I wrote one post this week answering a reader question about why index portfolios don’t all use dividend ETFs:
Why don’t couch potato portfolios use dividend ETFs?
Here are some short takes and some weekend reading:
A Wealth of Common Sense explains a cognitive bias we have that prevents us from admitting we don’t know something. This bias can be very costly for investors. Another good article demonstrates that envy is a bigger driver than greed. The second minute of the monkey experiment video is funny.
Jason Zweig explains why you should be concerned if you receive a “happiness letter” from your brokerage. In another good article, he looks back at his 1999 advice to avoid internet stocks. His was nearly a lone voice at the time. I was very fortunate that I decided to mostly avoid internet stocks through that period because I worked for an internet company and didn’t want to put too many eggs in one basket.
Big Cajun Man reports that unemployment in Canada has been on a fairly steady decline for 5 years now. I’ve certainly noticed more companies flying banners announcing they are hiring. Getting back to the heady days of the late 1990s when some companies lent Hummers to software developers on weekends seems too much to hope for, but it would be nice to see a friendlier job market for young workers.
My Own Advisor describes a retirement money management strategy from Daryl Diamond called a “cash wedge.” It is broadly similar to what I call cushioned investing, others such as Dan Hallett call bucketing, and Tom Bradley at Steadyhand calls a spending reserve. The basic idea is important but not new: during retirement it’s important to have some safe cash available in case your riskier investments drop in value significantly.
Million Dollar Journey compares various gas reward programs. It can be fun to optimize cash-back rewards, but keep in mind that real savings comes from things like driving less, getting a smaller cheaper car, and moving closer to work to reduce your commute. Few people truly understand how expensive cars are. Gas is just the beginning. If you add up fuel, insurance, maintenance and repairs, licensing, and car payments, you might find the total hard to believe.
Boomer and Echo have a story of a basement renovation that came in under budget. I like feel-good stories like this, but don’t count on it for your own home renovation. I’ve resisted doing too much renovation of my house because home renovations are a worthy rival to cars and eating out as huge money wasters. No doubt some home renovations are necessary and others increase a home’s value, but most home renovation costs just become decades of payments.