peers,
Far on the ringing plains of windy Troy.
I am a part of all that I have met...

So, these fifty-one nuggets of wisdom are things I've found to be true for me -- and, I believe, for most other people. (But each of us is different. What works for me may not work for you.) These beliefs make up the core of my personal philosophy of life.

For obvious reasons, some of these notions overlap with the core tenets of the Get Rich Slowly philosophy. Plus, long-time readers will recognize this as an article I update every year on my birthday.

Some of these ideas are original to me. Some aren't. When I've borrowed something, I've done my best to cite my source. (And I've tried to cite the oldest source I can find. Lots of folks borrow ideas from each other. There's nothing new under the sun and all that.)

Here are fifty-one principles I've found to be true during my fifty-one years on this planet. I'll lead with this year's new addition.

  • Love yourself. All my life, I've struggled with low self-esteem. There have been times when I've hated myself. Last year was especially tough for me as anxiety and depression proved to be crippling for several months. Working with a therapist has helped. She's helped me to understand that it's important to learn to both accept myself and love myself — even though, like everyone, I'm imperfect. I still have a long way to go, but I'm making progress.
  • Self-care comes first. If you're not healthy, it's tough to be happy. Before you can take care of your friends and your family, you need to take care of yourself. Eat well. Exercise. Nurture your mind, body, and spirit. Your body is a temple; treat it like one. If you don't have your health, you've got nothing.
  • You get what you give. Your outer life is a reflection of your inner life. If you think the world is a shitty place, the world is going to be a shitty place. If you think people are out to get you, people will be out to get you. But if you believe people are basically good, you'll find that this is true wherever you go.
  • Life is like a lottery. You receive tickets every time you try new things and meet new people. Most of these lottery tickets won't have a pay-out, and that's okay. But every now and then, you'll hit the jackpot. The more you play -- the more you say "yes" to new friends and new experiences -- the more often you'll win. You can't win if you don't play. That said, however...
  • Luck is no accident. What we think of as luck has almost nothing to do with randomness and almost everything to do with attitude. Lucky people watch for -- and take advantage of -- opportunities. They listen to their hunches. They know how to "fail forward", making good out of bad. [Via the book Luck is No Accident.]
  • Don't try to change others. "Attempts to change others are rarely successful, and even then are probably not completely satisfying," Harry Browne wrote in How I Found Freedom in an Unfree World. "To accept others as they are doesn't mean you have to give into them or put up with them. You are sovereign. You own your own world. You can choose...There are millions of people out there in the world; you have a lot more to choose from than just what you see in front of you now."
  • Don't allow others to try to change you. Again from How I Found Freedom in an Unfree World: "You are free to live your life as you want...The demands and wishes of others don't control your life. You do. You make the decisions...There are thousands of people who wouldn't demand that you bend yourself out of shape to please them. There are people who will want you to be yourself, people who see things as you do, people who want the same things you want. Why should you have to waste your life in a futile effort to please those with whom you aren't compatible?"

An Early Birthday

  • Be impeccable with your word. Be honest -- with yourself and others. If you promise to do something, do it. When somebody asks you a question, tell the truth. Practice what you preach. Avoid gossip. [This is directly from Don Miguel's The Four Agreements.]
  • Don't take things personally. When people criticize you and your actions, it's not about you -- it's about them. They can't know what it's like to be you and live your life. When you take things personally, you're allowing others to control your life and your happiness. Heed the Arab proverb: "The dogs bark but the caravan moves on." [Also one of The Four Agreements.]
  • Don't make assumptions. The flip side of not taking things personally is to not assume you know what's going on in other people's heads. Don't assume you know the motivations for their actions. Just as their reality doesn't reflect your reality, your life is not theirs. Give people the benefit of the doubt. [Another of The Four Agreements.]

True story: Before Kim and I moved to our current country cottage, the dog park near our home had a homeless problem. (And still does.) We early-morning walkers did our best to clean up camps when they were vacated, but it was a never-ending task. Once, I joined a new woman for a stroll down the trail. "Look at that couple," she said, pointing to a man and a woman who were dragging a tarp down the hillside. "They just woke up and are packing up their camp." I tried to tell her that no, they were regular dog-walkers who were pitching in to clean things up. She didn't believe me. "I'm going to report them," she said. Classic example of a faulty assumption.

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Happy birthday to me!

Today, I turn fifty-one. Holy cats, that's old! It's also a very, very strange time in this world. Kim and I had planned to celebrate by spending the weekend with my brother somewhere else in Oregon. With the coronavirus crisis in full swing, that's not going to happen. Oregonians have been ordered to stay at home with family unless absolutely necessary. So, we'll celebrate today with the dog and cats.

As I do every year here at Get Rich Slowly, I'm going to commemorate my birthday by sharing some of the most important things I've learned during my time on Earth. These are the core pieces of my life philosophy.

I'm no wiser or smarter than anybody else. And I'm certainly no better. But I am an individual. I'm my own person with my own personal preferences and personal experiences. These have all jumbled together over the past fifty years to give me a unique perspective on life (just as you have a unique perspective on life). To quote my favorite poem:

Much have I seen and known; cities of men
And manners, climates, councils, governments,
Myself not least, but honour'd of them all;
And drunk delight of battle with my peers,
Far on the ringing plains of windy Troy.
I am a part of all that I have met…

So, these fifty-one nuggets of wisdom are things I've found to be true for me — and, I believe, for most other people. (But each of us is different. What works for me may not work for you.) These beliefs make up the core of my personal philosophy of life.

For obvious reasons, some of these notions overlap with the core tenets of the Get Rich Slowly philosophy. Plus, long-time readers will recognize this as an article I update every year on my birthday.

Some of these ideas are original to me. Some aren't. When I've borrowed something, I've done my best to cite my source. (And I've tried to cite the oldest source I can find. Lots of folks borrow ideas from each other. There's nothing new under the sun and all that.)

Here are fifty-one principles I've found to be true during my fifty-one years on this planet. I'll lead with this year's new addition.

  • Love yourself. All my life, I've struggled with low self-esteem. There have been times when I've hated myself. Last year was especially tough for me as anxiety and depression proved to be crippling for several months. Working with a therapist has helped. She's helped me to understand that it's important to learn to both accept myself and love myself — even though, like everyone, I'm imperfect. I still have a long way to go, but I'm making progress.
  • Self-care comes first. If you're not healthy, it's tough to be happy. Before you can take care of your friends and your family, you need to take care of yourself. Eat well. Exercise. Nurture your mind, body, and spirit. Your body is a temple; treat it like one. If you don't have your health, you've got nothing.
  • You get what you give. Your outer life is a reflection of your inner life. If you think the world is a shitty place, the world is going to be a shitty place. If you think people are out to get you, people will be out to get you. But if you believe people are basically good, you'll find that this is true wherever you go.
  • Life is like a lottery. You receive tickets every time you try new things and meet new people. Most of these lottery tickets won't have a pay-out, and that's okay. But every now and then, you'll hit the jackpot. The more you play — the more you say “yes” to new friends and new experiences — the more often you'll win. You can't win if you don't play. That said, however…
  • Luck is no accident. What we think of as luck has almost nothing to do with randomness and almost everything to do with attitude. Lucky people watch for — and take advantage of — opportunities. They listen to their hunches. They know how to “fail forward”, making good out of bad. [Via the book Luck is No Accident.]
  • Don't try to change others. “Attempts to change others are rarely successful, and even then are probably not completely satisfying,” Harry Browne wrote in How I Found Freedom in an Unfree World. “To accept others as they are doesn't mean you have to give into them or put up with them. You are sovereign. You own your own world. You can choose…There are millions of people out there in the world; you have a lot more to choose from than just what you see in front of you now.”
  • Don't allow others to try to change you. Again from How I Found Freedom in an Unfree World: “You are free to live your life as you want…The demands and wishes of others don't control your life. You do. You make the decisions…There are thousands of people who wouldn't demand that you bend yourself out of shape to please them. There are people who will want you to be yourself, people who see things as you do, people who want the same things you want. Why should you have to waste your life in a futile effort to please those with whom you aren't compatible?”

An Early Birthday

  • Be impeccable with your word. Be honest — with yourself and others. If you promise to do something, do it. When somebody asks you a question, tell the truth. Practice what you preach. Avoid gossip. [This is directly from Don Miguel's The Four Agreements.]
  • Don't take things personally. When people criticize you and your actions, it's not about you — it's about them. They can't know what it's like to be you and live your life. When you take things personally, you're allowing others to control your life and your happiness. Heed the Arab proverb: “The dogs bark but the caravan moves on.” [Also one of The Four Agreements.]
  • Don't make assumptions. The flip side of not taking things personally is to not assume you know what's going on in other people's heads. Don't assume you know the motivations for their actions. Just as their reality doesn't reflect your reality, your life is not theirs. Give people the benefit of the doubt. [Another of The Four Agreements.]

True story: Before Kim and I moved to our current country cottage, the dog park near our home had a homeless problem. (And still does.) We early-morning walkers did our best to clean up camps when they were vacated, but it was a never-ending task. Once, I joined a new woman for a stroll down the trail. “Look at that couple,” she said, pointing to a man and a woman who were dragging a tarp down the hillside. “They just woke up and are packing up their camp.” I tried to tell her that no, they were regular dog-walkers who were pitching in to clean things up. She didn't believe me. “I'm going to report them,” she said. Classic example of a faulty assumption.

  • Always do your best. Your best varies from moment to moment. Some days in the gym, for instance, I'm able to lift heavier weights than on other days. Some days I can run faster than usual; some days, I'm slower. That's okay. What matters most is that I give my best effort every time. No matter what you do, do it as well as you can. This is one of the keys to success and happiness. [This is the last of The Four Agreements.]
  • Effort matters more than skill or talent. “Effort counts twice,” argues Angela Duckworth in Grit: The Power of Passon and Perseverance. Skill, she says, is talent multiplied by effort. The more you do what you're good at, the better you get. But achievement is the product of skill multiplied by effort. Effort counts twice. (This may be why psychologists say it's better to praise your child's efforts instead of her results. Praise her for spending time on her homework, not because she got an A.)
  • Embrace the imperfections. If you do what is right, and you do your best, then there's no reason to feel bad about the outcome. Nobody's perfect. Don't beat yourself up if you make mistakes. And don't sweat it if other people get upset with you too. If you're doing the best you can, that's good enough.
  • The perfect is the enemy of the good. Too many people never get started because they don’t know that the “best” first step is. You don't know the best guitar, so you never learn to play. You don't know which Spanish book is best, so you never learn to speak. You don't know how to bench press, so you never go to the gym. Don’t worry about getting things exactly right — just choose a good option and do something to get started.
  • There’s no single “right” way to achieve success. Each of us is different. We have different goals, personalities, and experiences. We each need to find the tools and techniques that are effective for our own situations. There’s no one right way to eat, love, pray, or pay off debt. Don’t believe anyone who tells you there is. Experiment until you find methods that are effective for you. (Note, however, that there are wrong ways to do these things — steer clear of obvious bad choices.)
  • Be present in the moment. Accept life for what it is, without labels or judgment. Yield to events; don't block them. Go with the flow. Nothing exists outside the present moment: Don't dwell on the past or worry about the future. Improve the quality of the here and now. When you do something, do that thing. When you're with somebody, be with them. Don't multitask. Put away the smartphone or the computer or the book. Be all there. [This is an ancient concept made popular by The Power of Now.]
  • Spirituality is personal. The desire for one person (or group) to impose her (or their) beliefs on others is the source of much of this world's strife. Believe what you want, and let others do the same. “There is no need for temples, no need for complicated philosophies. My brain and heart are my temples; my philosophy is kindness.” — the Dalai Lama
  • Be skeptical — but keep an open mind. Don't believe everything you hear — from others and from your own internal self-talk. Practice healthy skepticism. But keep an open mind. Don't automatically assume that everything is fake or false. Do your best to analyze the things you see and hear to determine whether they actually make sense.
  • Don't yuck someone else's yum. Just because you don't like something doesn't mean it's bad. Pursue your passions, and let others pursue theirs. If you don't like something, fine. Don't make a big deal about it.
  • You can't prevent every possible thing from going wrong. Don't even try. Instead, learn to deal effectively with minor problems. You'll build self-confidence, which will lead to an increased willingness to take calculated risks. (Similarly, you can't make everyone like you. It's foolish to try.)
  • Be flexible. Goals are good, but single-minded devotion to a goal can often blind a person to other opportunities. And it's a mistake to cling to one path out of sense of obligation. If you enter law school and discover you hate it, then quit. Don't endure years of misery because you feel like it's expected of you. That's dumb. You have more options than you think, but you may need to slow down and open your eyes in order to see them.
  • Be encouraging. Support the creative, positive actions of others. There are a lot of people out there who want to tell others what's wrong with their actions, why the things they want to do can't be done. They're quick to criticize small mistakes instead of praising the greater effort. Don't be this way. Do what you can — in ways both big and small — to help others achieve their goals. [Taken from Action Girl's Guide to Living.]

Keep Dropping Keys All Night Long

  • You are the author of your own life. Everyone has a story they want to tell you about yourself. Society tries to push a “standard narrative” on us about how life should go. Ignore these stories. If you don't like the story you're living, it's up to you to change the plot. You didn't write the beginning of your story, but you have the power to choose the ending. Choose and adventure you love instead of one that makes you unhappy.
  • You don't need permission. When we're young, we wait for our parents and teachers to say it's okay to do the things we want to do. As an adult, you don't need permission from anybody else. Do you want to quit your job and travel the world? Do it. Do you want to learn how to ride a motorcycle? Do it. Don't wait for somebody else to give you the go-ahead. You are the only one who needs to give yourself permission to do these things.
  • Don't let fear guide your decision-making process. My girlfriend Kim told me this on one of our first dates, and it echoes something my accountant once told me. He says that too many people make money moves based solely on the tax repercussions. “That's dumb,” he told me. “You should do what you want because you want to, not because of the tax hit.” This applies in all aspects of life. Make decisions based on what you want to do. Move toward something, not away from something.
  • Action cures fear. Thought creates fear; action cures it. What we're actually afraid of is the unknown. We like certainty, and choosing to do something with an uncertain outcome makes us nervous. Taking the first step can be scary, but each additional step becomes easier and easier. When you act, you remove the mystery. Action creates confidence. It creates motivation. (Most people think motivation comes before action. They're wrong. Action leads to motivation.) [This is an old idea but this phrasing is from The Magic of Thinking Big.]
  • Action is character. If you never did anything, you wouldn't be anybody. Superman is a superhero because he does heroic things, not because he talks about doing them. And a writer is a writer because she writes, not because she talks about writing. What we say doesn't matter; it's what we do that counts. We are what we repeatedly do. [From F. Scott Fitzgerald's notes on The Last Tycoon.]
  • You're more likely to regret the things you don't do than the things you do. That's not to say you should be an asshole, or that you won't regret making big mistakes. But generally speaking, you're more likely to be sorry that you didn't introduce yourself to the barista at the coffeehouse, didn't go bungee-jumping with your friends, didn't stay in touch with your friends. [This is the central idea in The Top Five Regrets of the Dying.]
  • Give without the expectation of return. Help other people — even if it costs a bit of money or time. Don't always expect a financial payoff. Don't get offended if your effort isn't acknowledged or appreciated. Help because it's the right thing to do, not because you want to be noticed.
  • When good things happen to people you know, help them celebrate. Their success does not diminish you. Be happy when your friends and family achieve something cool. If a co-worker gets a raise, be supportive and not jealous. Approach life as if it were a win-win game. Because it is.
  • Happy people almost never criticize, says Steven Pressfield in The War of Art. “If they speak at all,” he writes, “it's to offer encouragement.” This is true in my experience, as well. Being sarcastic and cutting doesn't mean that you're smarter than the people around you. Most of the time, it simply means you're an asshole. And that leads me to the next lesson…
  • Staying in a relationship out of a sense of obligation or pity is not a good reason. Sometimes you really do have to walk away — from a friendship, from a family member, even from a romantic partner. Yours isn't the only story in this world; sometimes it's better to be somebody else's villain than to make yourself miserable.
  • You have the freedom to choose how you respond to any event. In the classic Man's Search for Meaning, Victor Fankl writes, “Everything can be taken from a man but one thing: the last of human freedoms — to choose one’s attitude in any given set of circumstances, to choose one’s own way.” He based this philosophy on his personal experience in a Nazi concentration camp. When that jerk cuts you off on the freeway, you get to choose if you'll get angry or give him the benefit of the doubt. When you get stuck behind the old lady in line at the grocery store, it's up to you how to respond. When those stupid kids next door vandalize your lawn, you get to choose how you feel about it.
  • You'll be happier if you focus on efforts and attention only on the things you can control. Each of us has a large number of things about which we're concerned: our health, our family, our friends, our jobs; world affairs, the plight of the poor, the threat of terrorism, the current political climate. Within that Circle of Concern, there's a smaller subset of things over which we have actual, direct control: how much we exercise, what time we go to bed, whether we leave for work on time; what we eat, where we live, with whom we socialize. You'll be happier and more productive if you dedicate yourself to your Circle of Control and ignore your Circle of Concern. [This notion is part of Julian Rotter's social-learning theory of personality, but was popularized by Stephen Covey in The Seven Habits of Highly Effective People.]

[Circle of Concern vs. Circle of Control]

  • You can have anything you want — but you can't have everything you want. Everything is a trade-off. You have limited resources. When you choose to spend — time, money, brainwidth — on one thing, you're also choosing not to spend on others. Do your best to spend only on the things that matter most to you. Don't really give a rat's ass about Big Bang Theory? Then why are you watching it? Spend your time and energy on something you do care about.
  • Make room for the big rocks first. It's easy to let your time and energy be sucked up by trivial errands and tasks. You find you no longer have space for the things you thought were most important. Don't do that. Always carve out time and attention for those people and activities you value most. If the house doesn't get clean because you were hanging out with a friend, so what? If you didn't mow the lawn because you went to the gym instead, that's a good thing. Tackle the important, then the trivial.
  • If you want to avoid feeling overwhelmed, create margin in your life. Simplicity brings peace. Many people have tried to beat this into my head over the years, but it wasn't until I read The Life-Changing Magic of Tidying Up that I really understood. Every item you own, every meeting you schedule, every email you receive — every obligation in your life carries both psychic and physical weight. Traveling in an RV for fifteen months, I learned to love owning very little. It was freeing! And it was freeing too to not be a slave to a schedule. As much as you can, build margin into your life so that you can feel peaceful and free.
  • Be your own advocate. Don't be afraid to ask what you want and what you need — especially if it's help. Too often, we struggle in silence when we could make our lives better simply by asking a question or two. Better to look ignorant for a moment than to remain ignorant for a lifetime. Don't wait for others to solve your problems. Be proactive. Find answers. Take action. Learn to help yourself.
  • It’s always best to be proactive. In life, there are often default options. If you don’t consciously and deliberately choose something different, you get the default. When this happens, your life shapes you instead of you shaping your life. Most people go through their entire lives in default mode. They accept what life hands them without question. They're reactive. Choose to be proactive instead. If you don't set your own goals, somebody else will set them for you.
  • Quality tools can make life better. For years, I equated low cost with smart spending. Now I know that's not always the case. Now, I'm willing to spend to buy high-quality things when I know I'll use them all the time. I have high-quality boots, for instance, and an expensive computer. I'm okay with that. I walk everywhere I go, so the boots are worth it. And my computer is my livelihood. The expense is worth it because it makes working a joy. For items used daily, buy the best. If you don't use it often, of if it's not important to you, buy the cheapest possible.
  • The meaning of life is the meaning you decide to give it. Some people are searchers. They wander through life looking for answers…but rarely find them. Others accept without question what an outside authority tells them is true. I believe that the meaning of life comes from within, from the things that you lean to prioritize and value. Nobody is going to tell you what life should mean to you; you have to decide that for yourself.
  • You are the boss of you. Your circumstances might not be your fault, but they’re your responsibility. Don’t blame anyone or anything else for your situation, and don’t expect somebody else to rescue you. If you don't like where you are, resolve to do what it takes to make a change.
  • Don't compare yourself to others. I preach this often at Money Boss. Comparing yourself to others is counter-productive. Generally one of two things happens: You either feel shitty because you're not as good as the other person, or you feel superior because they're not as good as you. In reality, nobody is better than anybody else. We're just different. If you want to compare yourself, compare Present You to Past You — and do what you can to make Future You a better version of why you are today.
  • You can't get rid of a bad habit; you can only change it. “You can never truly extinguish bad habits,” writes Charles Duhigg in The Power of Habit. “Rather, to change a habit, you must keep the old cue, and deliver the old reward, but insert a new routine.” He calls this the Golden Rule of Habit Change. To change your habit loop, you have to do something different when the habit is triggered. Let me give you an example: I used to be a stress-eater. I'd eat junk food — and lots of it — any time I had a deadline or a conflict with a friend. The act of eating soothed my mind. The stress was the cue (the trigger), and the rush was the reward. No surprise, this habit made me fat. I've managed to (mostly) change the habit loop by walking instead of eating. Now if I get stressed, I go for a walk. I get a similar rush for a reward, but my actions are healthier.
  • Positive reinforcement is powerful. When Tahlequah performs a desired behavior — sitting, coming when called, being nice to the cats — we reward her. She learns to connect the treat with the actions we wants, and becomes more likely to offer them…even when we don't reward her. What's true for dogs is true for people too. Does nagging your spouse actually work? Probably not. (In fact, it probably has the opposite effect you intend!) But if you reward the behavior your want, you'll eventually see it offered without prompting. The same thing is true with children, co-workers, family members, and so on. [This is a fundamental principle of psychology. An excellent source for more info is Don't Shoot the Dog.]

  • Create your own certainty. Don't allow yourself to be dependent on the choices and actions of others. I call this “Michelle's Law” after my friend who taught it to me. But I have another friend — Jenn — who talks about “ensuring success”. When she's working on something important, whether it's a relationship or a vacation, she always follows up to make sure that what she expects to happen will happen. This philosophy is akin to the idea that you should trust, but verify.
  • Choose happiness. Do work and play that brings fulfillment. Spend time with people who build you up, not those who bring you (and others) down. Strip from your life the things that take time, money, and energy, but which do not bring you joy. Focus on the essentials.
  • Time is more valuable than money. You can always make more money…but you can't make more time. This isn't permission to spend lavishly on anything and everything just because you might get hit by a truck tomorrow. It is, however, an invitation to consider what's important to you and to focus on that. It's encouragement to get clear on your personal mission statement and to build your life around it.
  • It's never too late to be great. It takes time to achieve anything worthwhile. But just because you haven't started yet — or haven't reached the level your aiming for — doesn't mean you can't or won't make it happen. Don't be daunted by audacious goals. Are you fifty and want to run a marathon? Start training. Are you sixty and only now thinking of retirement? That's okay. Better late than never. Are you seventy and want to write a novel? Do it. History is filled with examples of folks who achieve great things later in life. [This argument is made persuasively by Tom Butler-Bowdon in his book, Never Too Late to Be Great.]
  • Be yourself. This is the most important thing I've learned during my 49 years of life. For too long, I tried to please others. I tried to be and do the things I thought they wanted me to be and do. As a result, I was unhappy. And most of the time, my actions didn't have the results I thought they would. They didn't make others like me any better. Instead of trying to please others, now I'm just me. I'm honest about who I am and what I want. Maybe some of my old friends don't like who I've become. That's okay. I've made plenty of people who do like who I am.
  • “Everybody is talented, original and has something important to say.” — Barbara Ueland, If You Want to Write.

This isn't a comprehensive list of my beliefs, but it's a fair survey of my life philosophy. It has evolved from my philosophy when I was forty or thirty. And I'm sure that my philosophy at sixty will have changed in ways that I cannot foresee right now.

Also note that although I really do believe these things to be true, I also struggle with them. I'm human, just like you. I don't always live up to my ideal self. I don't always adhere to my own life philosophy.

How many of these ideas do you agree with? Which do you disagree with? More to the point: What are the core ideas that make up your personal life philosophy?

One Hundred Words

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A short list of useful coronavirus resources https://www.getrichslowly.org/coronavirus-resources/ https://www.getrichslowly.org/coronavirus-resources/#comments Fri, 20 Mar 2020 18:00:15 +0000 https://www.getrichslowly.org/?p=240287 Believe it or not, the current coronavirus crisis is affecting Get Rich Slowly too. Things are slow around here. Traffic is down. Revenue is down. Production is down. Plus, I have a big deadline at the end of the month. My project for Audible and The Great Courses is due on March 31st.

So, just like the rest of the world, we're going to press "pause" for a couple of weeks. I will return next Wednesday with my annual birthday article, but you'll have to scroll down to see it. I'm going to pin this post to the top of the front page.

The break will allow me to focus my full attention on the FIRE course. Meanwhile, my partner Tom can work on behind-the-scenes stuff (including the nearly-completed site redesign!) without worrying that I'll mess things up haha. And, best of all, maybe we can get ahead on our publication schedule for once. We have two new staff writers. I have some articles planned. Tom has some articles planned. It would be great to resume in a couple of weeks with a backlog of material!]]> Believe it or not, the current coronavirus crisis is affecting Get Rich Slowly too. Things are slow around here. Traffic is down. Revenue is down. Production is down. Plus, I have a big deadline at the end of the month. My project for Audible and The Great Courses is due on March 31st.

So, just like the rest of the world, we're going to press “pause” for a couple of weeks. I will return next Wednesday with my annual birthday article, but you'll have to scroll down to see it. I'm going to pin this post to the top of the front page.

The break will allow me to focus my full attention on the FIRE course. Meanwhile, my partner Tom can work on behind-the-scenes stuff (including the nearly-completed site redesign!) without worrying that I'll mess things up haha. And, best of all, maybe we can get ahead on our publication schedule for once. We have two new staff writers. I have some articles planned. Tom has some articles planned. It would be great to resume in a couple of weeks with a backlog of material!

Note: During this break, I'll continue updating the “spare change” links on the front page and Jim and I will continue publishing Apex Money every weekday.

While we're on hiatus, I'll use this post to collect useful coronavirus resources. Some of this will be general info, but I'll also bookmark stuff related to personal finance and the economy.

I'm going to be very selective about what I list here. I'm only going to share the best of what I find. If you know of a resource that should be included, please share it in the comments.

General Coronavirus Information

First up, here's some of the best general coronavirus info I've found.

Our World in Data has an amazing page with coronavirus statistics and research. This is the best comprehensive resource I've found for coronavirus facts and figures. It features up-to-date info on growth and spread, plus other essential info. Here's a sample chart from the site.

The Financial Times, which keeps most of its material behind a paywall, is allowing free access to its own set of COVID-19 tables and graphs. I like these because a few of them are interesting and unique. A lot of people (including my ex-wife) are partial to the Johns Hopkins coronavirus dashboard. I find it to be a bit buggy and lacking in info.

You can find reliable info regarding the health aspects of COVID-19 at the World Health Organization coronavirus hub. The U.S. Centers for Disease Control and Prevention also have a useful COVID-19 info center. Also, Consumer Reports has created its own guide to the coronavirus.

The FluTrackers forum is collating coronavirus news from around the world, including news from each U.S. state. I've been using this coronavirus live dashboard for a week now, although I cannot vouch for the veracity of its data.

The Emory University school of medicine has created a quick and dirty coronavirus checker. (I've been feeling blah lately, but it's almost surely just my annual tree allergies. This checker gave me this result: “It is unlikely you have coronavirus.”) And, if you'd like to play with possible scenarios, this epidemic calculator uses a classical infectious disease model to project disease spread based on variables that you can tweak.

Epidemic calculator

Here are a few other articles and resources that you might find informative:

To fight misinformation about the current situation, check sketchy claims at Snopes (here are the Snopes search results for ‘coronavirus') or the World Health Organization coronavirus mythbusters page.

Coronavirus Financial Information

As I've written recently, this situation is going to wreak havoc on many families. The financial outfall of COVID-19 is likely to be severe. Here are some of the best resources I've found for tackling the money side of this situation.

Lastly, here's a podcast episode in which Brandon, the Mad Fientist, interviews J.L. Collins about the coronavirus stock market crash (and what to do about it).

Okay, that's it for now.

Although I know folks who have indeed contracted COVID-19, Kim and I (and our families) are currently healthy. I hope that you and your family are doing well too. See you on the other side.

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