3 Things 8-23

08/23/2021 Although MAS is a financial services company, not everything published herein will be about numbers or investing. But no matter the topic, we hope for three things: 1) That you find the time you spend engaged worthwhile. 2) That you’ll reach out to us for help in any of our areas of expertise if something we discuss creates an urging in you to do so. 3) That you’ll share this with somebody new each time you read it. Thing One Five Decisions Below is a summary of an article that discussed what was described by its author as five financial decisions that are among the most important in your life: 1. Deciding to become a saver. The key to building wealth is living within your means. For most of us, generating income is not the problem – it’s spending more than we earn. If we can develop the habit early (or ever) to set aside some of our income, it will pay off. Even little things like not buying the daily cup of coffee on the way to work can contribute in a major way to our savings when we view the effect over decades rather than as a discrete purchase. The money saved on the daily cup of coffee could amount to $100,000 or more when all things are considered. In addition to small decisions like buying a cup of coffee, the big ones, like buying a car, which is a depreciating asset, can set us up to underachieve financially as the money being paid to the lender in financing costs can’t be paid to our future selves. 2. Deciding to connect to the financial system. The credit card system and the banking system, to name two of the larger components, are vital to most of us in a way that they weren’t 100 years ago. Deciding to establish a financial identity by (prudently) opening a line of credit, or establishing a checking account are important in that they can decrease your expenses as it relates to accessing money and credit over your lifetime - assuming you conduct yourself in a financially responsible manner once you enter the system. 3. Deciding to become an investor. This decision succeeds number one above. An acronym that has been used here before, ESI (Earn Save Invest) summarizes what decisions one and three are, taken together. If you can earn income, you can save some. And if you can save some, you can (and should) invest for the point in your life that you’re no longer capable or desirous of working. On this point, it is important to note that one-third of American households have no retirement plan savings at all. 4. Deciding when to get started. This is listed as number four but that is not a true indicator of its relative importance. The sooner you start on the ESI path, the more time your money has to grow. And assuming the investment decisions are sound, the more money you will have accumulated at the end of the road. 5. Deciding when to take Social Security. The Social Security Administration allows you to start receiving your benefits as early as age 62 but you’d be leaving a substantial amount of money on the table. According to ssa.gov, if you turned 62 in 2021 and elected to start receiving benefits, you’d be permanently getting 29% less than you would have gotten at your full retirement age of 66 and 10 months. And speaking of full retirement age, there’s a “peak benefit” available to those willing to wait for it. A person who waits until age 70 would get 76% more (permanently) than the person who started taking it at age 62. That’s not quite double, but it’s close enough and it’s also worth considering.

Thing Two We’re All Scientists Now – At Least We All Can Be “Trust the science”. “Listen to the Experts”. Phrases like these are all over social media and traditional media, for that matter. But there was a time when we were all taught the basics of discovery – how to be a scientist, in other words. I think the first time I was exposed (that I can clearly recall anyway) to the idea that I could be a scientist was in the 8th grade. Now before I recount the 8th-grade lesson on being a scientist that I got from Mr. Bell, I’d like to share below what Google has to say about it. I typed in, “What do I need to do to become a scientist”. The top result came back in bullet form:

  • Obtain a bachelor's degree.

  • Complete a master's degree.

  • Gain experience.

  • Pursue certifications.

  • Consider a doctorate.

Now back to my 8th-grade science teacher. He told us we could all be scientists – right now. All we had to do was:

  1. Have a question

  2. Have a theory about the answer to our question.

  3. Conduct experiments or research in an attempt to answer our question

  4. Draw our conclusions and be open to challenges about them from our peers.

On that last point, Mr. Bell explained that the challenges from our peers would either sharpen our arguments or collapse them. He noted that even in the second case it was ok because it would likely lead to an all-new question being asked or an alternate theory being tested. “Science is rooted in skepticism” he used to say. Nobody says that today. And nobody says that a thirteen-year-old has the current qualifications to be a scientist. But it doesn’t mean those things aren’t true.

Thing Three Just A Thought “The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him.” - Leo Tolstoy