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tony

Perspective

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TODAY WAS PAINFUL. How painful? Think of the financial losses:

  • Homeowners who closed on their house sale might have lost as much as 6% of the proceeds to real-estate commissions.
  • Car buyers who picked up their new vehicle probably gave up more than 10% of the purchase price just by driving off the dealership lot.
  • Those who signed separation agreements with their soon-to-be-ex spouse likely surrendered 50%.
  • Investors who bought load funds might have been nicked for 5.75%.
  • Employees who got their paycheck were dunned 7.65% for payroll taxes, maybe 12% for federal income taxes and perhaps 3% for state income taxes.
  • Those who then spent their paycheck might have lost another 5% to sales taxes. And if the money they spent was $100 in cash withdrawn from an out-of-network ATM, they could have lost another $3 to bank fees, or 3%.

Oh yeah, the S&P 500 also slipped 1.82%. Thank goodness for small losses.

Follow Jonathan on Twitter @ClementsMoney and on Facebook. His most recent articles include Simple Isn’t Easy, Fanning the Flames and Just Asking.

 

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I agree with the sentiment, but it has problems.

People don’t have control over a declining market, declining markets are an ongoing event without a known end, stock market declines give you nothing in return aside from the fear of rising unemployment, invested assets are required for security/retirement, and invested assets are usually much larger than some of these items like purchases/sales tax.

...but maybe this framing is more effective than focusing on the temporary nature, inevitably recovery, and higher expected returns than the alternatives.

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Yes, I agree that this framing directs your attention away from the higher expected returns, the ones that we all want and apparently expect when paying an advisor. 

It could be an answer to those who will yell at you for the poor returns. I think to focus the attention of the investor to ways their money is spent, and without any control of the spender in some cases, is helpful. Because one item they can control is to buy loaded funds or not and to control the investment fees in general.

The summary did capture my attention, either way. 

I'm glad I'm not selling a house (6% is negotiable where I live), divorcing, or overpaying for a car. I do, however, pay 8.65% sales tax.

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I followed Jonathan for years at the Wall Street Journal when I used to get the paper. I've learned much from him over the years. He's written several books too.

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On 11/22/2018 at 3:41 PM, tony said:

I followed Jonathan for years at the Wall Street Journal when I used to get the paper. I've learned much from him over the years. He's written several books too.

I’m halfway through “The Little Book of Main Street Money” and I highly recommend it.  I wish I had read it when I started teaching.  

I’ve also subscribed to the Humble Dollar blog.  Thanks Tony 

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Jeb

You are doing an above and beyond the job of educating yourself in finance and investing. Trust me, it will pay off handsomely for you someday if it isn't doing so already. I just wish more teachers would take an interest in their financial health like you are doing.

While I haven't read his book you mentioned, here is a review of it with plenty of good information in the review.

https://www.thesimpledollar.com/review-the-little-book-of-main-street-money/

 

Also, some reviewers on Amazon like to knit pick certain things they don't like about a certain book or topic. That's all well and good and you need to read other folk's opinions BUT always appreciate a book for its overall message and how it makes you feel after you've read the whole book.

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1 hour ago, tony said:

While I haven't read his  book  you mentioned , here is a review of it with plenty of good information in the review.

https://www.thesimpledollar.com/review-the-little-book-of-main-street-money/

Excellent review here.  In fact, if you don’t have the time to devote to this short book, this review sums it up nicely.

However, if you skip the book you’d miss out on Clements writing style which I find very appealing.  There’s a lot of great information and Clements provides it in a way that rarely goes over my head.  In fact, somewhere in the introduction he mentions that he wrote it with his children in mind who were entering the workforce.  

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