Personal Finance for Long-Term Investors - The Best Interest

In today’s opening monologue, Jesse explores the concept of Sequence of Returns Risk, a crucial and often misunderstood threat to retirees, by illustrating how poor returns early in a retirement can severely impact long-term stability. He emphasizes the importance of diversification. Jesse then introduces the idea of path dependence, drawing parallels to the life of author Philip K. Dick, whose posthumous fame underscores the significance of a journey’s path, not just the journey’s outcome. Jesse connects this to investing, explaining how the sequence of returns can greatly affect an investor’s experience, despite the long-term average returns. Using "Sally the Investor" as an example, Jesse highlights the emotional and psychological challenges of navigating market volatility, reinforcing the need for resilience, understanding short-term unpredictability, and the benefits of diversification in long-term investing. Tyler, the creator of Portfolio Charts, joins Jesse for the second half of the show. His site is known for its innovative financial tools and insights. Tyler, a fellow engineer with a passion for finance, blends technical expertise with creativity to clarify complex investing concepts. In their discussion, Tyler and Jesse explore critical retirement topics, including the safe withdrawal rate and sequence of returns risk.. Tyler introduces the concept of engineering tolerances for managing financial variability and discusses strategies like variable withdrawal rates. He explains the "flowing nature of withdrawal rate math," illustrating how safe withdrawal rates change with longer retirement periods. If you’re looking for some evidence based, long term thinking in your DIY financial life, then this is the episode for you!   Key Takeaways: • How poor returns early on can negatively affect my retirement. • What is “sequence of returns risk”? And how can I create a financially resilient situation for myself? • Diversification into a variety of financial vehicles is key to the long term success of your portfolio. • Path dependence, illustrated by Philip K. Dick's posthumous fame, emphasizes that the sequence of returns can greatly affect investment outcomes. • What are “safe withdrawal rates”? And how can traditional average return calculations be misleading?   Key Timestamps: (01:07) Jesse’s Monologue: Understanding Sequence of Returns Risk (07:50) Mitigating Sequence of Returns Risk (08:35) Path Dependence: Lessons from Philip K. Dick (13:16) Sally's Ride: A Real Example of Path Dependence (22:57) Investment in Knowledge: Path Dependence (25:28) Understanding Safe Withdrawal Rates and Sequence of Returns Risk (35:05) The Importance of Consistent Portfolios (47:29) Tyler's Personal Finance Journey and Portfolio Charts (51:01) Conclusion and Listener Engagement   Key Topics Discussed: The Best Interest, Jesse Cramer, Rochester New York, financial planner, financial advisor, wealth management, retirement planning, tax planning, personal finance, Tyler from Portfolio Charts, path dependence, sequence of returns risk, safe withdrawal rates Mentions: Website: https://portfoliocharts.com/ Mentions: https://portfoliocharts.com/charts/withdrawal-rates/#chart https://portfoliocharts.com/2016/12/09/perpetual-withdrawal-rates-are-the-runway-to-a-long-retirement/ https://portfoliocharts.com/charts/retirement-spending/ https://portfoliocharts.com/portfolios/permanent-portfolio/ https://bestinterest.blog/path-dependence/   More of The Best Interest: Check out the Best Interest Blog at bestinterest.blog Contact me at jesse@bestinterest.blog   The Best Interest Podcast is a personal podcast meant for educational and entertainment. It should not be taken as financial advice, and is not prescriptive of your financial situation.

In today’s AMA, Jesse delves into various financial dilemmas and strategies to maximize benefits and secure a stable retirement. The first question comes from Mindy, a 50-year-old widow, weighing the pros and cons of remarrying due to its potential impact on her survivor benefits. Jesse explains the complexities of Social Security spousal and survivor benefits, urging listeners to consult with a Certified Financial Planner to navigate the intricacies and optimize their benefits. Then, Bob seeks Jesse’s advice on whether to use retirement savings to pay off a mortgage on a new home. With $1.2 million in retirement savings and plans to retire in five to ten years, Jesse takes into consideration some additional context to make some suggestions. Of course, any financial planner or advisor will answer unknown questions with “it depends” - we need to know all of someone’s financial “puzzle pieces” before we can put that puzzle together. Jesse then addresses Tad's query on compound interest and its application to stocks, bonds, and stock funds, clarifying the concept of "compound growth" in investments and the benefits of reinvesting profits. Our penultimate question is from Dan, a retiree who shares his bond-avoidant investment strategy, relying on pensions and CDs for market downturns. Jesse discusses the potential risks if Dan passes away, affecting his wife's income, and suggests considering a small bond allocation. Last up is Amy's question about setting up an annuity from a 401k to create what some might call a “retirement paycheck”, prompting Jesse to caution against high fees and sales tactics associated with annuities, recommending traditional investment portfolios for better returns, flexibility, and liquidity. If you’d like a question in a future AMA, send Jesse a message!   Key Takeaways: • Consult a certified financial planner to navigate the complexities of Social Security spousal and survivor benefits, especially when considering remarriage. • The most common answer to finance questions is “It depends”. It depends on your city, your state, different tax rates, your income, your relationship status, your goals. There is no one size fits all solution. • Understand that "compound growth" is a more accurate term than "compound interest" for investments like stocks and stock funds, with reinvested profits accelerating growth. • Bonds can be a useful asset in your investment strategy, but of course, it depends on your goals and life situation. It’s important to consult with a CFP to get a more complete picture. • Be cautious about setting up an annuity from a 401k due to high fees and sales tactics; traditional investment portfolios often offer better returns, flexibility, and liquidity.   Key Timestamps: (00:00) - Introduction (01:49) - Social Security and Survivor Benefits Explained (09:46) - Financial Planning for Retirement and Mortgages (19:34) - Understanding Compound Growth vs. Compound Interest (25:49) - Dan's Retirement Strategy (27:59) - Evaluating Risks in Retirement (32:51) - Amy's Annuity Question (36:29) - Comparing Life Insurance and Annuities (42:46) - Immediate Fixed Annuities (47:08) - Conclusion and Final Thoughts   Key Topics Discussed: The Best Interest, Jesse Cramer, Rochester New York, financial planner, financial advisor, wealth management, retirement planning, tax planning, personal finance, annuities, compound interest, compound growth, death of a spouse, prenup, mortgages, ask me anything   Mentions: https://bestinterest.blog/valuing-social-security-as-an-asset-in-your-retirement-plan/  https://bestinterest.blog/how-much-life-insurance-do-i-need/  https://open.spotify.com/episode/2NMGr6vYPT4KuCdu9txoce?si=41789317e9614367     More of The Best Interest: Check out the Best Interest Blog at bestinterest.blog  Contact me at jesse@bestinterest.blog   The Best Interest Podcast is a personal podcast meant for educational and entertainment. It should not be taken as financial advice, and is not prescriptive of your financial situation.

Jesse starts by sharing two of his blog posts in today’s monologue.  The first post, “The Answers are Here, But…”, expands on William Gibson’s quote, “The future is already here. It’s just not evenly distributed, yet.” Jesse draws a connection between Gibson’s quote and the distribution of financial literacy, explaining that The Best Interest is part of the distribution effort. Of course, there are those who distribute bad, or even dangerous information, leading into the second half of the monologue, “How to Avoid Frauds and Ponzi Schemes”. Jesse offers 3 ways we can avoid being taken for a ride.  Today’s guest, Rachael Camp, is a Certified Financial Planner (CFP) specializing in helping solo business owners, offering services with her own business, Camp Wealth, and educating people through YouTube, her blog, social media, and more.  Their discussion centers around recognizing scams and debunking myths circulated on social media, calling out fearmongers, and offering helpful insight into the financial tools available to solopreneurs.  Importantly, Rachael notes what an LLC is, why an entrepreneur may - or may not - want to register one, and who they should consult before making that decision.    Key Takeaways: • How to find the answers you’re looking for. • Keeping a lookout for scams - and finding people who’ll help you watch! • Social media and the myths perpetuated thereon. • What is a stock option? • What is a solopreneur? And what financial tools are at their disposal? • Should you register as a corporation? What kind?   Key Timestamps: (01:20) Jesse’s Monologue: The Answers Are Out There (06:47) Avoiding Financial Frauds and Ponzi Schemes (21:41) Introducing Rachel Camp: Solopreneur Wealth Builder (23:11) Debunking Financial Myths with Rachel Camp (30:30) The Reality of Social Media Investment Strategies (31:17) Understanding Options: A Primer (33:52 Exploring Options Trading Strategies (36:54) Critiquing Robert Kiyosaki's Financial Advice (43:50) The Rise of Solopreneurs (46:31) Business Structures and Tax Considerations (51:04) Debunking Tax Hacks and Financial Myths (54:39) The Importance of Financial Literacy and Caution (1:00:41) Conclusion and Final Thoughts   Key Topics Discussed: The Best Interest, Jesse Cramer, Rochester New York, financial planner, financial advisor, wealth management, retirement planning, tax planning, personal finance, solopreneurs, LLCs, business structures, incorporation, Robert Kiyosaki   Mentions: Website: https://www.rachaelcampwealth.com/  LinkedIn: https://www.linkedin.com/in/camprachael/  Mentions:  https://bestinterest.blog/the-answers-are-here-but/  https://awealthofcommonsense.com/2023/06/the-evolution-of-financial-advice/  https://bestinterest.blog/how-to-avoid-frauds-and-ponzi-schemes/  https://x.com/camp_wealth  https://www.youtube.com/@CampWealth/videos    More of The Best Interest: Check out the Best Interest Blog at bestinterest.blog Contact me at jesse@bestinterest.blog   The Best Interest Podcast is a personal podcast meant for educational and entertainment. It should not be taken as financial advice, and is not prescriptive of your financial situation.  

Jesse begins today's episode with two reflections. First, he talks about the rarity and preciousness of gathering all your loved ones in one place. While money is important, it is ultimately a means to gain the freedom to spend time with those you care about. In his second reflection, Jesse recounts the story of his parents' neighbors' house catching fire, highlighting the importance of risk management and preparedness, such as having smoke detectors and emergency plans. This underscores the idea of using money wisely to enhance life’s quality and maximize meaningful experiences with loved ones. Today's guest, Andy Hill, is the founder of Marriage Kids and Money, an award-winning YouTube channel, blog, and podcast that offers actionable advice for family financial independence. As Jesse and his wife raise their first infant child, Andy provides invaluable insights on the importance of emergency funds, baby items, healthcare, life insurance, and more. He delves into the essentials of family financial planning, enabling us to enjoy more time with the people we care about most. If you’re thinking about what matters most in life and how smart financial planning can help you get there, then this is the episode for you.   Key Takeaways: • Money matters because of the freedom it allows. • How to prepare for crises. • The cost of childbirth, diapers, and a whole lot of other things. • How to deal with financial stress as a family. • Preparing your family financially for the worst. • Simple tips and tricks for new parents.   Key Timestamps: (02:28) Jesse’s Monologue: The Value of Time with Loved Ones (07:45) A Financial Cautionary Tale: House Fire (19:45) Introducing Andy Hill: Family Finance Expert (20:29) Preparing for the Costs of Childbirth (24:42) Real Estate Considerations for Growing Families (27:37) Emotional Impact of Financial Decisions (29:45) Navigating Parenthood, Career Choices, and Savings (38:59) Practical Tips for New Parents (44:25) Life Insurance and Estate Planning for New Parents (52:31) Conclusion and Resources   Key Topics Discussed: The Best Interest, Jesse Cramer, Rochester New York financial planning, financial stress, emotional attention, family financial advisor, family finances, marriage kids and money, Andy Hill, estate planning, the finances of children   Mentions: Website: https://marriagekidsandmoney.com/  LinkedIn: https://www.linkedin.com/in/andyhillmkm/  Mentions:  https://bestinterest.blog/you-just-go/ https://bestinterest.blog/house-fire/  https://bestinterest.blog/foxes/)  https://open.spotify.com/episode/0JVTRYN8HBrgTI4EhVZglk?si=26185de5a5704a06 https://open.spotify.com/episode/1ox7hbv5uhG3bHsIzf2Cfk?si=8da95ab3e144443a  https://waitbutwhy.com/2015/12/the-tail-end.html    More of The Best Interest: Check out the Best Interest Blog at bestinterest.blog Contact me at jesse@bestinterest.blog   The Best Interest Podcast is a personal podcast meant for educational and entertainment. It should not be taken as financial advice, and is not prescriptive of your financial situation.  

Jesse starts this episode with a confession: money still stresses him out. The four ways that Jesse reduces this stress are remembering what’s going right financially, prioritizing spending, working hard, and remembering that others have walked this path.    Then, with another call back to his blog, Jesse invokes Marshall McLuhan’s quote “the medium is the message” when sharing from his post, “The Friction is the Message”.    Today’s guest is Carl Richards, the creator of the Behavior Gap, author of The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money, and host of Behavior Gap Radio. Not only has Carl been featured on Oprah.com and Forbes.com, he’s the creator of the Sketch Guy column which ran weekly for a decade in The New York Times. In this episode, Carl gives us some great insight into how we can refocus ourselves and our finances on what really matters to us.   If you’re interested in not only financial planning, but time, energy, and attention planning, too, then this is the episode for you!   Key Takeaways: • 4 ways Jesse reduces his financial stress. • Friction as a bad thing, and friction as a good thing. • Why you should invite imposter syndrome in. • What is the Behavior Gap?  • How to choose your financial advisor. • How to manage your money, time, energy, and attention.   Key Timestamps: (02:10) Jesse’s Monologue: Money Still Stresses Me Out   (07:24) Managing Financial Stress: Four Key Reminders   (13:42) The Friction is the Message   (22:14) Carl Richards Joins the Conversation   (28:48) Why Carl Shares   (30:41) Overcoming Fear, Anxiety, and Imposter Syndrome (39:02) The Behavior Gap in Investing   (44:48) The Value of Real Financial Planning with a Real Advisor (52:28) Conclusion and Resources   Key Topics Discussed: The Best Interest, Jesse Cramer, Rochester New York financial planning, financial stress, human capital, personal energy, mental attention, financial advisor, imposter syndrome, financial anxiety, the Behavior Gap, the Friction is the Message   Mentions: Website: https://behaviorgap.com/  LinkedIn: https://www.linkedin.com/in/thinkingcarl/  Mentions:  https://bestinterest.blog/money-still-stresses-me-out/  https://bestinterest.blog/the-friction-is-the-message/  https://bestinterest.blog/selling-and-surviving/ https://behaviorgap.com/radio/  https://www.50fires.com/    More of The Best Interest: Check out the Best Interest Blog at bestinterest.blog Contact me at jesse@bestinterest.blog   The Best Interest Podcast is a personal podcast meant for educational and entertainment. It should not be taken as financial advice, and is not prescriptive of your financial situation.

Jesse begins today’s episode with a short monologue on the highs and lows of money. Can money buy happiness? Or are they uncorrelated? Either way, money can certainly buy flexibility and optionality. Jesse collects insights from Thom Yorke, Matthew Killingsworth, Danny Kahneman, and Angus Deaton.   Today’s guest is Jonathan Clements, the founder and editor of Humble Dollar, the author of My Money Journey and How to Think About Money. Clements spent nearly 20 years at the Wall Street Journal as their lead personal finance columnist. He shares why we need financial goals that fulfill us, why he plans to continue working, and how we can plan financially for retirement, but why that shouldn’t be the end goal of our financial journey.    If you’re interested in long-term financial planning that will set yourself up for success, then this is the episode for you!   Key Takeaways: • How to strike the balance between spending and saving. • Why you can never know what you’ll really want in the future. • We need personal fulfillment goals, not just financial goals. • Jonathan’s retirement plan is ICE over FIRE. • How to invest not only for retirement, but also for your heirs’ inheritance.   Key Timestamps: (01:54) Jesse’s monologue: Can money buy happiness? (09:15) Introduction to Jonathan Clements (10:30) My Money Journey (12:40) Switching from saver to spender (15:50) We can’t predict the future (21:43) 8 traits successful people have in common (24:25) ICE: I’ll Continue Earning (28:46) Annuities and Social Security (36:29) Setting the next generation up for success (44:40) Close   Key Topics Discussed: The Best Interest, Jesse Cramer, Rochester New York financial planning, immediate fixed annuities, lifetime income annuities, equity and indexed annuities, Roth IRA, Social Security, retirement wealth planning   Mentions: Website: https://humbledollar.com/  Jesse’s Radiohead article:  https://humbledollar.com/2024/05/happy-conclusion/ LinkedIn: https://www.linkedin.com/in/jonathanclements/  How to Think About Money:  https://amzn.to/3yHtlth My Money Journey: How 30 people found financial freedom - and you can too:  https://amzn.to/3Kw91NO   More of The Best Interest: Check out the Best Interest Blog at bestinterest.blog Contact me at jesse@bestinterest.blog   The Best Interest Podcast is a personal podcast meant for educational and entertainment. It should not be taken as financial advice, and is not prescriptive of your financial situation.

On today’s episode, we bring you something a little different. Jesse’s collected a series of questions from newsletter subscribers and will answer them in today’s AMA (Ask Me Anything). Jesse answers into which accounts young people should be putting their money. Other questions answered are: Is getting to your “Coast FI” a good idea? How to balance which accounts you’re putting money into and how your goals might change that. How can you financially prepare for parenthood? Why you should diversify your investments, even if your lack of diversification is working for you. What are “Roth Conversions”? And how can we make the most of tax diversification? If you’re interested in hearing Jesse’s answers to these questions, then this episode is for you. If you’d like a question in a future AMA, send Jesse a message!   Key Takeaways: When should I put money into my Roth IRA vs. my Traditional 401k? We don't know the future. So, diversify. What Jesse’s doing to prepare financially for parenthood. How clear goals can get you more specific guidance when financial planning.  When and how you can do “Roth Conversions”.   More of The Best Interest: Check out the Best Interest Blog at bestinterest.blog Contact me at jesse@bestinterest.blog   The Best Interest Podcast is a personal podcast meant for educational and entertainment. It should not be taken as financial advice, and is not prescriptive of your financial situation.

Jesse starts this episode discussing his “50/50 rule” of college savings. Jesse also talks about 529-to-Roth conversions (why they’re overrated!), the FAFSA, and other financial tools at our disposal for college planning.    Evan Giokas then joins the show to dive deeper into a college admissions conversation. Evan is the founder of The College Confidence Coach, which helps students through their higher educational journey. Evan covers what a “conative assessment” is,  how to be cost-conscious when preparing for college, how to start college conversations with your child, and the importance of showing your values to college admissions staff..   If you’re preparing a child for college, this is the episode for you!   Key Takeaways: How to start the college conversation with your child  What is the Conative Assessment?  What is the college money pit trap? How to be cost-conscious in college planning How to optimize your FAFSA The “50/50 Rule” for college saving The pros and cons of 529–to-Roth conversions   Mentions: 🌐 Website: https://www.thecccoach.com/  👉🏼 LinkedIn: https://www.linkedin.com/in/evan-giokas-56443746/  📚 The Important Details Behind 529-to-Roth Conversions: https://bestinterest.blog/the-important-details-behind-529-to-roth-conversions/ 📚 Follow the 50/50 Rule for College Saving: https://bestinterest.blog/the-50-50-rule-for-college-saving/ 📚 University of the People: https://www.uopeople.edu/    More of The Best Interest: Check out the Best Interest Blog at bestinterest.blog Contact me at jesse@bestinterest.blog   The Best Interest Podcast is a personal podcast meant for educational and entertainment. It should not be taken as financial advice, and is not prescriptive of your financial situation.

In episode 79 of The Best Interest Podcast, host Jesse Cramer discusses the intricate relationships between health, wealth, and time with guest Phil Pearlman. Jesse starts with his usual monologue, explaining and establishing that health, money, and time are all interchangeable resources that many people trade-off throughout their lives. Jesse and Phil then delve into how health decisions significantly impact financial standing and overall quality of life, emphasizing the importance of viewing health as an investment in one's future. Phil, transitioning from a finance profession to focusing on personal health, shares his insights on behavioral finance, the importance of making conscious decisions regarding health and finance, and the impact of societal trends on individual well-being. Additionally, Phil discusses his unique approach to personal health, advocating for self-experimentation and critical thinking in navigating health advice. The conversation also touches upon cultural aspects of addiction and the power of individual choice in improving one's health, wealth, and time. Finally, Phil shares information about his work at the Pearl Institute and his dedication to helping people make better health and life decisions.   Key Takeaways: How physical health is a critical aspect of financial health. Health will allow you to enjoy your wealth. Phil’s holistic approach to health and how it includes finances. Why you need to imagine yourself in the future. How to see your future self as a real person, and consider their needs. Why you should be a scientist and your most important subject! You don’t have to be a statistic.   Mentions: 🌐 Website: https://www.pearlinst.com/  🌐 Prime Cuts Newsletter: https://primecuts.substack.com/  👉🏼 LinkedIn: https://www.linkedin.com/in/philip-pearlman-1002183/  📚 Rebels with a Cause by Phil Pearlman: https://primecuts.substack.com/p/rebels-with-a-cause  📚 Fahrenheit 451 by Ray Bradbury: https://amzn.to/3xHyaSF 📚 Brave New World by Aldous Huxley: https://amzn.to/3U7W55j 📚 1984 by George Orwell: https://amzn.to/3U5e2Bu 🎥 The film Fahrenheit 451, on Vimeo  https://vimeo.com/433467090   More of The Best Interest: Check out the Best Interest Blog at bestinterest.blog Contact me at jesse@bestinterest.blog   The Best Interest Podcast is a personal podcast meant for educational and entertainment. It should not be taken as financial advice, and is not prescriptive of your financial situation.

Jesse starts this episode with an engaging monologue: how exactly does The Best Interest generate revenue? Jesse answers this question and asks YOU for your help in ensuring The Best Interest continues as a terrific free financial resource.    And then Justin Peters joins for the second half of the episode. Justin hosts The Struggle is Real, a podcast about adulting through your twenties. He’s also a co-founder of SimplePod Studios, which produces The Best Interest Podcast. In this episode, Justin and Jesse discuss, compare, and contrast their top five “Golden Rules” of personal finance. If you’re looking for an insightful, fun, and fast-paced conversation, this is the episode for you.    Key Takeaways: How does The Best Interest make money? The intersection of Jesse’s professional life and The Best Interest Why you need to track your money! How gift cards trick you into spending more. The best investment is in yourself. Simple is better than complex (almost always). Why and how you should prepare for risk. Why you MUST automate your finances, as much as possible. Think long term, but don’t forget the present.   Mentions: 🌐 Website: https://simplepodstudios.com/  👉🏼 LinkedIn: https://www.linkedin.com/in/justinleepeters/  🎙️ Podcast: https://www.tsirpodcast.com/  🧠 The RRTTLLU Framework: https://bestinterest.blog/rrttllu/   More of The Best Interest: Check out the Best Interest Blog at bestinterest.blog Contact me at jesse@bestinterest.blog   The Best Interest Podcast is a personal podcast meant for educational and entertainment. It should not be taken as financial advice, and is not prescriptive of your financial situation.