Don’t miss an episode of our podcast, Personal Finance for Long-Term Investors. Tune in on: Apple Podcasts Spotify YouTube Now, here’s today’s article: I’ve struggled with this concept. I’ve seen many others struggle with it, too. Step 1: We discover a new shiny idea (…Roth conversions! …Small-cap value investing! …Qualified charitable distributions!) Step 2: This idea’s shiny appeal catapults it to the top of our priority list. Step 3: Blinded by the light, we mistakenly overemphasize this new idea to the detriment of the big picture. In various fields, this is called a “novelty effect” or “novelty bias.” It affects long-term investors and DIY financial planners, too, as they contemplate retirement and other long-term goals. What if, instead, we had a simple, prioritized list of ideas that long-term investors ought to consider? Something that wipes away bias and cuts straight to the facts. We need an “order of operations” that ensures you focus on the most important things first, before getting to the shiny new idea. Math has “PEMDAS.” Personal finance has “FOO” – the “financial order of operations.” And what we’re about to do here is “FOO-adjacent,” but much more specific to long-term investors, retirement planning and portfolio construction. The Long-Term Investor’s Order of Operations I believe that if you follow this list in order, you’ll be a better long-term investor. Don’t commit too much energy to a lower topic until all the upper topics are fully addressed. Step 1: Invest I know, I know… we start with a stunning revelation: the most important step in investing is “invest.” But the truth is, many people get caught up in small details before they’ve invested enough to make those details matter. Your stock/bond allocation doesn’t matter if you only have $100 sitting in an account. The single biggest dial you can turn is how much you choose to invest. Consider making consistent investment deposits over time (aka “dollar cost averaging.”). Focus on your savings rate, lifestyle inflation, and career capital. Step 2: Control Your Temperament Warren Buffett said, “Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.” Despite what many people think about investing, behavior dominates math. Simple steps, like automated investing and rules-based rebalancing, can be vital. We all possess biases (loss aversion, recency bias, anchoring) that can derail us. Long-term returns are achieved by staying invested during crashes, avoiding panic selling, avoiding speculative manias, thinking long-term, and choosing process over prediction. The math is straightforward. Controlling the broad spectrum of human emotion is far more challenging. Step 3: Risk Assessment & Asset Allocation Asset allocation describes splitting your portfolio across broad asset types like stocks, bonds, real estate, cash, etc. Determining a proper asset allocation is related to your personal time horizon and “need,

In this edition of the reader story, we meet a 41-year-old unmarried woman who freelances to earn a monthly income of Rs 50,000. About this series: I am grateful to readers for sharing intimate details about their financial lives, which benefits us all. Some of the previous editions are linked at the bottom of this article. You… The post How a 41-Year-Old Single Woman Built 30% of Her Retirement Corpus with 50K Freelance Income appeared first on […]

We’re in the fun phase of innovation right now. Tons of overreactions. All kinds of predictions are being thrown around. No one knows what will happen but plenty of scenarios seem plausible. Some people think it could be the greatest technological breakthrough in history. It will solve diseases and create so much abundance we won’t know what to do with ourselves. Others are worried about creating a god in a bo…

Are you looking to listen to more travel podcasts? Podcasts about travel share inspiring stories, offer insider insights and local perspectives, suggest things to do, and give us a peek into how people explore the world. They encourage us to step out of our comfort zones by sharing lessons learned and debunking myths, melting away […] The post 38 Must-Follow Travel Podcasts For Every Adventurer – Episode 121 appeared first on The Thought Card.

Many retirees look at their average tax rate as a quick measure of how much they pay in taxes each year. It feels like a tidy summary. The problem is that this number is useful for reviewing the past but surprisingly poor for guiding your next decision. Your average tax rate is mostly a rearview-mirror statistic. It tells you what already happened, but does not tell you what your next decision will cost.  The Impact […]

    Now that my kids are getting to be college age, I’m starting to see the paths of various kids diverge as they enter the real world.    I’ve seen some kids transition from childhood to adulthood with ease, while others are clearly struggling.    It’s become increasingly apparent to me that there isKeep Reading The Simple Reason Why Some Kids Don’t Thrive in the Real World & Others Do was originally published on […]

The Short Version: You bought a house, maxed out your 401(k), funded the HSA and 529. On paper, you’re doing great. But when you actually need money… you can’t touch any of it. Most middle-class wealth is locked in illiquid assets, retirement accounts with penalties, and home equity you can’t easily access. The trap is optimizing for a retirement decades away while sacrificing flexibility today. There are ways out: Roth accounts, HELOCs, house hacking, and building income streams that pay you now instead of later. On paper, you’re doing everything right. You bought a house, you’re maxing out your 401(k), you’ve got money in an HSA, maybe a 529 for the kids. Your net worth looks solid when you add it all up. But when you actually need money… for an opportunity, an emergency, or just to take a break from work… you realize something uncomfortable, and it’s that you can’t touch any of it.This is the middle-class trap. You’ve accumulated assets but you’ve lost access to them. You’re wealthy on paper and broke in reality. How the Trap Gets Set Nobody sets out to lock up all their money. It happens gradually, one “responsible” decision at a time. You buy a house because that’s what adults do You fund an HSA because it’s triple tax-advantages You open a 529 because you want your kids to have options You put money in your 401(k) because your employer matches and the tax break is too good to pass up Each of these decisions makes sense in isolation. They’re the things you’re supposed to do. Financial advisors recommend them and your parents validate it. Society rewards you for being responsible. But add them all up and you’ve got a problem. Your entire net worth is tied up in places you can’t reach. Want to retire early? You can’t access your retirement accounts without penalties. Want to take a year off to switch careers? Your money is locked behind tax walls. Want to invest in an opportunity that could accelerate your wealth? You’d have to liquidate something and pay through the nose to do it. The trap is that you’ve optimized for a retirement that’s decades away while sacrificing flexibility today. The Liquidity Problem Liquidity is one of those financial concepts that doesn’t feel important until you need it. Liquidity just means how easily you can convert an asset into cash you can actually use. A savings account is highly liquid. A retirement account is not. Home equity is somewhere in between. Meaning you can access it but it takes time and costs money. Most middle-class wealth is illiquid. It’s trapped in homes that would need to be sold or borrowed against. It’s trapped in retirement accounts that penalize early withdrawals. It’s trapped in assets that are optimized for tax efficiency, not accessibility. This creates a weird situation where people with substantial net worths live paycheck to paycheck. They’ve got $500,000 in

The landscape of the American workforce is facing a period of unprecedented volatility. While previous industrial revolutions primarily automated manual labor, the current wave of artificial intelligence is targeting the professional, college-educated workforce. Insights from political figures, leading economists, and top-tier software engineers suggest that the transition is moving significantly faster than many anticipated, signaling a profound change in how “work” is defined in the 21st century. Read the rest