Carl Richards writes about money for the New York Times. The Behavior Gap distills much of his financial wisdom in a slim, easy-to-read volume. It took me less than an hour to read The Behavior Gap. Richards recommends some common sense investment strategies (buy low, sell high even though most investors do the opposite). He shows how excessive planning and budgeting can be counter-productive. What I liked most about Richards’ approach to money management is his focus on “happiness.” Richards cites the too little known research that shows that after people make about $75,000, more money doesn’t mean more happiness. Happiness then comes from doing what you like to do and spending time with family and friends. Those activities don’t need to cost you a lot of money. If you’re looking for a common sense approach to money management, I’d recommend The Behavior Gap. GRADE: B+
For most of my life, you could feel okay about putting money in a savings account. Now you feel like a sucker doing that. And like a sucker putting it in the market. And like a sucker buying real estate. This is a darn shame.
You’re right about the financial world being more risky, Patti. People used to think real estate and the stock market would just go up, up, up. And, for a decade or so, it did.
What goes up must come down, so slow and steady wins the race (if the fix isn’t in–which, after the last decade’s roller-coaster ride, you have to wonder….). But people still don’t realize how much of “wealth” is just getting into a bubble at the right time. We’ve had real estate bubbles, dot-com bubbles, and, just a few weeks ago, the Facebook bubble. They seem to be coming faster and popping quicker than at any other time in history.
Exactly, Deb! The financial excesses of our economy favor those who get in quick…and get out quick before the bubble bursts.
People should consider taking the word investment out of their vocabulary. A house is a place to live, put aside money safely for emergencies, meet needs with income but always save some. Buy what’s needed not what’s simply desired. The things that were once considered investments; stocks, property, even collectables, aren’t any more, any more than groceries or eyeglasses or a pet. Once, yes. Now, no.
People need to realize all investments come with levels of risk, Rick. Even if you sock your money in your mattress, there are risks (your house could burn up, someone could steal it, etc.). Choosing your comfort level with risk is one of the most important decisions we need to make.