Month: September 2023

The Ultimate Hedge: How Do We Enjoy the Journey to Long-Term Wealth?

A road with yellow text that reads: Let's go

Suppose someone told you, “I’m worried about what will happen in the future, so I want to make sure I have less money when I get there.”

This makes no sense, and yet, it is essentially what conventional investing wisdom tells anxious investors to do: “Hedge your risks! Seek safety!” But what does this mean? When investors choose “safety,” they are sacrificing their growth over the long term. In return for stability in the short term, they are choosing a smoother ride to a poorer future.

It’s human and normal to feel concern for the future. But choosing, in the moment, to soothe that short-term fear about long-term returns by avoiding volatility means you may be sacrificing those exact long-term returns that would soothe your concerns.

And investing for the long term doesn’t mean foregoing spending—it means a little bit less short-term spending now in exchange for (hopefully) a little more spending overall, in the long run. Spending more money now does mean that you will miss out on opportunities to invest that money for compounding returns, so it can be another road to a poorer future.

Choosing to invest for the long run is not a path of deprivation. Suppose the worst of the worst just happened last week: nuclear war broke out, or a giant asteroid hit Texas, or maybe you got struck by lightning. Should the worst happen, you are not likely to go out wishing that you had invested more conservatively: “If only my balances hadn’t wiggled so much! If only my returns had been lower!”

But maybe you could go out a little more content knowing that at least you committed to a possibly-more-abundant path: you chose to focus on the long term, and maybe you enjoyed some of it along the way. Maybe you found the perfect house for you, maybe you took that amazing vacation with your loved ones that you’d been dreaming of. You made your life happen along the way.

We invest for the long run; we spend for the long run too, so to speak. We don’t invest for a poorer future; we don’t spend beyond our means. (The road to broke is never worth it.) And, as always, you need to understand where your short-term money is—and keep it out of your long-term buckets.

We think the smart money is in investing for the best possible future. But we never know what the future may hold, so it does make some sense to hedge your bets. At 228 Main, we don’t tend to think of hedging investments in terms of bonds or gold or real estate—or any conventional option that sacrifices returns for Future You in order to pander to the fears of Current You.

Instead, you could continue investing for long-term growth and spend some money on the ultimate hedge: living your own best life.

Ready to talk about what this means for your portfolio? Call or write, anytime.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss.

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Thoughts about the Future, Reminiscing on the Past

When The Jetsons first aired, the idea of a robot maid or a flying car seemed too good to be true. In 2023, we have moving walkways, Roombas, and flying car prototypes. With the growth of green energy, could we live in Orbit City by 2062? Get more here.

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What Do the Happiest People Know about Spending?

Two cups of coffee with a leaf design in the foam.

No matter their savvy or experience level, most investors would probably agree that money is a means to an end. It’s not an end in itself. You could have all the cash and all the stock certificates in the world, but you can’t eat them or burn them for fuel. They make terribly inefficient insulation. They’re less fun than a deck of cards.

But when it comes to deploying our money to optimize pleasure, finding joy can be more of a challenge than you’d think. One reason? Psychologists call it the “hedonic treadmill”: our brains are so good at getting used to things that they will keep chasing new pleasures, new experiences, and the next thing that will bring us a boost.

In terms of our spending, this means that we get used to fancy new gadgets sooner than we think we will. Luxury goods lose their luster as fast as anything from the bargain bin.

The danger is that if we don’t notice that we’ve started running from one thing to the next, the costs mount and the returns on enjoyment diminish.

Consider how we make decisions the larger the ticket price gets: housing and transportation are huge outlays, and they make up sizeable portions of many household budgets.

Is the purpose of buying a new vehicle to replace a family car, to enjoy the everyday pleasure of being able to get reliably from point A to point B? Or is this “for fun,” for the joy of driving and being seen driving a particular make or model? If this is fun money, are you okay with the fun that might be given up, if the money goes toward this one decision?

It’s okay to deploy our discretionary spending however we see fit, but we might do well to remember something powerful: we shouldn’t underestimate how gratifying even the smallest of joys can be. In fact, sort of like the effects of compound interest, routine doses of fun can go much farther than those fewer, farther-between spending sprees.

This is why it’s vexing to hear a little treat like a latte get such a bad rap. As writer Laura Vanderkam explains, such “small, repeated pleasures” have the power to give life a lift, regularly. And better, even a lifetime of $3 lattes will not sink your longer-term goals the way that a $300,000 status symbol—like houses or cars truly beyond our means or needs—could.

So what do the happiest people know about spending? That if you want more of that proverbial bang for your buck, think more about the frequency than the size of life’s pleasures. The big stuff may be overrated, in that humans tend to overestimate the impact that large purchases will have on their happiness.

Tending more often to your joy and enjoyment as you spend? Now that sounds like a nice way to direct your time and money.

Want to talk more about how your money is working for you in your everyday life? Let’s visit, anytime.

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What Do the Happiest People Know about Spending? Presents: The Best of Leibman Financial Services

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A Wealth of Stuff

Our stuff is not the most important part of our financial planning, but it can certainly be part of it. As you look around at the things of your life, we hope that you see them as a reflection of and tool toward your goals—as part of a happier, healthier, and more sustainable financial future.

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Would You Rather… Have a Pot of Gold or Have an Orchard? 

When I was young, I pictured my retirement account as a pot of gold. It would be there at the end of the rainbow, when my career is done, to fund my retirement.

Talking with folks, it seems like the pot of gold is the type of thing lots of people think about when the subject is retirement. Whether it’s finding their “number,” amassing a big enough balance to feel “safe” enough to retire, or hitting a nice round goal like $500,000 or $1 million, the lump sum is the thing.

The challenge with thinking in lump sums is, we live our lives moment to moment, month to month. We have food to buy every week, bills to pay every month, and holidays or travel or projects to fund every year.

In other words, life happens with recurring income—not a lump sum.

A pot of gold sounds nice, but when you take gold out to do something or buy something, it’s gone: you can only spend it once. This may be why some people with substantial resources still don’t feel comfortable with the idea of hanging up their earning power. They’re stuck on discrete balances instead of ongoing flows.

Long ago I realized that what we need in retirement is an orchard, not a pot of gold. The orchard produces a fruit crop, and the crop is what meets our income needs for a year. And when it’s over, we still own the orchard! Next year, another crop. When the orchard is sustainable and can produce a fruit crop big enough to live on, we’ve become financially independent—and don’t need to sell our labor to pay our bills, anymore.

One of the best things about the orchard is that it does not matter how long you live. If the fruit crop each year is big enough, you won’t run out of resources. We tend the orchard and keep it healthy enough to supply the crop.

And when you are done with it, “you can’t take it with you” as they say, so the orchard gets passed down to people or causes you love. You don’t just leave an empty pot, where the gold used to be. Instead, the ground can be made ready—for whatever’s next.

Email us or call if you’d like to talk about turning your pot of gold into an orchard.

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Would You Rather… Have a Pot of Gold or Have an Orchard? Presents: The Best of Leibman Financial Services

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It’s Never Too Early, and It’s Never Too Late

Quite a bit of the news around retirement research focuses on shortfalls. How many of us have heard a headline lately about how many people aren’t saving enough for retirement or aren’t hitting their retirement goals? 

It can sound bleak. But when you get into the numbers, things are a little more nuanced. (Examples: people sometimes overestimate what they think they’ll need, and even when they “fall short,” people tend to make do with however much they do end up with.) 

According to survey findings from Allspring Global Investments, most retirees agreed that they were glad they had started preparing for retirement when they had… but most retirees also wished that they had started earlier. Turns out humans are a tricky bunch to satisfy! 

Retirement is such a huge topic, and our emotions around it can affect how willing we are to take a closer look at our situation. We don’t need to let fear call the shots, however. Avoidance is a survival skill, not a “thrival” skill. 

“Being clueless about money is no longer affordable,” writes Kate Levinson in her book Emotional Currency. (Ouch, right?) But Levinson points out that this challenge is also an opportunity: any day is a great day to get started. 

Not only is it never too early to get started, it’s also never too late to get started. Ever ripped off a Bandaid or taken a flying leap into the deep end? Ever opened that email or that bill you were dreading? 

Ever crossed a finish line after you thought it would be impossible to even get started? In the face of the unknown, it’s easy to let fear tell us stories about how hard things will be. We don’t have to accept the first story our fear tells us. 

Instead, let’s let the journey be as pleasurable as it can be. We can embrace this very moment as the best possible one to take the next step. It’s never black-and-white. Sure, maybe we could’ve started yesterday, and after all, there’s always tomorrow. 

But it’s also really nice to be here with you, today. Call or email us, any time. 

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It’s Never Too Early, and It’s Never Too Late Presents: The Best of Leibman Financial Services

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Rolling with the Punches

Our daily struggles might have more going for them than we first think. Imagine tripping on the coffee table and thinking, “Gee, it sure is nice to have toes to stub!” A little perspective goes a long way. So “rock bottom” may sound like a terrible place to find oneself, but it also could make a solid place to push off from. This week’s video: a serious lesson from a funny show. 

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