Popular Wall Street Journal personal finance writer Jonathan Clements is leaving the publication to begin a new job at Citigroup. He'll be the director of financial education for a new unit created to advise the "emerging affluent," investors with less than $500,000 in assets. Jonathan has always been one of my favorite personal finance writers. His advice was practical and basic, and as a result was very, very effective.
Clements recently did an interview with NPR and said a couple of things I wanted to highlight. Here's the first:
NPR: Why do you think issues of personal finance are so difficult for many of us to grasp?
Clements: The investment problem is not difficult. You save regularly, you buy a diversified portfolio, you repeat as necessary. 30 years later, you retire with more money than you could possibly imagine. And yet people cannot do it. We know that people make all kinds of behavioral mistakes: they're too short-sighted, they struggle with self-control, they don't save nearly enough and I think a lot of it has to do with evolutionary psychology. We are the great, great, great, great grandchildren of cavemen and women who were able to survive and reproduce because they focused relentlessly on the short-term. They weren't thinking about retiring 30 years hence; they were thinking about how they were going to survive until tomorrow.
Boy, did he hit this nail on the head! My thoughts exactly.
In fact, I've talked about these issues before -- that getting rich is easy in concept but that many people lack the discipline to make it happen. For reference, see these posts:
NPR: You wrote 1,009 columns. Were there any trends in personal finance that surprised you either when they came along or when they went away?
Clements: One of the things that I tell people is there are basically only 20 personal finance stories, which means that I've written each of those stories 50 times each and this, of course, is one of the reasons why I thought it was time to give it up. I mean, eventually readers were bound to notice. In terms of trends, what constitutes prudent investment advice has not changed over the past 13 and a half years. What you should have done in 1994 is the same thing you should be doing today in 2008. It's just that the market's changed. Something gets hot, everybody gets overly enthusiastic about it. This year it's commodities. A couple of years ago, it was real estate. We get this continuous new scenario thrown up by the financial markets and we all get all hot and bothered about it, but what you should be doing stays the same. You should be saving regularly, putting money into that 401(k). The answers don't change; it's just the scenarios that we're dealing with.
Again -- exactly!!!!! You can see why I love this guy!!!
The basics of personal finance are pretty simple and there aren't really that many of them -- as you can see from my thoughts in How to Get Rich in Three Easy Steps. This advice is tried and true and doesn't change with the "new" and "hot" new ideas that regularly come out. In the end, the new/hot ideas always fade away and we're all left with the simple facts once again. Apply them, and your net worth will be sure to grow.
Goodbye, Jonathan. I sure enjoyed the ride.
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