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Today, I have an incredible collection of resources. They will test our assumptions about what we’ll miss on the other side of retirement and how accurate people are at estimating future investment returns.

I’ll share examples of bad financial advice from a financial guru, financial media, and supposedly trusted professionals. I’ll also share some good advice on early retirement, health savings accounts, and shifting your mental outlook.

I close out with an interesting narrative from a couple of FIRE bloggers who say the time financial independence bought for them is the best money they’ve ever spent.

Enjoy…

Retirement Is Great, But…

Jonathan Clements reminds us What We Lose after we retire. Clements is one of my favorite writers and he nails it here, but the reader comments on this one may actually be even more useful than the article itself.

Unrealistic Investment Return Assumptions?

The headline of this next article says it all. Alex Padalka shares survey results showing Investors Expect Investment Returns Twice as High as Financial Advisors.

How is there so much confusion about anticipated market returns when we have so much financial media to educate investors? Maybe the problem is financial media.

The screenshot below is courtesy of Jeremy Zuke, our newest advisor at Abundo Wealth, who shared it on our internal Slack chat. Note that these headlines came from the same large publication on consecutive days! 🙄

Wow!!!! What a difference a day makes!?!?!?!? 😜#ClickBait #FinancialPorn pic.twitter.com/k4jSohccGp

— Chris Mamula (@caniretire_yet) September 20, 2023

The latest SPIVA scorecard was recently released. This is long but fairly simple to understand report, comparing the performance of actively managed mutual funds to their benchmark index. 

It is well worth your time to read, but if you get overwhelmed by the amount of information, at  least check out the tables labled Report 1b (on page 10), Report 6b (on page 21), and Report 11b (on page 26).They demonstrate investing in any subcategory of actively managed US equity, international equity, or fixed income funds is making an expensive and extremely low probability bet that you will outperform the corresponding benchmark index.

Despite the evidence, many people still think active investing is a reasonable bet and they pay a lot of money making it. Why?

Below is a video I recently saw on social media of personal finance “guru” Dave Ramsey. Listen for yourself. 🙄

Dave Ramsey: “It’s not really hard to beat the S&P 500”

Please reply with one word describing your reaction pic.twitter.com/cxmnsKgDvo

— Ramit Sethi (@ramit) September 22, 2023

Conflicted Financial Advice

It’s frustrating for me to see bad advice in traditional and social media. But my blood boils when financial professionals prioritize their own interests over those they supposedly serve.

Erika Giovanetti writes about a troubling trend of Buy Now, Refi Later. There was a lot that was troubling in her report, but nothing more than the advice that is given by those who are supposed to represent the interest of home buyers. She writes:

“Most recent homebuyers (82%) were assured they could “buy now and refinance later.” They most often heard this from their mortgage loan officer (63%) and/or their real estate agent (60%). But 13% say they won’t be able to keep making payments if they can’t refinance – among borrowers with an adjustable-rate mortgage, that figure is higher at 16%.”

Some Good Advice

Enough with the negativity. Let’s focus on some good advice.

Cody Garrett shared some planning gems for those on the path to early retirement on the Bogleheads on Investing Podcast.

Tom Morgan shares How To Be Lucky.

More on Health Savings Accounts

Earlier this month, I shared the evolution of our strategy for investing our HSA now that we’re buying our own medical insurance.

Christine Benz reinforces some of the principles I cover, but shares a different investment approach. She writes How I Invest My Health Savings Account.

Grab the Tissue Box

Bryce of Millennial Revolution wrote Full Circle, sharing why his wife Kristy says pursuing financial independence and choosing to retire early is the “best money they ever spent.”

This one hit close to home for me on several levels. It brought a tear to my eye but ultimately left me with a big smile at the end. Check it out!

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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. After achieving financial independence, Chris began writing about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. Chris also does financial planning with individuals and couples at Abundo Wealth, a low-cost, advice-only financial planning firm with the mission of making quality financial advice available to populations for whom it was previously inaccessible. Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He has spoken at events including the Bogleheads and the American Institute of Certified Public Accountants annual conferences. Blog inquiries can be sent to chris@caniretireyet.com. Financial planning inquiries can be sent to chris@abundowealth.com]

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