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Tag: investing in the market

February 6, 2023By Paula Pant

#426: Key Takeaways: Best Lessons from the Last Year, with Paula Pant

Behavioral researcher, Vanessa Van Edwards, talks to us about the critical importance of charisma – and how to use the perfect blend of warmth and competence to be charismatic.

Dr. Michael Slepian walks us through what secrets mean, what they cost, and how we think about them.

We dive into the world of long distance real estate investing, and talk about two of the major components of investing – Cash and mindsets – to help you determine if long distance real estate investing is right for you.

International best selling author, Julie Winkle Giulioni, reviews eight dimensions of career development and how to navigate them.

Chris Hutchins, entrepreneur and life hacker extraordinaire, spills his best secrets on optimizing spend to travel more cheaply.

Kiersten and Julien Sanders join us to discuss money topics for couples, and their framework for being financially independent in 15 years.

Stanford professor Jeremy Utley breaks down the art of creativity and producing new ideas – and shares actionable tips on how we can be more creative and have better ideas.

Dr. Daniel Crosby discusses how we are not wired to be good investors, and how to overcome our evolutionary wiring.

Enjoy this compilation of our favorite episodes to air in the second half of 2022.

Keep reading...

November 10, 2022By Paula Pant

#412: Ask Paula: Should I Repay Debt or Invest?

Taylor recently graduated. She wants to reach financial independence as soon as possible. What should she do first: invest or repay low-interest debt?

Carter doesn’t want to pay too much for his investments. He’s worried about the tax drag. He wants to know how to improve cost efficiency in his portfolio. How should he manage decisions about basis points, dividends and capital gains?

Our first anonymous caller has been working and investing for a decade. Today her portfolio is large enough that she and her husband can finally take a mini-retirement.

They’d like to rebalance their portfolio. They want it to reflect the fact that they won’t be working for a while. They’d also like to calculate how much money they need to travel with their children. How should they handle this?

Our second anonymous caller is worried that their portfolio is out-of-whack. Their money is in a target date retirement fund. They’d like to move some of it to a three-fund portfolio. But this is a scary time to sell. Stocks are low. What should they do?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.

Keep reading...

July 28, 2022By Paula Pant

#393: Money and Investing Has Changed, with Chuck Jaffe

Chuck Jaffee, a forty-year veteran financial journalist who regularly writes for the Wall Street Journal and is also a nationally syndicated financial columnist, discusses how money and investors’ attitude towards investing has changed over the last few decades.

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June 29, 2022By Paula Pant

#388: “Feeling Anxious About Your Investments?”, with Scott Nations

Recessions are terrifying.

Market crashes often bring out the worst in people’s anxieties and fears.

This fear triggers us to act even more irrationally than usual – which can lead to making expensive mistakes in our investment portfolios.

In today’s episode, Scott Nations, who spent his career studying market volatility, describes some of the most common cognitive biases and irrational behaviors that investors make. He shares tips on how to master the mental game of investing, especially in turbulent times.

Here are a few irrational biases that destroy wealth:

#1: The disposition effect – Humans have a tendency to sell their winners and hold their losers.

Why? We get a dopamine hit when we sell a winning asset and lock in our gains. Meanwhile, sunk cost fallacy makes us want to hang onto the loser ‘until it comes back.’

How can we avoid falling prey to this?

First, if you’re thinking about selling off an asset that’s performing well, ask yourself: What’s the real motivation? Do you want to book a profit for the sake of booking a profit? Or do you believe that some underlying fundamental has changed?

Next, compare this decision to your investor policy statement, which is your written statement about your goals, timeline, risk tolerance, risk capacity, strategy and style as an investor. Is this decision aligned with your written personal policies?

#2: Status quo bias – Our tendency to overvalue our current situation, such as the mix of assets that happens to already be inside our portfolio. We demand a higher burden of proof to justify any change than we do to justify holding the status quo.

This is often triggered by information overload – when we feel overwhelmed by excess information and too many options, we react by doing nothing.

Psychologist Barry Schwartz calls this the “paradox of choice” – the more choices we’re offered, the more likely we are to not make any decision.

How can we protect ourselves from this? One tactic is to adopt a low-information diet, in which we carefully curate the amount of news and information that we receive.

Another tactic is to look at our resources and imagine that we’re starting from a blank slate. If we didn’t have our current mix of stocks, bonds, real estate, crypto, etc. – if we imagine that we’re starting with our entire net worth in cash – how would we allocate our capital if we were starting from scratch?

#3: Overconfidence – Research shows that people consistently overestimate both their abilities and their predictions of positive future outcomes.

The majority of people think they’re an above-average driver, which is mathematically impossible.

Most people overestimate their probability of getting and staying married forever, of not grappling with fertility issues, choosing a winning investment, or becoming a millionaire.

Today’s interview guest says that he’s aware that, among all the cognitive biases he describes, he’s personally the most susceptible to overconfidence bias. Staying aware of his personal susceptibility helps him keep it in check.

#4: Loss aversion – The sting of a loss is more emotionally profound than the joy of a gain. As a result, our brains are hardwired to avoid losses, rather than pursue gains.

This closely relates to the sunk cost fallacy that fuels the disposition effect, which we described above.

We describe many more cognitive biases in today’s episode. Enjoy!

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April 7, 2022By Paula Pant

#374: Ask Paula: Watch Out! Here’s How Lowering Your Investment Tax Bill…Might Increase Your Risk

Jake wants investment cash flow until he’s eligible for his military pension in 10 years.  Should he buy small multifamily properties right now, wait a few years and invest in syndications or should he invest in index funds through taxable accounts?

Andy in Palm Springs is shoveling money into a taxable brokerage account. He wants to use these investments to create another stream of income. But there’s a problem: his tax bill is going to be high. What should he do?

Anonymous is a U.S. citizen, lives in London, and can’t invest in index funds. Can he emulate the index fund experience by directly buying a huge number of individual stocks?

Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.

Enjoy!

Keep reading...

August 25, 2021By Paula Pant

#334: Ask Paula: What Paintbrush Did Michelangelo Use? (said no one ever)

In today’s episode, we answer three questions from a college senior named Rafael.

He asks about productivity tools and tactics, student debt, Robinhood and market investing, and how to establish yourself as an expert in a given domain.

We answer his questions by widening the lens.

People often ask about productivity tools. “Do you use Asana or Trello?” But nobody asked Michelangelo what paintbrush he used to paint the Sistine Chapel. The discussion around tools misses the point, which is to master the craft.

Sure, we answer his direct, overt questions. But we also dive deeper, refining these topics and exploring the questions *behind* his questions.

This is an episode in which we peel layers off the onion.

Keep reading...

July 21, 2021By Paula Pant

#328: Ask Paula: I’m on the Verge of Retirement and My Taxes are Rising … Help!

Sarah O Sahara’s parents sold their rentals and business of 24 years. They’d like to create a trust for their grandkids with boundaries in place to avoid entitlement. How should they structure this trust?

Renee and her husband are in their 60s, and most of their retirement funds are in pre-tax accounts. They have federal tax credits they’d like to use to move these funds into taxable accounts. Is this a sound strategy?

Anonymous “Yvette” in Canada has a fully paid off condo that she wants to turn into a rental once her new townhome is ready. Should she mortgage against the condo to reduce the mortgage on her townhome? Are there any tax benefits to having a mortgage on a rental?

Luis’s wife wants to start moonlighting in her field. Can she open and contribute to a Solo 401k even though she has a TSP account with her 9-to-5 employer?

Russell and his partner want to emigrate to Canada in the near future. Should they move their investments into Canadian funds?

My friend and former financial planner Joe Saul-Sehy joins me once again to answer your questions. Enjoy!

(Have an investing, entrepreneurship, lifestyle, or decision-making question you’d like us to answer? Submit it here!)

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June 17, 2021By Paula Pant

#322: Ask Paula – I Want to Retire at 50; How Do I Bridge the Gap?

Jess wants to reach financial independence by the time she’s 50. But she’s worried that she doesn’t have enough money in cash or taxable brokerage accounts to bridge the gap in her first few years of retirement. What moves should she make, if any?

Yisell wants to invest money now. Should she cash out her $70,000 pension in hopes to generate more than the $1,000 per month she’s guaranteed from it?

Abbey is 22 and she would like to go back to graduate school for nurse anesthesia. Should she save up and pay for it in cash, or invest her money and take out federal loans?

Eliana enjoyed our interview with Paul Merriman on the two-fund portfolio. She’s curious about what growth stocks and value stocks are, and how they fit into a passive index fund investing strategy.

Finally, Sneezy wants to know: why aren’t stocks a good hedge against inflation?

My friend and former financial planner, Joe Saul-Sehy, joins me to answer these questions on today’s episode. Enjoy!

Keep reading...

June 4, 2021By Paula Pant

#320: Ask Paula – Thinking about Money from First Principles

Rob hopes to retire at age 60, but he has a pesky mortgage balance he wants to eliminate beforehand. He and his wife expect to inherit $300,000. Should they use this money to pay off their mortgage or should they bulk up their retirement accounts?

“Billy” has two questions. One is about the tax efficiencies of ETFs vs. mutual funds, while the other is about Ginny Mae funds and whether there are bond funds that have an inverse relationship with equities.

Priya is looking for information on home equity loans: where can you get the best terms, and what are the disadvantages? Additionally, she’d like to know which city is best for rental investing: Atlanta, Dallas, or Raleigh?

My friend and former financial planner, Joe Saul-Sehy, joins me on the show to answer your questions. Let’s dive in!

Keep reading...

May 5, 2021By Paula Pant

#314: Ask Paula – I’m Worried About My Parent’s Retirement. What Should I Do?

Briale opened a Variable Annuity inside a 403b at work when she was 23. She has 17 years to go before retirement. As an elementary school teacher, her pension will be $6,000 per month. Should she stop contributing to the annuity and contribute to a Roth IRA instead?

Debi has an extra $1,000 each month and isn’t sure where to save it. She also has $10,000 in a CD which will reach maturity in August 2021. Her goal is to buy a residence in the next five years. Should she save this all for a downpayment?

Dominique is concerned about her parents retirement portfolio. Their advisor charges a fee of 1.5 percent assets under management. Her parents are frugal and they don’t realize how much they’re paying. Should she talk to them, or drop the issue?

Sarah isn’t sure whether she should put more of her savings towards a Roth 401k or a 529 fund for her future kids. Which option is best if she wants financial flexibility?

Hunter put a credit freeze on his two children’s credit, which required sending each credit union documentation via mail. Experian and TransUnion confirmed the credit freeze, but Equifax didn’t. Upon calling, the representative gave Hunter a different mailing address for the documents. What should he do?

My friend and former financial planner Joe Saul-Sehy joins me once again to tackle these questions. Enjoy!

Keep reading...

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Afford Anything

  • Start Here
    • About
    • Team Afford Anything
    • Media
    • Questions?
  • Blog
    • Binge
  • Podcast
    • Binge
    • Sponsors
    • Ask a Question
    • Guest Guidelines
  • Community
  • TV
  • Explore
    • Your First Rental Property
    • Travel
    • Start a Blog
    • Earn Extra Income