Money For The Rest Of Us

How a safety-first retirement approach using income annuities is more predictable and takes less money than depending entirely on your investment portfolio to fund your retirement.Topics covered include:The difference between a safety-first and probability-based approached to retirement.How income annuities work.Why setting a sustainable retirement withdrawal rates requires planning for below average market returns and above average life expectancy.How using an income annuity and other guaranteed income to fund basic living expenses means not having to set a sustainable withdrawal rate.How long can retirees expect to live.Why most retirement portfolios are not as liquid as retirees think.Why are retirees hesitant to use income annuities and how to overcome the fear of doing so.Thanks to Policygenius and Vistaprint for sponsoring the episode. Use code David50 for Vistaprint.For show notes and more information on this episode click here.

Two Money For the Rest of Us podcast listeners are struggling with spending money. The first listener is 22 and lives in Canada. He feels as if his money is going everywhere such as saving for a house, car, and retirement, but very little goes to things he enjoys.The second listener is 46 with a $2 million net worth, but in his case, he finds he doesn’t enjoy spending money on himself. He is willing to spend money on his wife and two children, but he still finds himself feeling tight, fearful and worried about money and his business, even though he has plenty of wealth and is close to his goal of financial freedom.In this podcast episode, we consider the standard to use to determine how much to spend on ourselves.Topics covered include:The most difficult part of figuring out how much is enough.What is the Voluntary Simplicity movement and how it can help us decide where to spend our money.What is the difference between comforts and luxuries.What is the difference between joy and pleasure.What is a simple filt

How regulatory changes could lead to a boom in new ETFs, including actively managed ETFs. Why ETFs continue to be one of the most innovative, cost effective and tax efficient investment vehicles.Topic covered include:How big is the ETF market relative to mutual funds.What are the benefits of ETFs that have allowed them to gain market share from mutal funds.What are some of the negatives with ETFs.What has changed to make it easier for sponsors to launch new ETFs.How do non-transparent actively managed ETFs work.What are some examples of more complicated, outcome-based ETFs.Thanks to LinkedIn and SleepNumber for sponsoring the episode.For show notes and more information on this episode click here.[2:45] The benefits of ETFs[8:40] Challenges with ETFs[12:50] The rules that have changed[15:25] What is an AP Representative?[18:40] Should you invest in actively managed ETFs?[21:30] All about outcome Based ETFs[26:20] Understand what drives performance

How to find your unique work that can bring satisfaction and income before and during the traditional retirement years.Topics discussed in this episode include:What is settled work.Why you need time and space to find and do your best work.What is a commonplace book and why it can be helpful.How filters and saying no can help us control our time.The important role of serendipity in finding our path.Thanks to The Great Courses Plus and Vistaprint (use code David50) for sponsoring the episode.For show notes and more information on this episode click here.[0:20] An antique lamp store in Phoenix[3:10] The concept of “Settled Work”[5:30] How do we find our settled work?[7:40] David’s commonplace book[12:15] Why we need settled work[15:00] Take time to reflect[16:05] Take back control of your time[18:00] The art of saying “no”[21:00] Capturing Serendipity

Is it possible to be too diversified and how can you tell? Why Warren Buffet thinks diversification is protection against ignorance.Topics covered include:The skills you need to be able to select individual stocks.How have active managers outperformed relative to passive indexing products.How much diversification is too much and a test to determine if one is over diversified.What is factor investing and which factors have worked over the past 200 years.Thanks to LinkedIn and Policygenius for sponsoring the episode.For show notes and more information on this episode click here.[2:22] Exploring the concept of over-diversification[5:25] Should you pay for an investment advisor to select individual stocks?[8:05] An individual investor should choose index funds[11:10] Determining how much diversification is enough?[13:37] Weighing the cost against the benefits[16:10] When being over diversified is possible[17:05] Analyzing the listener question regarding over-diversification[20:20] A Fascinating study analyzi

David's book Money for the Rest of Us: 10 Questions to Master Successful Investing is now available (at least the e-book version). To celebrate, here is a bonus episode with excerpts from the forthcoming audiobook.Please enjoy the Introduction and Chapter One.Also, as part of the book launch, David will be hosting an Ask Me Anything (AMA) on Reddit on Wednesday, October 30, 2019 at 1PM Eastern time. Please join us.

What are the timeless principles we can follow in order to become better investors. Topics covered in this episode include:How a book's permanence makes it different from a podcast.How David's book got written and published and why his publisher just recalled the hardcover version of the book.What are the 10 questions we should answer before we invest in anything.Thanks to NetSuite and The Great Courses Plus for sponsoring the episode.For show notes and more information on this episode click here.[0:20] How David decided to write a book.[3:00?] The right book can change your life.[4:20] The art of writing a book.[7:00] The extensive process of writing a book.[9:57] Recording the audiobook.[11:32] Question 1: What is it?[13:36] Question 2: Is it investing, speculating, or gambling?[14:32] Question 3: What is the upside?[15:54] Question 4: What is the downside?[16:42] Question 5: Who is on the other side of the trade?[18:06] Question 6: What is the investment vehicle?[18:58] Question 7: What does

What are the benefits and risks of investing in exchange-traded notes (ETNs) compared with ETFs.Topics covered include:How big is the market for ETNs compared with ETFs.How ETNs can do a better job tracking their target index than ETFs.Why ETNs can be more tax-efficient than ETFs..How ETNs have counterparty risk, pricing risk, and liquidity risk.Under what circumstances would an ETN be preferred over an ETF.Thanks to WIX and Policygenius for sponsoring the episode.For show notes and more information on this episode click here.[0:21] ETPs, ETFs, and ETNs—which is the most popular?[3:10] Exchange-Traded Notes exhibit low tracking error.[5:28] ETNs are vastly more tax-efficient than ETFs.[6:14] Examples of Exchange Traded Notes.[10:16] Should there be a default-risk discount on ETNs?[13:34] Why there is issuance and closure risk with ETNs.[17:21] Clarification on the term “Net Asset Value” when referring to ETNs.[17:58] The issues of illiquidity risks and high fees.[20:46] Exchange Traded Notes are a niche

Why some analysts believe the Consumer Price Index formula understates inflation while others believe the CPI formula overstates inflation. What really matters to us individually when it comes to inflation.Topics covered in this episode include:What is inflation and what causes it.How is the Consumer Price Index calculated and how has the CPI formula changed over time.What are examples of different CPI measures.Why do some analysts believe U.S. inflation is higher than what CPI states while others believe inflation is lower than what the Consumer Price Index shows.How inflation calculations impact the measurement of other economic data such as the rate of poverty and the growth in real wages.What are consumer attitudes toward inflation and why do central banks worry about changes in household and business inflation expectations.How individuals can monitor and improve their cost of living.Thanks to Sleep Number and Money For the Rest of Us Plus for sponsoring the episode.For show notes and more information on

Why true financial independence means eliminating financial vulnerability including not being overly reliant on stock market appreciation.Topics covered in this episode include:What does it mean to be financially vulnerable.What are the two paths to financial independence.Why we shouldn’t stake our financial independence and early retirement on the historical performance of stocks and bonds.What are the rules of thumb we can use to develop reasonable assumptions for stocks and bonds and how those assumptions will lead to lower portfolio balances compared to using historical returns.What has historical earnings growth been for U.S. stocks.Why stock buybacks will be less in the future due to high debt balances unless companies grow their revenues and overall earnings.How are actions lead to financial independence even when it is difficult.Thanks to Vistaprint and WIX for sponsoring the episode.For show notes and more information on this episode click here.[0:17] Being financially independent begins with a

How a liquidity crunch in the short-term lending markets sent interest rates soaring. Why this is a huge blunder on the part of the Federal Reserve, and what it means for us as individual investors.Topics covered in this episode include:What are repurchase agreements and how are they used to finance U.S Treasuries.How outflows from money market funds and hoarding by banks led to a liquidity crunch that caused repo rates to spike to 10%.Why banks are hoarding reserves held at the central bank even though there are over $1.4 trillion of them, up from $20 billion in 2007.How quantitive easing increases reserves and quantitative tightening reduces reserves.How the Federal Reserve was able to stop the disruption in the repo market, even though the central bank was caught off guard and could have prevented it.How individual investors can protect themselves from unintended consequences arising from the unconventional policies and experiments being conducted by the Federal Reserve and other central banks.Thanks to Th

Why most state and municipal pension plans are underfunded and why that could lead to higher taxes and reduced government services. Why participants in state government retirement systems have greater protection against benefit cuts than participants in municipal retirement systems.Topics covered include:How defined benefit plans work.Why there is more subjectivity regarding valuing a pension plan's liabilities compared with its assets.What does it mean for a pension plan to be underfunded, and why are so many public sector pension plans in that situation.Under what circumstances can a pension plan cut benefits to beneficiaries.Why underfunded pension plans will most likely lead to higher taxes and reduced government services.Thanks to WIX and Peloton for sponsoring the episode.For show notes and more information on this episode click here.[0:18] The crisis of underfunded defined-benefit state and city pension plans.[2:32] Calculating the financial value of a public pension plan.[4:46] What rate of retur

What are the three steps to better manage risk and get what you really want.Topics covered in this episode include:Why goods and services that lessen risk tend to cost more.What is the three-step process for assessing and managing risk.Why defining the risk-free option or asset is critical to managing risk.Why immediate annuities are the retirement risk-free option rather than a conservative investment portfolio.What are the two types of risk and how do we mitigate them.What is the difference between hedging and insuring against risk.Thanks to Dashlane and The Great Courses Plus for sponsoring the episode.For show notes and more information on this episode click here.[0:17] Weighing the risk and knowing how to make a decision under uncertainty.[5:00] Three steps for assessing and managing risk.[9:11] Finding the risk-free asset in a retirement plan.[14:36] Idiosyncratic & systemic risk.[16:40] De-risking and using hedges to create a risk buffer.[20:22] Identifying a sound insurance operation.[23:36]

How inequitable business models like those in the gig economy can lead to a financial crisis, more regulation, and doubts about the viability of the free-market system.Topics covered in this episode include:What is the expanded role of corporations according to leading chief executive officers.What is the gig economy.Takeaways from David’s recent experience delivering restaurant meals for Doordash including the huge liability many independent delivery drivers are unaware of.Who covers the shortfall when the cost of operating a business is less than what consumers are willing to pay for the goods and services the businesses offer.How more regulation results from businesses unfairly passing on costs to others.How income inequality and debt can lead to a financial crisis.Thanks to Policygenius and Sleep Number for sponsoring the episode.For show notes and more information on this episode click here.[0:18] Is Capitalism still working for everyone?[2:12] David’s disappointing gig economy experience.

How momentum investing works, what are some of the challenges in implementing it, and how can individuals use momentum in their investment portfolios.Topics covered in this episode include:What is momentum investing and why does it theoretically deliver excess return.Why do momentum strategies suffer through periods of horrendous losses.Why high trading costs and selling a position can be challenges to successfully implementing momentum strategies.What are examples of momentum oriented funds and ETFs.How momentum can be used for making asset allocation decisions and adjusting portfolio risk.Thanks to The Great Courses Plus and Netsuite for sponsoring the episode.For show notes and more information on this episode click here.[0:18] Momentum investing consistently outperforms the market.[5:04] Why does momentum investing work?[7:31] The three challenges of the momentum investing phenomena.[12:50] What happens if investor behavior changes?[14:24] Tactics for implementing momentum into your own portfolio.[20

How the composition of Tesla's autopilot software gives clues to how we should invest, recognizing there are no perfect algorithms for driving or investing.In this episode you will learn:Why Americans are afraid of self-driving cars.How autonomous automobile software works.Why people reject even the best possible algorithms.What are examples of safety features and rules of thumb we should build into our investing process.Why does everyone think a recession is coming soon even though there is little evidence currently.Thanks to WIX and Dashlane for sponsoring the episode.For show notes and more information on this episode click here.[0:17] The pervading fear of self-driving cars, despite their safety features.[3:33] Why do people fear algorithms and prefer human decision-making?[7:45] Algorithmic decision-making has proven to be most accurate.[10:10] Automating your investing is like choosing an automated vehicle.[12:06] Keeping within the guardrails of investing strategy.[15:44] How to diversify your por

What are negative interest rates, why they could come to the U.S. and what investors can do about it.In this episode you will learn:How negative interest rates are even possible.How longer life spans, central bank actions, changing time preferences and the FIRE movement are contributing to negative interest rates.What is the paradox of thrift.How investors can earn a positive return on bonds even if interest rates are negative.What are some indicators to watch for that could signal imminent negative interest rates in the U.S.How individuals need to adjust their lifestyles in an era of negative interest rates.Thanks to Peloton and The Great Courses Plus for sponsoring the episode.For show notes and more information on this episode click here.[0:20] Germany government bonds go negative for the first time.[2:38] Understanding savings: the paradox of thrift. [6:35] The concept of the individual choice and the perceived expense of saving. [11:05] The savings glut could lead to negative interest rate

With gold at a six-year high, is now the time to invest? What determines the price of gold and what are ways one can invest in this precious metal? We also explore whether gold is an effective inflation hedge and store of value. In this episode you’ll learn:How has gold performed as an investment over different time periods.How gold has outperformed inflation, but has not been a great inflation hedge.What are the challenges to gold being a safe havenHow gold’s performance is driven by fear and momentumWhy gold is a speculation and not an investment.Why Ray Dalio and Jim Grant recommend gold but Warren Buffett is more skeptical.How to invest in gold via an ETF, physical coins or the gold futures market.Thanks to WIX and Policygenius for sponsoring the episode.For show notes and more information on this episode click here.[0:18] Gold may not be as strong as it used to be. [2:03] The performance of gold depends on when you bought it. [3:46] Why do people own gold?[4:15] Is gold actually a goo

How a less energy intensive and more regenerative economy will allow the developing the world to advance without breaching ecological boundaries.In this episode you’ll learn:What is the difference between circular and linear supply chains.What is doughnut economics?What are adaptive preferences and how they led David to trade in a BMW 650i for a Toyota Prius.How electric vehicles and the proliferation of solar panels are leading to a less energy-intensive economy.How the reduction of litter is an example of changing culture.Thanks to NetSuite and Dashlane for sponsoring the episode.For show notes and more information on this episode click here.[0:20] Creating a global economy that is better—not bigger.[3:18] A circular economy is better than a linear one.[6:20] The growth constraints of a circular economy.[9:08] Being wise in our aspirations.[12:55] David’s Tesla experience changed his perspective on investments.[14:52] The power of energy transitions.[18:02] Making more economical choices concerning ene

Why has value investing underperformed growth investing for over twelve years and how to position your portfolio for the eventual rebound in value investing.In this episode you will learn:The difference between growth and value investing and why value investing outperforms growth investing over the long-term.How value and growth indices are constructed and how they differ from fundamental indexing.What are the risks and opportunities of investing in concentrated, deep-value managers.Why value investing will eventually rebound.Thanks to WIX and Sleep Number for sponsoring the episode.For show notes and more information on this episode click here.[0:18] What is value investing?[2:07] A historical look at growth vs. value yields. [5:41] The return of the value stock in the early 2000s. [11:07] The twelve and a half years of underperforming value stocks. [13:09] The sectors controlling the performance of value and growth stocks. [15:01] Better understanding the indices. [20:31] Using