Holistic Retirement Planning -- Beyond Finance to Purpose and Relationships

Key Quotes

"The market is really two things so if you look at the mug of beer and let's assume it's in a mug that you can't see through right there's going to be foam on top and underneath that foam there's going to be beer and depending how that beer was poured there will be more or less foam more or less beer and if you look at the stock market there is the stock market of the financial news that you see day to day the traders you know all what's the market going to do next what stocks should you buy now what should you be selling all of that speculation all of that is what i call the foam underneath all the foam is the beer and the beer is the actual companies that we own the actual companies that provide services and make products and if they do that well generate profits that pay us as owners it's the beer that i'm interested in it's the beer that investors are interested in because we're long term we want to own that business or a small part of it"

J.L. Collins uses the analogy of beer foam and beer to distinguish between short-term market speculation and the underlying value of companies. Collins argues that long-term investors should focus on the "beer"--the actual businesses and their profits--rather than the "foam"--the daily market noise and speculation. This perspective emphasizes the importance of owning businesses for their fundamental performance rather than reacting to transient price fluctuations.

"Most people look at their securities portfolio as though it were in isolation and it's not it's in our context and the context is all of the other assets and the incomes that you have and for most people who are investors if you look at the size of their 401k plan and the value of their social security when it gets claimed but what's its present value today it's a big item and their homes are usually a big item as well if they would only think of those values the home value and the social security value as part of their total portfolio they would i think in almost every case make a serious reconsideration then reduce their bond portfolio substantially"

Charlie Ellis highlights that investors often fail to consider their entire financial picture when making investment decisions. Ellis argues that assets like a home and future Social Security benefits should be included in a total portfolio assessment. By considering these broader assets, Ellis suggests investors might reconsider and potentially reduce their bond holdings.

"The reason if you're in a position where you've been successful which a lot of you know the listeners of this show either are or advise people that are in that position the very habits and traits and characteristics that got you there you know delayed gratification you're really good at that right you might even be good at being frugal but certainly delaying gratification investing for the future waiting and now you're at the spot you've been waiting for right and like you've been waiting for this thing whether that like you've been successful you've waited for this thing so what do you do now and it's antithetical to your very identity so i think you practice right the same thing we do you just you just practice like pick want look the research is clear but nobody you don't need another lecture about the research right this behavior is perfectly rational but now the situation you're in it's slightly irrational to be at the spot where you could put the golf shoes on and refuse to do it"

Carl Richards explains that the habits that lead to financial success, such as delayed gratification and frugality, can make it difficult to transition to spending in retirement. Richards argues that continuing these saving-oriented behaviors when one has achieved financial security can become "slightly irrational." He suggests that practicing spending, even on small desires, is necessary to overcome this ingrained behavior.

"The 01 rule basically says that you can spend 01 of your wealth or just another way of looking at it it's 1 10 000th so you could call this the 1 10 000th rule as well you can spend 1 10 000th of your wealth on a daily basis without having to worry about anything and so i'll explain where that comes from so let's say your net worth is 10 000 you're basically right on the cusp between level one and level two that means you can spend an extra 1 per day without any worry about jeopardizing your future wealth"

Nick Muli introduces the "01 rule," also known as the "1 in 10,000th rule," as a guideline for daily spending without jeopardizing future wealth. Muli explains that this rule allows individuals to spend a small fraction of their net worth daily, which is theoretically generated by their wealth itself. This concept provides a framework for incorporating lifestyle creep after demonstrating financial discipline.

"Many couples really slide into their financial arrangements with each other like i said most couples don't talk about money substantively so it's quite rare that a new couple would sit down and say hey let's gather all of our information and let's create our shared vision and our philosophy on money no it's much more likely that one person comes with these five accounts the other has these four accounts they sort of combine it but not really and it's a little sloppy what you will find in almost every couple is that there is a money person in my opinion this is a big no no it's a huge mistake it's tempting but it is a potentially catastrophic mistake"

Ramit Sethi cautions against couples designating one person as the sole "money person" in their relationship. Sethi states that this dynamic, where one partner manages all finances while the other disengages, is a "catastrophic mistake." He emphasizes that money management should be a shared responsibility, similar to parenting, requiring active participation and communication from both partners.

"There is scientific evidence that the strength of your relationships is the single most important predictor of your health and happiness in life the harvard study of adult development was this incredible study conducted over 85 plus years 2000 plus participants that they followed the lives of and they found that the single greatest predictor of your physical health at age 80 was your relationship satisfaction at age 50 it was more important than your cholesterol than your blood pressure than your alcohol and smoking habits it was how you felt about your relationships the people you surrounded yourself with have that impact on your life and yet we don't take that into account we we you know we spend all of this time and energy thinking about our financial investments and we ignore our relationship investments which tend to pay the greatest dividends"

Sahil Bloom emphasizes the profound impact of relationships on overall well-being, citing the Harvard Study of Adult Development. Bloom argues that relationship satisfaction is a stronger predictor of long-term health than traditional health metrics. Bloom suggests that people often prioritize financial investments over relationship investments, despite the latter yielding greater dividends in life.