July 2024 Best of the Web

I start with timeless lessons about risk management, simplifying finances, and finding balance in life. We’ll take deep dives into technical topics including Social Security, tax-deferred vs. Roth accounts, and safe withdrawal rates. We’ll also explore some less technical but equally important benefits of frugality.

I share some good and bad news from the world of travel rewards. Finally, we’ll examine the term fiduciary and why you should keep your guard up when you hear it.

Important Lessons

Last month, I shared Jonathan Clements blog in which he shared the sad news of receiving a terminal cancer diagnosis. In spite of that, he keeps on writing and sharing important financial lessons. We’ll start with two.

Clements covers one of my favorite topics, risk management, from his unique perspective writing The Risks We Miss.

In another post, Clements shares all that he is doing to simplify his financial life for his family after his impending death writing No Slowing Down. Reading this was validating. I share similar tips with almost every one of my clients as I challenge them to pare down unnecessary complexity from their financial lives proactively.

Finding Balance

Christine Benz writes I’m Not Ready for Retirement (but I’m Not Waiting). She proposes we normalize phased retirement, and I agree fully!

Dr. Peter Attia shares My Recent Lesson In Overtraining. This one has nothing to do directly with finance. However, I can’t help but notice the parallels between my time as a physical therapist and a financial blogger and planner. It is true in the general population most people both under save and get too little physical activity. In most cases saving and exercising more is better. However, as with anything more is not always better. You can have too much of a good thing. This short read is a powerful reminder.

Benefits of Frugality

Frugality is too often equated with sacrifice which no one likes. Instead, we need to reframe frugality to highlight the benefits of saving.

Olivia Lima writes A Guide to Savvy Car Buying. She brings receipts for how much her frugality with vehicles saved her, money which she can use for far more valuable things than interest payments to a bank for a depreciating asset.

Though we’re all pursuing financial “independence,” Katie Gatti Tassin reminds us We Live in a Society. This is a powerful reminder of the value of community, and how we can build it by helping others and accepting their help while saving money in the process.

Technical Topics

Brad Barrett interviewed Mike Piper was on the Choose FI Podcast: Your Social Security Questions Answered. This conversation serves as an outstanding introduction or refresher on Social Security terminology, retirement benefits, and claiming strategies.

A similarly great foundational conversation on the complex topic of safe withdrawal rates can be found on the Forget About Money video podcast. David Baughier interviews Karsten Jeske: Sequence of Returns Risk Solved!

Outside of FIRE blogs, conventional wisdom is that Roth IRA and 401(k) accounts are better than tax-deferred versions. Sean Mullaney writes Accumulators Should Ignore the Conventional Wisdom.

Travel Rewards – Good and Bad News

One of the best travel credit cards for its generous sign up bonus and easy to use and versatile travel rewards just got better.

For a limited time with card_name you can earn 75,000 miles once you spend $4,000 on the card on purchases within the first three months of account opening, plus receive a one-time $250 Capital One Travel credit in your first cardholder year. In total, that’s equal to $1,000 in travel.

The card_name has some additional perks. It provides travel insurance benefits and a $100 annual credit for Global Entry or TSA PreCheck®.

This is one of the first travel cards I ever had. Since it’s been a while since I had it I signed up again to take advantage of this rare bonus opportunity!

On a less positive note, changes are afoot at Southwest Airlines. This has traditionally been my favorite place to use travel credit card rewards for the tremendous value and ease of use I’ve been able to attain.

I recently listened with concern to this episode of The Journal podcast: Southwest Changed Flying. Can It Change Itself? It describes how a new investor group is challenging Southwest to change some of the characteristics that made it unique among airlines in order to become more profitable. Already last week, a first of these changes came to fruition when Southwest announced it is getting rid of open seating. 🙁

Fiduciary Duty

A fiduciary duty sounds like an amazing idea in theory. It legally binds one party to act in another party’s best interests. What’s not to like?

Allan Roth explains, writing Fiduciary Duty – Theory versus Reality. This is an excellent resource for those who claim to be fiduciaries to challenge their own biases and recognize the inherent conflicts of interest with all financial advice. It is also an excellent reminder for consumers to ALWAYS do their due diligence, or risk repeating my biggest investment mistake.

Dinah Wisenberg Brin writes Fidelity Sales Practices Violated Reg BI Advisor Says in Whistleblower Suit. In recent months, I’ve also shared several articles critical of Vanguard.

To be clear, as an advice-only planner with Abundo Wealth, I regularly recommend both Fidelity and Vanguard (as well as Schwab) brokerage services. They’re all fine, but none are perfect. YOU have to look out for your own best interests. Don’t blindly assume any company or individual is doing it for you.

Bad Financial Advice

Finally, I’ll close out with a related but fun and fascinating story. Earlier this month, I learned about a holiday named after one of my favorite childhood baseball players.

Mike Axisa writes Bobby Bonilla Day: Why the Mets still owe former MLB All-Star more than $1M per year on July 1. Every year since 2011 and ending in 2035, the Mets “celebrate” by cutting Bonilla a check for about $1.2 million (nearly $30 million in total)!

The Mets released Bonilla in 2000, but owed him the remaining $5.9 million on his contract. Their financial advisor convinced them they could make a profit by deferring the salary with 8% interest and investing it with him, then paying it out to Bonilla as the annuity over 25 years.

That investment turned out poorly for the Mets while they remained on the hook for these payments. The advisor whose recommendation they trusted….Bernie Madoff! Did I mention you should never blindly trust anyone with your money?

Enjoy the rest of your summer!

*Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

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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. After achieving financial independence, Chris began writing about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. Chris also does financial planning with individuals and couples at Abundo Wealth, a low-cost, advice-only financial planning firm with the mission of making quality financial advice available to populations for whom it was previously inaccessible. Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He has spoken at events including the Bogleheads and the American Institute of Certified Public Accountants annual conferences. Blog inquiries can be sent to chris@caniretireyet.com. Financial planning inquiries can be sent to chris@abundowealth.com]

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