Money

June 2022 Best of the Web

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Financial markets continue to be volatile while inflation rages on. At times like this it’s especially important to return to fundamentals.

This month’s selections are heavy on this theme. Articles review fundamentals of building and managing a portfolio and fundamentals that dictate bond returns.

We explore the idea that recent retirees may have hit a perfect storm of falling stock and bond prices combined with high inflation. Resources help you understand how you can navigate the sequence of returns risk this creates for those contemplating or early in retirement.

We will explore how inflation is reported and how that has changed over time. Resources will help you spot B.S. and avoid financial scams. We close with a reminder of why all of this matters.

Let’s dive in….

Investment Fundamentals

Adam Grossman discusses characteristics of investment portfolios that are Built to Last

Mike Piper suggests that we should treat our money as though we are a fiduciary. He asks, Do You Invest Your Money as Prudently as You Would Invest Somebody Else’s?

Bond Fundamentals

Rising interest rates have hurt bond prices generally. Longer term bonds are getting pummeled. If you are second guessing why they are in your portfolio, Ben Carlson builds The Case For Owning Bonds.

TIPS  have been a part of my portfolio for years as part of my strategy to mitigate the effects of inflation. I’ve been pleasantly surprised with how well they have performed through recent periods of low inflation. Yet with high inflation, they are performing similarly to most other bonds.

Adam Collins asks and answers, Are TIPS Broken?

Sequence of Returns Risk

For years, we’ve been exploring the risks and challenges of retiring in times of high stock valuations and low interest rates.

Christine Benz asks What If This Turns Out to Be a Terrible Time to Retire?

Allan Roth shares Real-Life Strategies to Mitigate Sequence-of-Return Risk.

Understanding Inflation Numbers

Jeanna Smialek is doing outstanding reporting on inflation. Unfortunately her work is typically behind a paywall, so I don’t share it often.

This next resource is a Twitter thread she shared that explains how inflation is reported and how that has changed over the years. You can follow this to links to more detailed resources.

B.S.

Last month I dedicated a full segment of the round up to the topic of B.S. I don’t intend to make this a recurring theme, but this post by Morgan Housel is an excellent read. Different Kinds of B.S.

Buyer Beware

I am a long-time client of and borderline cheerleader for Vanguard. But recently I’ve shared a number of articles criticizing their poor customer service, dated technology, shift in investment strategy, and new emphasis on pushing advisory services. 

I’ve also written a critique of their content. It seemed more interested in generating internet clicks than in helping educate clients. 

Despite all that, it’s important to remember that Vanguard is still unique among brokerages. Their structure encourages them to act in alignment with their customer’s best interests.

An example of the difference between them and literally every other investment company structured to maximize shareholder profits was on display this past month. An SEC press release announced that Schwab Subsidiaries Mislead Robo-Adviser Clients about Absence of Hidden Fees.

And once you leave the world of regulations and enter the Wild West of cryptocurrencies, all bets are off.

MacKenzie Sigalos reports Crypto scams have cost people more than $1 billion since 2021.

Aside from scams, crypto platforms continue to struggle through their biggest stress test. On June 12th, Celsius published A Memo to the Celsius Community. It informed customers Celsius was “pausing all withdrawals, Swap, and transfers between accounts.” As of June 26, this still has not changed. Ouch!

Remembering What Is Important

A few weeks ago I was starting to feel stressed out and overwhelmed trying to keep up with my CFP education program and exam prep, self-imposed schedule to create content for the blog, and preparing for upcoming travel and speaking engagements. Then I came across this post on social media that stopped me in my tracks and reminded me of what is important and why I went down this path.

what matters

My only daughter is at the half-way point, having just finished third grade. This led me to revisit one of the most impactful blog posts I’ve ever read, Tim Urban’s The Tail End.

After reflecting on these ideas, I decided to take my foot off the gas a little. This past month, we went back to Pennsylvania and I focused on cherishing that time with family. I encourage you to do the same.

I’ll close with another excellent read putting a different spin on the topic of why money is so important in our society up to a point, and then that importance starts to wane. Jim Wang writes Don’t Chase More: To Win at Money, Accomplish Goals.

Enjoy your summer! I’ll be at Camp FI Colorado next weekend. I hope to meet some of you there.

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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. You can reach him at chris@caniretireyet.com.]

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