Charged Up! podcast: How to think about money
Episode 30 with author, financial columnist Jonathan Clements
By Jenny Hoff | Published: July 26, 2017
Longtime financial columnist for The Wall Street Journal and best-selling author Jonathan Clements goes through the main tenets of how to think about money, simple tips that can change your financial life, and money questions you should always say no to. With the clarity of a journalist and the knowledge of an expert, Jonathan Clements’ advice is easily understood and can be put into action immediately.
So, let’s get Charged Up! about learning how to think about money!
Jenny Hoff: Jonathan, thank you so much for joining me today.
Jonathan Clements: It’s great to be with you, Jenny.
Hoff: Let’s talk first a little bit about your background in the financial sector. You’ve been a writer on personal finance for years. You’ve written numerous books. What got you into this sector and how have you changed your mindset about money along the way?
Clements: I think there are two crucial things here. One is I’ve always been interested in economics. Even back as a teenager when I was in British boarding school, I had this nutty interest in economics. I also studied it when I was in university. When I got out of university in England, I immediately became a financial journalist, first in London and later in New York. I worked at Forbes magazine for three years, and then I was at The Wall Street Journal for almost 20 years, and I was the paper’s personal finance columnist.
It wasn’t just my interest in economics that got me into this but also personal experience. When I arrived in the States in 1986, the only thing I had to my name is credit card debt. I very quickly got married. I very quickly ended up with a couple of kids, meanwhile my wife at the time was a graduate student, and I had no money. So personal finance wasn’t just that academic interest, it was the personal interest of figuring out how to make ends meet in my 20s. So it’s really formative for me. It really taught me how to save and how to be smart about money.
Hoff: Since then we’ve experienced crashes, you’ve seen what’s happened with housing markets, you’ve seen what’s happened with the stock markets, you’ve probably seen people’s fortunes come and go, and you probably learned a lot about the way. I want to talk about two things in this interview that I think are really interesting and one is this article that you wrote recently, “51 Things You Shouldn’t Do,” and it’s really regarding money and also your book, “How to Think About Money.” It’s one of your numerous books and you have five steps in there that if you really follow these five steps in an all-encompassing way, you can control your financial life. First, let’s talk about your article: “51 Things You Shouldn’t Do,” Now, we can’t go through all of your tips, but what would you say are some of the top tips in there that people just don’t realize, and they make this mistake over and over and over again and it really hurts them financially?
Clements: If you look at a lot of the mistakes we make as investors, we make mistakes because we associate complexity with sophistication and hence, investment success. But the reality is that the best investments are typically the simplest because simple investments tend to be low cost. So a lot of things that we get excited about, different types of alternative investments like hedge funds and private equity and stuff like that, they have this certain sex appeal that’s what the so-called smart money, but the reality is a lot of times, returns on this is low and most of us would fair far better by just putting together a portfolio of low-cost index funds.
Hoff: That’s through something like Vanguard or Schwab or any of those companies where you don’t really need to have a minimum to get into the game?
Clements: It’s extraordinary what has happened to financial product offerings over the past two decades. You go back to the early 1990s and you still needed a decent amount of money to get involved in the financial market. Plus, once you got involved, the costs you incurred were really pretty high. Today, you can go out and you can build a portfolio to replicate the global financial markets, a portfolio that includes thousands and thousands of stocks and you will pay roughly 0.1 percent a year.
That means that for every $100 you are investing, your costs are going to be 10 cents or less. It is extraordinary what’s happened to investment costs over the past couple of decades. That reduction in cost is because of the introduction of index funds and exchange credit index funds and firms like Vanguard and Schwab are in the forefront. They are driving down those costs, and the consumer has been the big beneficiary.
Hoff: When you talk about index funds, can you describe for the listeners exactly what that means, that you’re owning a little piece of every part of the stock market? What does an index fund mean?
Clements: Supposing you wanted to build a portfolio to get broad market exposure, you could do that with index funds. You could get what’s called the total U.S. stock market index fund. That’s a fund that would track an index, which includes every stock listed on the stock market in the U.S. That is over 5,000 stocks. So you could buy one fund that gets you exposure to all U.S. stocks. You could buy another fund that gives you exposure not only to developed fund markets but also to emerging markets. There are a number of these so-called total international stock funds out there.
And then you probably want to have some bond exposure in case you have a down market, in case you need to check your portfolio for cash at short notice. And for that, you could buy something called a total bond market index fund, and that will give you exposure to the broad array of U.S. bonds, both government bonds and corporate bonds.
You put together those three funds in a combination that makes sense, giving your time horizon and you’ve essentially given yourself exposure to the entire global financial market. It’s extraordinary what you can do with just three funds.
Hoff: So what does that mean in terms of if there is a stock market crash or if there is a big downturn in the economy? When you hold these index funds, are you a little bit more protected against losing everything because it’s so broadly diversified?
Clements: One of the hits on index funds is that if the market goes down, your index funds are going to go down as well because they track the market. So if stock market drops 10 percent, your index funds have been dropped 10 percent and that is absolutely true. You should imagine that if you buy an index fund, nothing else is going to happen. That might sound like a bad thing: Market drops, you drop. But the reality is looking to statistics, the research has shown that actively managed funds where there’s an actual manager there trying to pick the right stocks or pick the right bond is a losing competition.
This isn’t just a theory, this is irrefutable logic. Forecast investors are going to collectively earn the result of the market averages after cost, which means investors inevitably earn less. If you invest in actively managed funds which has far higher expenses than an index fund, on average, you’re going to do far worse in the market. Meanwhile, with an index fund, which will have these super low expenses, you’re going to get the market return minus that 0.1 percent, so the net result is over the long run if you index and you sit there quietly there with your funds over 10 or 20 or 30 years, you’re going to do far better than somebody who invested in active manage funds.
Hoff: That’s a good tip. We’ve heard that from a couple of people now. This is this more passive investing style versus active investing style, and you’re basically leaving your money in for the long haul, you’re not touching it. You’re just saying, “This is money that’s going to carry me into retirement or I’m going to access in 20 or years and I’m going to let the market do what it needs to do whether it goes up or down, it will always change course at some point.”
Clements: If you say to people today, “Should you be in the market?” they’ll wring their hands and talk about the uncertainty of the economy and the uncertainty of the political environment in D.C., the valuations and so on, but 30 years from now, you’re going to look back and say, “Why in the world did I own anything other than stocks?” If you have that long-term perspective, you will realize that simply being in the market and capturing its return at the lowest possible cost is a fabulous strategy, but to get there, you need to tear your gaze away from the daily ups and downs, the financial markets, from all the turmoil in the economy and all the turmoil in D.C. and think about the long haul. We, as humans find that extraordinarily difficult to do.
Hoff: Yes, absolutely. I want to get to a few other tips that you have in “51 Things You Shouldn’t Do.” I really recommend people, check this out, “51 Things You Shouldn’t Do.” It’s on your website humbledollar.com, because some are really funny in the sense that you chuckle when you read them, but you’re being serious about them. One is don’t max out your 401(k) if you smoke heavily, drink heavily or you’re basically in poor health. Why should you not do that?
Clements: Well, if you’re investing in your 401(k), presumably you’re doing that because you plan to have a long and enjoyable retirement. If you don’t exercise, you eat too much, if you smoke, if you drink too much, you’re not going to have a long retirement, you’re going to have a very short one. So it’s irrational to keep funding that 401(k) plan if you’re not going to be around to enjoy the money. It’s a very simple message, but the message is this: If you’re investing for the long haul, look after yourself so you will be around for the long haul.
Hoff: Absolutely. That sounds like a good idea. Also, don’t apply for credit too often. Is that basically because you don’t want to hurt your credit score?
Clements: Absolutely. I’m sure, Jenny, you know much more about this than I do but one of the ways that you can ding your credit score is to apply for credit too often. Having a good credit score has become the status symbol for the average American, getting into the 700, above 800 in your FICO score is considered to be a real achievement, but it’s not that complicated. What do you want to do? You don’t want to charge too much to your credit cards every month. You want to preferably use less than 10 percent of the credit on your card. You want to pay your bills on time.
One of the other key tips is you don’t want to apply for credit too often. Sure, you want a new credit card, go ahead and apply for it, but don’t start applying like crazy for stuff because you just want to collect credit cards or see what you qualify for. If you do that, you’re going to ding up your credit score, and down the road it could mean it will cost you much more to borrow.
Hoff: Absolutely. Another one is don’t pay a 6 percent real estate commission. This is interesting because if you are selling your house, generally, you do have to pay the 3 percent to the buyer’s agent and 3 percent to the seller’s agent. So how do you avoid that?
Clements: It used to be that 6 percent was sacrosanct and you couldn’t get anybody to budge on it. That just isn’t true today. I’ve taught at a couple of places in the last six years and I paid 4 percent on one house and 4.5 percent on the other. You can negotiate this with your real estate broker. You should do it upfront when you sign the contract. Often, the strategy would be, say, all right, if you sell this and you also find the buyer, then I’ll pay you 4-4.5 percent. If you have to split the commission with another broker, we’ll make it 5 percent.
But whatever it is, don’t just roll over and agree to the 6 percent. That’s what your real estate agent wants you to do, but we’re talking here about serious money. If you’ve got a $500,000 house and you get to knock down the commission by 1 percentage point, that’s $5,000 going to you. It’s well worth having the conversation.
Hoff: I just used Redfin to buy a house. And if you buy it, they give you part of the commission they receive, but if you sell it through them, you can actually pay a lower commission. So there’s a lot of competitors out there that maybe give you more leverage than negotiating with your agent
Clements: And just through an international perspective, the commissions we pay here in the U.S. are far higher than they are in other parts of the world. If you sell a house in the U.K., you could be paying a commission of 2 or 2.5 percent. The idea that it should be 6 percent because the broker has to work so hard, well, I guess in other parts of the world real estate agents just don’t feel that way.
Hoff: Yes, absolutely. I like it. Everything’s negotiable. I want to also make sure that we talk a little bit about your book, “How to Think About Money.” You have five steps in there, but it fills up a whole book because there’s a lot to each step. Let’s go through each step and if you could expand on that more, what does it mean and what does it mean as far as actions we can take right now? Step No. 1 is to buy more happiness. Can you talk a little bit about that?
Clements: One of the myths out there is money buys happiness. We may say, “Oh, no. Money doesn’t really just buy happiness.” But deep in our gut, we do believe if we have more money, we would be happier, and yet there’s been research and the reality is money does appear to buy happiness.
You look back over what happened over the past 40 years, the standard of living in the U.S. has been doubled and our reported level of happiness has not budged. We are as happy today as we were in the early 1970s. So what’s going here? How can we turn this around? Part of the problem is we’re not very smart about how we use our money.
One of the things I talk about in that new book of mine, “How to Think About Money,” is trying to use your spending in a way that’s going to boost your happiness. One of the key ways to boosting happiness is to use it to have special times with friends and family. Anything you can think of, it’s almost better if you get to do it with friends and family. You think about going out for dinner, you go out to dinner when you’re on a business trip and you eat alone in a restaurant, you are sort of uncomfortable. If you’re there with three friends, you’re going to have a great time.
Go for a walk in the woods. It’s OK if you’re by yourself. If you go with a couple of friends, you’re going to have a real adventure. You could chat along the way. You’ll feel better afterward. Everything is better when it happens with friends and family.
That comes to relate to the first thing which is we tend to get more happiness out of our dollars if we spend it on experiences rather than possessions. Experiences like going out for a meal, going to a concert, taking a walk, going on vacation tends to deliver much more happiness than going out buying a new car or purchasing a new electronic gadget. Why is that? Probably it’s because when we have these experiences, we get to anticipate them beforehand and that period of anticipation really boosts our happiness. But also afterward, we gladly have a great meal of or we have a fun vacation, we have these fun memories. And the way the brain works, these memories tend to get sanitized over time so that in fact our memories tend to be more glowing than the actual event. By contrast, if you buy the new car, what happens? Pretty soon, you get that first scratch, then you have the fender bender, then the car won’t start in the morning. And suddenly this thing that you thought was going to deliver you a great deal of happiness is instead delivering you a great deal of unhappiness. Unlike experiences which are over and done with and we all we have is a fun memory, when it comes to possessions, we have to sit around and watch them deteriorate, we have to repair them, there’s a lot of maintenance involved. It’s just one big hassle and the things that we thought were going to make our lives so much better end up making our lives worse.
Hoff: Absolutely. You know that old saying, they say the best day of your life is when you buy your boat and the second best day of your life is when you sell it. So it’s kind of that idea that you buy all these things and you think, OK, that’s going to make me happy but then you have to worry about them and stress about them and fear of losing them and fear of destroying them. So buy your experiences, spend your money on that if you’re going to be spending your money to make sure that you have beautiful memories and you can share it with others. What about your other rule? Bet on a long life. So I’m assuming this is for people who are not heavy drinkers and heavy smokers?
Clements: That’s right, Jenny. Life expectancy in the 20th century rose by 50 percent and it continues to rise. There’s every chance if you look after your health that you will live into your 90s. We have extraordinarily long lives now and you want to make the most of them. So one of the things that I talk about in my new book – and this has ruffled a few feathers – but one of the things I talked about in the new book is how people should try to get themselves to create financial shape as early as possible in their lives so that they very quickly buy themselves some financial freedom. So what this means is that if we tell our kids, “Go off and pursue your passions, doesn’t matter if you earn money in your 20s,” I think that’s garbage. In your 20s, you should go out and you should make money. You should take that boring corporate job and save as much of your income as you can because the fact is in your 20s, the boring corporate job isn’t so boring. The work world actually seems exciting. You want the promotions, you want the pay raises. By the time you get to my age, you get to your 50s, you realize that the corporate world is actually the death of the soul. You don’t think of promotions anymore. You’re not interested in pay raises. What you want to do is spend your days doing what is personally important to you. And if you’re going to spend your days doing what is personally important to you, once you get into 40s and your 50s, what you need to do is get yourself in great financial shape as early in your adult life as possible. That’s why you take the boring corporate job in your 20s. You save as much as you can and then when you get to your 40s or your 50s, you will have the financial freedom to change careers and at that point pursue your passions. At that point, pursuing your passions is going to be far more important to you than it was in your 20s.
Hoff: I like that. That’s true. When you start off working, it’s always exciting but as you get older you start to realize it was the same humdrum as always and I’d rather do other things. What do you think about student loans then? I know a lot of millennials, it was interesting because I was looking in investing in another property the other day and there’s a lot of millennials who live there and they have great credit ratings and they pay all of their rent on time, and I asked why aren’t they actually buying these apartments. They said well, it’s because they have 60-70-$80,000 in student debt still that they have to pay off so they don’t have cash flow. What do you think about taking on student debt especially in today’s world where there’s so many other options for getting a good education?
Clements: Pursuing a college education and getting an undergraduate degree is still a great investment, make no mistake about that. If you look at census bureau figures, they find that the lifetime earnings of somebody who was only a high school graduate, their lifetime earnings average in today’s dollar is about $1.4 million. If you get an undergraduate degree, your lifetime earnings are about $2.4 million. So it’s a million dollars more. So taking on $30,000 or $40,000 in loans in order to have a million dollars more in lifetime earnings is a pretty good investment. The problem, I believe, is that the parents have bailed on their responsibility here. Parents may not be able to help their kids financially when it comes to paying those college bills but even if you can’t help your kids financially, you can certainly help them with advice. It is absolutely criminal, it is criminal to allow your kids to go off and load up on student loans to get a degree in something that’s not going to pay them a whole lot of money. If you’re going to become a social worker, you should not be graduating with $70,000 or $80,000 in debt. You are sunk. If you are going to be social worker, you should be advising them to go to a community college for two years and get some credit that way and then transfer to a four-year university, preferably a state university, to graduate from there so they end up with relatively little student loans. If your kid’s going to be an investment banker, different story. By all means, take on $80,000 in loans. The parents need to be there. They need to be advising their kids because the kids, they don’t realize what it means to take on all these debts and what it’s going to mean for their ability to buy homes and buy cars and have the life that they want to lead after they graduate.
Hoff: Absolutely. Not all degrees are created equal. So, you have to think about that when it comes to what you’re willing to invest your money in as far as long-term payout. No. 3 in your book, “How to Think About Money,” is to rewire your brain. You talk a little bit about our hunter-gatherer ancestors and how we’re hardwired. Can you go into that a little bit more?
Clements: Much of the way we behave are instinctual reactions and when faced with financial choices we are driven by the instincts we’ve inherited from out hunter-gatherer ancestors. The No. 1 instinct that derails our financial lives again and again is this instinct to consume whenever we can. For our hunter-gatherer ancestors, that made ample sense. There may be no food tomorrow. There was no need to save for retirement so it made entire sense to consume as much as possible today. By contrast in 2017, consuming as much as you can today is a disaster. It’s the reason we end up with too much credit card debt. It’s the reason we save too little for our future.
So if you’re going to do anything in terms of rewiring your brain, what you need to do is rein in your desire to consume today and strive mightily to delay gratification. You need to sign up for those automatic investment plans of your favorite mutual funds. You need to sign up for your 401(k) plans so the money comes out of your paycheck before you get a chance to spend it.
Over the years, both when I was at The Wall Street Journal and during the six years that I was director of financial education for Citi Group, I met thousands of everyday investors who accumulated seven-figure portfolios. A lot of these people had relatively modest incomes. Most of them were mediocre investors but almost all of them shared one attribute in common which is they were extremely frugal, otherwise, known as cheap. If you’re going to amass significant wealth in this country, forget winning the lottery, forget picking the next hot stock, forget buying a bunch of rental properties. If you really want to get rich in this country, the No. 1 attribute you need is the ability to save a buttload of money every month. It’s that classic millionaire next door story that we’ve heard again and again. It’s the couple who live in a modest home, they drive a secondhand car, they get their clothes at J.C. Penney. You never know in a million years that they have a million bucks and yet they do and the reason they do is because they live frugally.
Hoff: All right. So rewire us. Don’t keep increasing your quality of life necessarily because your income increases but instead take that extra money and put it away. But don’t keep it in your checking account because that’s one of your don’t-dos in that list of 51.
Clements: Yes. I mean if you’ve got too much money in your checking account, you want to get it out of there and then at the minimum put into a high-yield online savings account or better still to funnel part of that money into stock and bond mutual funds, preferably index funds with low annual expenses.
Hoff: All right. Let’s talk about one of your tips to think really, really big. Talk about that.
Clements: We all tend to engage in mental accounting. So we think of our home as separate from our investment portfolio. Our investment portfolio as separate from our insurance policies. We think about our insurance policies as separate from our debt and yet all of these are part of our broader financial lives and all of these pieces fit together and affect one another. So let me just give you a very simple example. Let’s say that you have been very successful investing and you do have a significant portfolio. Well, you may discover that you have enough money that you actually don’t need life insurance. If you end up hit by the next bus, your family would be just fine financially. So why carry the life insurance? You might as well drop it, save yourself the premiums and you can add those dollars to your retirement stash.
When we think about our broader financial life, the central organizing principle, the central thing we need to think about is our so-called human capital, it’s our income earning ability. That regular paycheck we collect drives every other aspect of our financial life. So for instance, you think about how to design your investment portfolio. When you’re in your 20s, we’re often advised to invest heavily in stocks. Why is that? We’re told to invest heavily on stocks simply because we have a long time of our lives and we’re told to invest heavily on stocks because we don’t need money for our portfolio right now because we have that paycheck. By contrast, once we get into our 50s and early 60s, we know that paycheck is about to go away, that’s the point when we want to start adding significant amounts of bonds to our portfolio because when our human capital stops paying us income, we want bonds that will pick the slack and start paying that income instead. Similarly, we talk about debt. It’s OK to take on debt in your 20s because you know that you have four decades of paychecks ahead of you to service that debt. So you obviously don’t want to go overboard but in our 20s we often end up taking student loans. We end up taking on car loans. We end up taking on mortgages to buy that first home. That’s not an irrational thing to do because we know we have those 40 years of paychecks to get those debts paid off and still be able to retire debt-free.
Hoff: OK. So looking at the overall picture instead of each individual investment or insurance that you might have but look at your age, look at your income, look at how much longer you’ll be working, if you have children that you have to pay for, and make decisions based on your specific circumstance instead of by the book thinking which is “I have to do it at this time.”
Clements: Yes. And if you do that, you’ll start to save yourself money. Small but classic example, you come across is somebody with $5,000 of credit card debt and they have $5,000 sitting in the savings account or the credit card debt is costing them 20 percent a year and the money in the savings account is earning them 1 percent. Why not just take the money in your savings account and pay off the credit card? Instead of earning 1 percent, you’ll be able to save yourself paying 20 percent. It’s a classic arbitrage that dramatically improve your financial situation. If down the road you need cash, you can always run up the balance on the credit card again. But in the meantime, you’ll be avoiding paying that 20 percent interest.
Hoff: All right. And your final tip is to win, don’t lose. That seems obvious in a sense but you’re really saying don’t always necessarily look at the growth, look at what obstacles could be hurting your investments. Can you go into that a little bit more?
Clements: We all get just one opportunity to make the journey from here through to retirement and failure is not an option. We cannot afford to fail at this journey. So what we want to do is take every step possible to stack the odds in our favor. That doesn’t mean we shouldn’t take risk. I’m not saying you shouldn’t invest in the stock market but you should take steps that dramatically improves your chance for success. That really involves two sets of things, one is you want to be sensible about the way you invest. You want to be broadly diversified. You want to keep your investment cost low. Those are some things to improve your odds of investment success but also you want to avoid the big disaster. What does that mean? That means that if you don’t have a whole lot of savings, you should have disability insurance because if you can’t work, you can very quickly vouch at our savings and end up with nothing. So you want disability insurance.
If you have some savings, you might want to get umbrella liability insurance in case you’re sued. If you get sued and you lost a law suit, it could derail your finances, put you back 20 or 30 years. So get that umbrella liability insurance. Keep insurance and it will save you from that law suit. Similarly, when it comes to investing, you want to be diversified. You don’t want to be betting everything on one stock or one market sector because if you get it wrong, you set yourself back 20 or 30 years and you’re not going to successfully make that journey from here to retirement. So think about risk, not risk in terms of markets fluctuating up and down, think about risk in terms of things that could blow up in your face and cause you to fail totally from a financial point of view.
Hoff: All right. I always like to get my audience three actionable items. What are three things somebody could do right now to better their financial lives?
Clements: No. 1, create a wish list. Write down all the things that you would like to buy in the next two or three years. Draw up that list, put it aside and come back and look at it once a month. What’s that going to do for you? Well, one, you’re going to have this period of anticipation where you think about all the things that you want to do, about the great vacation you want to have, about how you want to remodel your kitchen, about the new car you want to have. One of the things I tell people is, “You should think about your vacation six, seven months ahead of time because that way, you can think about all the different possible vacations you might have. You could travel all over the world in your head.” It’s a crazy thing to do but making that wish list and coming back the next month and the month after that, you could also look at that wish list and say, “You know, remodeling the kitchen, maybe I don’t really need to do that, maybe that wouldn’t give me the thrill I initially thought it would so let’s scratch it off the list.” By having that wish list, you can save yourself a whole lot of money. So that’s the first thing I would do, create a wish list.
Second, I would think about ways to simplify your finances. What I would say to you is, imagine that you died and you were also the executor of your estate, you were the person who was going to come and have to clean up the mess that you created. You think about that and say, “Wow, should I have less bank accounts? Should I have less financial accounts? Maybe I should slim down the number of credit cards I have.” You may discover there are all kinds of things that you can do to clean up your finances so that, God forbid, if something happens to you, it will be easier on your family that’s been cleaning up your finances, what you’re also going to do is make things a whole lot easier for yourself in the years ahead. So think about it as though you’re cleaning up your own estate after you’re dead and how much simpler you’d like to make things.
And then third, coming back to what we’ve discussed a couple of times, Jenny, seriously think about indexing. We all tend to be self-confident. We think we’re better-than-average drivers, we think we’re smarter than most, and we also think we’re better looking. But when it comes to financial markets, make no mistake, there is very little chance over a lifetime of investing that you’ll outperform the market averages. There’s a reason we talked about Warren Buffett. The reason we talk about Warren Buffett and his record of outperforming the market over 50 years is because he is the only one. There is nobody else with a record of outperforming the market over 50 years. Warren Buffett is the exception who proves the rule and the rule is this, over a lifetime investing, your chances of beating the market is so small it’s not worth considering. My advice, give up the game. Stop trying to beat the market. Buy yourself that three-index-fund portfolio I was describing earlier, and go off to do something better with your life.
Hoff: Fantastic. Absolutely. Fantastic. Great advice all around. Finally, I want to ask you. My show is called Charged Up! What keeps you charged up about making money management common sense for people?
Clements: You know what really gets me excited is when I’m able to get somebody investing successfully at a young age. If I find somebody my age, at 54, and I get them investing sensibly, they’ll get a few decades out of that and it will certainly help their lives. But if you can get somebody who is 18 or 19 or 20 and get them investing sensibly at a young age, putting aside a few dollars every month, putting it in index funds, focusing on the long-term, it’s extraordinary how much wealth they could amass between now and when they retire. Even if you’re old, even if it’s too late for you, though it’s never really too late, but even if it’s late in the game for you, I bet you that some young person in life who you could steer toward low-cost sensible investing and toward a regular savings program, and by doing that you can transform that person’s life. So go ahead and do that. That is something hugely valuable to do for a young person out there.
Hoff: Fantastic. Jonathan, fascinating conversation. I really recommend people check out your books. You have your Money Guide that you put out, I think, on a yearly basis. You have “How to Think About Money.” You have your website Humble Dollar. You give fantastic tips, great advice, and it’s very simple to understand and I really appreciate it. Thank you so much for talking with us today.
Clements: Thanks for having me on the show, Jenny. I really appreciate it.
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