a hundred dollar bills, look at you! look at you!

I think I ought to speak to a financial adviser.

“Professor,” you ask in a robust chorus. “Don’t you have a degree in economics from a prestigious university?” I do; thank you for reminding me. But that doesn’t make me qualified to invest wisely. I know I’ve used this metaphor in the past, but: asking an economist for stock tips is like asking a physicist to build a bridge. Engineers (the people who build bridges) need to know physics, but their education doesn’t end there. Similarly, I have my private theories about what the economy will look like in 2016, but that doesn’t tell me which funds to buy.

But I remain chary about just walking into the closest Ameriprise office, dumping my financial statements on the desk, and asking, “Whaddaya got?” I have little faith in the ability of advisers to build an investment plan to weather a crisis they never saw coming (or hurried along, depending on their employer). So I need someone I can trust.

The first step: knowing about myself. What do I know?


  • I have good saving habits. When I moved from my job at The Company to my job at Internet Inc., I got a pay raise of x%. Almost all of that x% goes into savings. I’m living at the same standard of living I did before – which is easy; I’m used to it – and banking whatever extra money I make.

  • I hate managing my investments. Burton Malkiel, in A Random Walk Down Wall Street, ranks categories of investments on a “sleeping scale,” in which instruments are ranked on a scale by how much sleep you’ll lose worrying over them. Bank accounts are “semicomatose,” money-market accounts are “long afternoon naps and sound night’s sleep” (though any editions published after 2008 might offer, ahem, a mild caveat), real estate is “tossing and turning, vivid dreams” and gold is “insomnia.” The farther down you go on the scale, the more you have to manage the investment.

    I have more important things to do with my time than log on to a website and track a portfolio every day, or crunch numbers on my homemade spreadsheets. I like my investments the way I like my rotisserie grills: something I can set and then walk away from.

  • I’m allergic to risk. I hate the thought of losing money. A decent rate of return would be nice, but right now I’d be happy with a vehicle that simply kept its value year over year. I wouldn’t invest at all, except the knowledge that my savings accounts and money-market accounts will lose value due to inflation spurs me on. Real losses have finally started to scare me more than nominal losses.

  • I have a 401(k) through my current job, a 401(k) from my old job, some stock in my old company, an IRA that I started when I was a teenager but have not touched since college, an online stock portfolio, a savings account and a checking account. I have zero debt and zero real assets (unless you count a car that needs minor bodywork and a new CV joint).

  • Goals: get to that mythical “three months of expenses” savings mark. Save up for various trips outside the country. Saving for retirement’s less of a priority – I’m not of the mindset that puts off the fun parts of life until age 65, and I spend a lot of my spare time pursuing a job that I can still do in my golden years. But I’m not going to stop saving for retirement.

Having examined my financial life, let’s see if it’s worth living.

Advertisements

One Response

  1. I wouldn’t trust anybody in that industry. But with a risk profile like yours, stuff everything into I-bonds and TIPS and beat inflation in your sleep.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: