Masters in BusinessJonathan Clements Explains Why Dying is Hard Work
Barry speaks with Jonathan Clements, Founder and Editor of the HumbleDollar and veteran personal finance columnist for the Wall Street Journal. He wrote over a thousand columns for the Journal and for the Wall Street Journal Sunday before spending six years as Citigroup's Director of Financial Education. He also held positions at Euromoney and Forbes. Jonathan is the author of 9 personal finance books including "My Money Journey" and "From Here to Financial Happiness." He received a Stage 4 Lung Cancer diagnosis last year, an experience he's used to expound on the relationship between money, well-being, and life satisfaction.
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This week on the podcast boy, What an extra special guest I Have? Jonathan Clements was the personal finance columnist at The Wall Street Journal for nearly twenty five years. He wrote over a thousand columns. He also worked as director of financial education at City Group. Jonathan kind of famously announced that he was diagnosed with terminal cancer on his website as well as social media, and that started this cascade of not just an outpouring of affection and appreciation for his work, but just a dialogue about how we all should be thinking about our lives, our money, and our life satisfaction. I've been a reader of his for forever, and it was really a privilege to have him come into the studios and with no hesitancy, discuss what many people find to be difficult subjects with just tremendous grace and insight and dignity. And I found it to be an absolutely fascinating conversation, and I think you will also if you are at all curious about estate planning, or investing or personal finance. This is not the usual discussion, and I think it's very worthwhile for you to hear this and share it with friends and family with no further ado. My discussion with Jonathan Clements Barrio.
It's great to see you again and it's great to be on your podcast.
Well, well, thank you so much. I'm glad we have the opportunity to do this. Before we start talking about the serious, heavy stuff, let's get a little background for you. You grow up in London, you graduate Cambridge and you start at Eural money magazine in London. What were you studying at Cambridge? What was your original career plan?
So from a relatively early age, I actually thought about being a financial journalist because my father had been a financial journalist. He spent ten years in journalism in London. He worked for the Daily Telegraph, he was city editor for the Glasgow Herald. His first job out of college was at the Financial Times. In fact, wow, and this will blow your mind, Barry. My father graduated from Cambridge in nineteen fifty six. He decided he was going to take the highest paying job he was offered, and the highest paying job he was offered the second highest paid job he was offered at seven hundred pounds a year was as a management trainee for Shell Oil. The highest paying job he was offered at eight hundred pounds a year was as a cub reporter for the Financial Times. Can you imagine a world to where the highest paying job you get offered out of college is a job in journalism?
That's amazing. Journalism today has, you know, technology has changed it so much that's really hard to fathom. Although you and I not far apart in age, grew up in an era where media was very specific and thought of as a genuine career. I don't think even at the journalism schools people are approaching.
It the same way.
What's your thoughts on the state of journalism in the modern world.
Well, if you said to me, you know, what advice would I give to somebody who wanted to go into journalism, My aunts would be dope. I really feel like I was the last generation that got into journalism and made a career out of it and made a living wage. But anyway, going back to your question, yeah, financial journalism was always on my radar screen, and even before I went to Cambridge, I actually spent eight months working for a little suburban newspaper outside of Washington, DC, and in many ways it was the most fun and then the most educational experience I had in journalism. I worked for this you know, rinking little paper that came out every other week. The circulation was twenty five thousand, but as a nineteen year old, I was able to not only get involved in writing stories, but also I was involved in the paste up of the paper. For people who remember what paste up was. I even went on advertising calls with the advertising director. It was so much fun and I learned so much.
So you're from the UK, but you've spent a lot of time in the US. Where did you grow up?
Both places? I was born in London, and when I was three and a half, my father got a job for the World Bank in Washington, d C. So we all moved to Washington, d C. Then, just before my tenth birthday, my father was posted to Bangladesh for four years. So my mother and father and my sister went to live full time in Bangladesh, and my two brothers and I got packed off to boarding school in England, which explains everything you know. We'd go out there during vacations. Four years later, my parents moved back to DC, but with my parents' encouragement, I stayed on a boarding school in England, went to Cambridge, worked there for a year, and then after a year as a journalist in London, I realized the standard living for reporters in England seriously socked. And that's when I decided to move to New York City and I joined Forbes magazine as a glorified fact checker and immediately doubled my salary moving from London.
Well didn't you also double your cost? New York back then was still in the nineties, New York was really an expensive place to live.
London is also a really expensive place to live. And in any case, at the time, I was actually living out in Princeton with my graduate student wife.
You go from Forbes pretty much during the golden era of mutual funds and star managers, like the eighties and nineties, that was peak mutual funds. What was that like looking at it as the data was begun coming clearer that hey, this may not be the best deal for investors.
When I was at Forbes, after this initial spell as a fact checker, I was given the mutual funds beat and the core article as the mutual funds reported for Forbes magazine and subsequently when I covered mutual funds for the journal, was the star manager profile, and it was very formulaic. You went and you interviewed some star manager, usually a man, and you would have a couple of paragraphs about their investment philosophy and strategy. You would offer three of their stock picks where they were probably touting stocks they wanted download from their portfolio, and the managers you selected were all based on past performance. And one of the things I started to realize in those years was the star managers, well, their stars started to flame out pretty quickly. And this, of course was the experience of many investors across the US, and that was in many ways, you know, the seeds of the index fund revolution. That people bought these star managers, you know, one after another, the managers started to flame out, they bought new star managers. They ended up with these portfolios that were just a hodgepodge of x star fund managers and that really set us up for the boom and index scene in the late nineteen nineties and into the two thousands.
Yeah. The funny thing is the behavioral aspect of mutual funds seems to have been when people finally learn about a manager who's put up great numbers. By the time it makes it to Forbes, hey, most of that run is probably over in a little mean reversion is about to kick in. That experience led you to becoming the index guy. Tell us a little bit what it was like being an index guy at a time when it wasn't as popular or well thought of as it is today.
So in nineteen ninety four, at the lofty age of thirty one, the journal gave me my own column, which, in retrospector is obsurd. I have a thirty one.
Year old their own It seems to have worked out well for them, though, to be fair.
Yeah, but I'm not sure I would give a thirty one year old that that chance. Okay, but yes, I was given my own column. And by that point, having seen all these star managers come and go, you know, I had become an index fund devotee. And in column after column I banged the drum for index funds to the point where my editors were asking me, hey, could you write about something else? But the numbers you can't argue with. I mean, we all know that the brutal math of investing before costs, investors collectively will earn the market's return after costs. They will earn that mark return less whatever they're paying. If you can just match the market's return minus some tiny amount for an index fund's expenses, you're going to outperform the vast majority of investors, and that annual advantage snowballs over time. Until probably the early two two thousands, that message didn't resonate as widely in pot because index funds were the preserve of bank gotten a couple other, you know, fun companies. But then these ETFs came along, these exchange traded index funds, and at that point any financial advisor, any broker, could sell index funds to their clients. And it was really the ETF revolution that took indexing and turned it into a national phenomenon that now supposters the amount of money and actively managed funds.
So that's an interesting thesis. I know ETFs are really significant to the adoption of indexing, But spy has been around for seems like forever. It certainly was around in the nineties. What was it about the two thousands, specifically?
Was it just the variety of choice?
Why do you think ETFs kicked off so much attraction to indexing, especially considering the bulk of those moneys, the flow of black Rock, Vanguard, and State Street.
Well, so you're right, you know, spiders Spy came out, I believe in nineteen ninety three, but it was just the S and P five hundred and it was just that single fund. The exchange traded index funds really did take off thanks to what was then Barclay's now part of black Rock with the I Shares series, and suddenly you could buy index funds that cover all of the major asset classes, and you because they were stocks that traded on the market, you didn't have to have an agreement with Vanguard or with Fidelity in order to sell those funds. You just needed a brokerage account. And suddenly every broker, every financial advisor where they were operating through Mery, Lynch or Schwab, could sell those funds and indexing was available to all. Prior to that, there were a lot of brokers who would never have sold an index fund because they didn't have access to Vanguard's platform.
So let me push back a little bit on that. My experience has been that the brokerage side, at least up until recently was much more interested in the value add And I'm making air quotes for listeners of stock selection, fund selection, manager selection, and they seem to have been less keen on passive or indexing, whereas the RIA side of the street, the independent advisor that or the certified planner, they seem to be more focused on let's get a plan, let's figure out what your objectives are, and the market will take care of itself. How do you see that that shift? I've watched that over decades. You you were in the thick of it. I'm curious as to what you witnessed.
So you're right. I mean, these are traditional brokers were much slower to adopt ETFs than you know, the only financial advisors. But today you know a lot of brokers, you know, whether they're with the big full service brokerage firms now have advisory accounts. They flog to clients where they can buy ETFs and as long as they're getting their fee, whatever it's you know, one one and a half percent, whatever amount it is, you know, they now have an incentive to sell those ETFs. And remember, if you're an advisor and you're selling ETFs, I mean there's no reason to ever say sorry.
Right, that's right.
You get the market's a ton surprise, surprise.
Well, if you tilt it all towards international or emerging markets or value, there are occasional apologies along the way. Hey, but that's what's the old joke. The cost of diversification is frequently having to apologize for something that's not keeping up with the SMP.
If nothing in your portfolio is performing badly, you're not diversified.
That's right, that's exactly right. So so you said something interesting that jog something in my mind. That you are constantly flogging passive indexing and ETFs, much to the sugarn of your editors, kind of makes me think of something Jason has said, which is his job is to write the same column over and over again, but in a way that neither his editors nor the readers know. What are your thoughts on repeating yourself over and over again, but in new and interesting ways.
So Jason was the next employee hired by Forbes after me. That's hilarious. And when I left Forbes, Jason ended up with the Mutual Funds be Then he went onto Money Magazine, And then when I left the journal for the first time in two thousand and eight, they said, well, who should we hire to replace you? I said, Jason's why. So, Jason and I have known each other for over thirty years. I consider him to be one of my best friends, and in fact, you know, through my recent diagnosis, he's been a super supportive You know, we remain great friends after all these years, and I'm a huge admirer of his work for the Journal and elsewhere. So, yes, Jason has the same joke that I do, which is, you know, there are only twenty postal finance stories, which means by the time I left the Journal and writing a thousand columns, I've written each of those stories fifty times each. If you are going to serve your readers, well, you know there are only a limited number of stories to be written. You know, if you're a reporter who spends their career writing the stock of the day, the fund of the month, just flogging one thing after another trying to predict the market's direction, you'll be plenty busy, but your readership will be a whole lot poorer. So if you want to do the right thing, you're basically going to have to have a set of sound principles and focus on them again and again, and one of the things you discover is that you start to sound like a repetitive, blathering idiot. And that's when, for me, and I think also for Jason, you start costing around for other things to write about. So when I go back to the late nineteen eighties and I started as a financial journalist, the sole topic was investing. It was all about which fund to buy, which stock to buy. Fortunately, over time, the field that is personal finance has expanded to today, if you are a good financial journalist, you should be writing not just about investing, but about topics like you know when to claim Social Security, what should you have in your estate plan, you know what sort of house should you be buying, and then beyond that, writing about things like behavioral finance, thinking about things like money and happiness. The topic that we call financial journalism has expanded enormously over the past three plus decades. And that's good news for somebody like me, because if I'm still writing only about index funds, I would have been out of a job a long time ago.
Really really interesting, So the twenty years you spent at the journal really is a fascinating couple of decades. You wrote at the Journal, through the dot com implosion, as well as the whole run up to two thousand, September eleventh, the Great Financial Crisis. What era of finance did you find the most intriguing as a journalist.
I know this probably sounds like I'm an ambulance chaser, but you know what, the periods that I enjoyed the most was when the stock market was going down.
I'm I totally agree with you.
I have been warned repeatedly, hey, people are getting, you know, really hurt out there. Can you stop whistling into the office like that? But that's when the most amount of fascinating things happen and the most amount of opportunities present themselves, Which leads me to my next question. Right into the teeth of the financial crisis, you went ninety five percent into stocks. Tell us a little bit about why you did that, which turned out to be the right call, and how you shared that information with your readers.
Coming into sort of late two thousand and eight, I think, if I recall correct, I have somewhere between seventy and eighty percent stocks. By that point, I'd left the Journal and I was working at City Group as director of financial education for the wealth management business. And a number of things happened. One was I was working on Wall streets. I was earning a whole lot more money. Two, I got my first Wall Street bonus. Three I sold another book, which meant I got a big advance. And four tragically, my father was killed during this period and I inherited money from him, and I took every one of those dollars and put them into the stock market. And it was a time when the sequence of returns, that combination of what's going on in the market and whether you're pulling out money from your portfolio of putting it in worked like magic. And said to people numerous times when we have a period in like two thousand and eight, two thousand and nine when everybody thinks the world is going to hell in a hand basket, well, if it really does go to hell, doesn't matter what you own, right, More than likely, you know, we humans being humans, will figure out a way to solve this problem and the market will come roaring back, and what you want to own at that point is stocks. So I just backed up the cart and bought stocks like crazy.
So that's kind of interesting that you're making an active decision in the face of market turmoil and increase volatility. Did at any point in that process did you feel like, hey, you know, I'm kind of going against everything I've said in the past. Or was it people said stocks were pricing now they're cheap.
I'm just a value investor.
Well, guilty is charged, Barry. I mean, I can't entirely justify it. But over my career as an investing the things that I've learned is one that you know, you can't win through stock selection. You can't win by buying actively managed funds. You know what you need to do is indexing. But one way you can tilt the field in your favor is in periods when people are panicking. Is too, as I like to put it, over rebounds to move even more into stocks. It's it's a temporary move. But you know I've done it repeatedly. I did it in two thousand and two thousand and two, I did it in two thousand and eight and nine, I did it during the coronavirus collapse in twenty twenty, and I did it again in twenty twenty two. You don't know what the bottom of the market looks like, I think it's very hard to say stocks are objectively cheap because all of these valuation metrics have become unreliable over the decades as the nature of the stock market has changed. But the one thing I have learned is that if the market is off twenty thirty percent, things are a whole lot cheaper than they were prior to the decline, and what you should do is buy.
It's easier said than done. You mentioned covering behavioral finance as a way to look beyond just indexing funds. Tell us a little bit about the challenges that the average investor faces trying to buy into a down thirty percent market when everybody else is panicking and running the other way.
Well, we know how investors behaved, which is they extrapolate recent returns. So if the market's going up, they think it's going to keep going up, it's going down, they assume it's going to keep going down, and that, of course is what everybody around them is doing. They're also extrapolating returns. It's very hard to step aside from the narrative of that time and think independently, but that's what you need to do to be a successful investor. At a bare minimum. At a bare minimum, if you can just stand your ground, you'll probably do a whole lot better than most investors who will tend to be buying and selling it just the wrong time.
I just have to ask you a little bit about what you did after the Journal, and that includes both City Group and Humble Dollars. You were at City Group for about six years and you were director of education. Tell us a little bit about what that role encompassed and what it was like dealing with City investors rather than journal readers. And I'm sure there's a bit of an overlap there.
So in a couple of years running up to early two thousand and eight, I was getting increasingly burned out on writing the column and I was thinking, like I got to do something else in life, and I cast around. I talked to various people about different jobs. Nothing quite rang a bell for me. And then I was approached by City Group about being director of financial education for this startup called ma FI. And the idea was they were going to help small investors with their entire financial life in return for a fixed monthly fee. That was the notion, lovely notion. But two things went wrong. One is The idea of doing a startup within a large corporation is absolutely absurd. Companies large companies are incapable of innovating in that way. It was just a struggle from day one, particularly in the rehdatory environment that is the securities business between lawyers and compliance people. Everythink was a headache. And then on top of that, of course, we ran straight into the two thousand and eight two thousand and nine Great Recession, So the business was pretty much dead before it began. And by the summer of two thousand and nine they'd pulled the plug on this venture and suddenly, you know, I've thrown away my journalism career to join the City Group. You know what would happen next, Well, this group of people that were part of this startup, well my FI, were rolled into the traditional bank based brokerage business, if you can imagine two completely different group of people. And then on top of that, they decided they were going to try to turn these bank based brokers into feelingly financial advisors.
Which, by the way, was the underlying trends outside of the broker's firm. They were watching what was a small part of the business really begin to blossom post crisis.
So I became part of this new business, and I did a lot of writing and a lot of public speaking over the next four plus years until I realized that, you know, I really wasn't doing much good in the world. I was collecting the nice paycheck, the biggest paycheck in my life, but I really felt like I was wasting my time, and I've I've never already done anything in my career solely for money, and it's suddenly dawn on me that really I was just living for my paycheck. So I made a plan to get out of there. I realized I had enough to retire if I wanted to. I was in my I was fifty one, so I spent ten or eleven months preparing to leave. I contacted the journal about writing for them again. I also started working on a book, and after I got my lost year in Bonus in early twenty fourteen, I walked in and handed in my notice.
So you said something I have to follow up on. I can't tell you how many people have said, you know, I don't really do this for the money, and very often they get pushedback. But I feel that way, and I know you feel that way. What sort of response do you get from people when you say, well, I'm getting a nice paycheck, but that's not why I do this.
I think that in this case, I probably did not express it to people in that way. I'm not saying that I don't like getting paid.
But well, we all like getting paid. But my question is why do we do what we do. Is it for the money or is the money like a nice aspect of being able to do what you really love?
And it's really the latter, And I think it probably depends on the economic comfort in which you grew up. I mean, I grew up in a very comfortable middle class or from middle class household, so money was never my priority going into the workforce. You know, I wanted to cover the costs obviously, I wanted to save for the future, but I was never motivated by money. If I was motivated by money, I would never have ended up in journalism.
That's interesting, and you have said, especially post diagnosis, you've very publicly said, gee, had I known when when the clock was going to run out, I would have spent money more aggressively. It's kind of interesting that you were saving despite having come from a fairly comfortable background. Clarify that a little bit. How did you think about spending money and how did the diagnosis change your perspectives on this.
So there are two reasons why I became very focused on saving money. First, what I call the great family story. So when my great great grandfather died in eighteen eighty eight, he was listening in the newspapers as one of the richest men in England.
Really, I had no idea.
That's fascinating.
He he was based out of Liverpool and he and his brother had launched a cigarette company called Cope Cigarettes and they made a ton of money. That fortune ended up with my great grandmother, uh huh, and she lived the Downton Abbey lifestyle. She had an estate in the Cotswolds on which there were five mansions. She lived in one and her various children lived in the other houses on the estate. The estate was inherited by the kids to a person. They blew the money in short order.
Classic three generations shirtsleeves to shirts life.
So I grew up with that great family story about how you shouldn't you know, waste money, how you should think about the future. And then added to that was when I got out of college and I got into the workforce. I ended up getting married and having kids really quickly. I was a father at age twenty five, supporting a graduate student wife and living in New York City and tight.
Money's a little tight.
Yeah, you know, ordering a pizza on a Friday night was a questionable decision. And you know, I learned to be super careful with money, and that continued for probably thirty years. It's really on the last five years that I've become happier about spending money, eating out more often, traveling more. And of course since my diagnosis, you know, I've been doing even more of that. I mean, I still want to make sure that my kids and my wife inherit plenty of money, but I'm at the point where, Okay, I don't need to stay for the future anymore because there isn't much future left for me. So we've been traveling more. But to come back to the question you're going to ask me, which is do I regret my earlier frugality. Not really, because what I would say to you, Barry, is one sure way that money buys happiness is by allowing you not to worry about money. And so I have not worried about money for years.
And to be fair, you know, I don't want to engage in what anti Duke calls resulting when you you know, all of us are born not knowing how long we have and when you get an end date, when you know when the game is going to end, well, now you have that information, it's not fair to go back and say, hey, twenty years ago, had you known, what would you've done differently, Because at the time you don't know, it's impossible to go back and revisit those decisions. The question, really, the fairer question, is the advice you would offer people who don't know what the end date is. How much should they be saving, how much should they be occasionally taking money out and enjoying it? And obviously it's all a function of specifics, but how has your perspective changed, if at all, when you're giving that sort of advice to people.
So, first of all, I'd say to you, Barry, one of the things that's the greatest source of happiness to me is just the day to day. Just getting up in the morning, having a cup of coffee, sitting at my laptop writing in edit, seeing you know, going out for lunch, having a glass of wine in the evening with Lane. These are not expensive things for me. A happy life does not cost a whole lot of money. Yes, you know, we all are doing more traveling now, and you know we are traveling first class or business class, which I wouldn't have done a couple of years ago. So yeah, I'm spending more freely. But the real happiness I get is basically doing what I've always done, which is to do work that I think is important. That is a big source of happiness for me, And not only does it not cost very much, but it actually owns me some money. So up. The other thing I would say to people is you do not want to do all of this too early on. You know, if I had flown business cross regularly in my twenties, it would not be special to be today. Having a gradually rising standard living throughout your life is a wonderful thing. You know. If you stayed at Motel six in your twenties, staying at HIGHTT in your sixties seems pretty special, right.
That's really interesting.
So let's talk a little bit about Humble Dollar. When did you set that up? And you're still you're still running that and publishing yourself with a group of other people tell us a little bit about the humble Dollar.
So Humble Dollar was launched right at the end of two thousand and sixteen. I used it essentially to take a annually updated financial guide that I was producing, and I decide just to throw it on the web and make it freely available and run some mads against it. And as part of that, I invited a few people to start writing for the site. And that snowballed over time, and I have, you know, probably fifty or sixty people who write occasionally for the site. They all do it for free. They're all amateur writers. And the thing I say to these amateur writers is, you know, you know, you may not be financial experts, but you are experts on your own life. So I encourage them to write about their own financial lives. And the result has been that people engage in a level of financial disclosure about what they've done with their own money that the readership finds fascinating, they find liberating, and it's become to my surprise, I mean, this is not what I set out to do. It's become a place where people happily talk about their own finances, and the readership tends to be very supportive. I do carefully moderate comments. I mean, if I feel like people are getting too rough on somebody, I'll delete comments. I also steer people away from the endless political commentary that's poisoned social media and it's becomes I like to take a safe place for people to talk about their own finances.
I think that's the right approach. I mean, I had a comment section on the blog on the Big Picture for I don't know, close to ten years and literally millions of comments, and at a certain point, really post financial crisis, it kind of began going off the rails and I did the same thing you did. It's like, hey, this is not a political forum, and if you're gonna just really be you know, it takes so much time and effort for someone to write something, and it's so easy to just dismiss it. It doesn't seem fair, and I think your approach is the right way to go. Is I don't know what sort of pushback you get to it from the readers. But the other thing I wanted to ask you about that, not just the other writers on the Humble Dollar, but the comments is people are kind of weird about money sometimes people are just like it's perplexing how some people think about money or use money. Tell us a little bit about your experiences dealing with the public and trying to be sort of calm and rational when consumerism and materialism very often isn't.
So. I'm not sure I have a clear view on how the typical American thinks about money these days. You know, what I have is a realtively narrow audience, somewhat older, more affluent. They tend to have been drawn to the site because they followed me for a number of years. A lot of them are indexers. Most of them are great savers, and the biggest issue for them is not saving more and delay and gratification even more, but learning how to spend in retirement. I mean, that is the biggest struggle. Obviously, not a struggle for most Americans. People do have peculiarities about money. You know this as well as I do. It varies enormously, so it's hard to generalize. Right. Probably most people are naturally inclined to spend too much and to save too little. But in terms of my audience, their inclination is to spend too little and save too much.
Let's talk about that because we have about thirty advisors who are cfps that work in my shop, and one of the common conversations is I have a client. He's got millions of dollars invested. We can't get him to spend money. He wants to buy a vacation property, he can't pull the trigger. They want to take the family on a European trip, and he thinks it's going to cost too much. How do you help people who were earners and savers pivot in their fifty sixties seventies to becoming spenders.
I think that pushing people to spend more is unlikely to work. I think instead you should talk about other goals. I mean, do you want to stop giving money to your kids? Do you want to start giving money to charity? Think of other ways to get them to let go of some of their dollars, and maybe that doorway will become the doorway to start spending more on themselves. Suddenly, I've changed up the last five years. Five years ago, pre pandemic, I was very careful about spending. I didn't go out to eat a lot, didn't spend a lot on travel, And I think one of the things that for me coming out of the pandemic was a willingness to spend more to God and enjoy life more after that long period stuck at home. And of course my diagnosis has done that even more. And not only I have I've been spending more, I've also been giving more to my kids, to charity and so on. So I think if you could open the door a little bit and people get comfortable with it, then they'll spend more. And giving away money, whether to charity or to your children, is a way of opening that door.
So I don't know if this is my perspective or if this is accurate or not. I kind of recall prior generations the wealth was passed down out of the estate after the person passed away.
They would leave their money to their family.
It seems like it's a little more modern concept is why not give them the money one you can watch them enjoy it, buy a house, travel whatever. Is that a skewed perspective or do you see something similar?
No, absolutely, people definitely seem to be happier to give away money now. And it's not simply that you get the pleasure of seeing your kids enjoy the money. You can also guide how they use it. I actually just wrote checks at the beginning of the year to both my kids, and you know, my kids asked, well, what should I do with the money? So it's a chance to say, yeah, you know, you want to put it into your retirement account, you want to put it into your emergency fund, you want to use it to pay down the mortgage. The other thing, of course, is that you get to see them enjoy it, right, And they are at the point where, you know, if I give my kids nineteen thousand dollars this year under the gift tax exclusion, which is the sum you can give without how finding a gift tax return, that money to them in their thirties is so much more valuable than it is to me in my sixties, right right. I mean, they're at a point where they're still under a fair amount of financial stress. And I'm not saying that's a bad thing. I meanial stress, yeah exactly. That's how you learn good spending habits. But you also get a lot of pleasure from getting a nineteen thousand dollars check from your father.
So a theme that we seem to be talking about is things that have changed. People are giving money away sooner rather than as part of the estate. We've talked about the shift from active mutual funds to passive ETFs. What other significant shifts have you observed over the course of your career.
So we did touch on this as well, which is what is considered financial journalism has changed. It used to be that everybody was solely focused on investing and solely focused on beating the market. I mean, that was the discussion, you know, day in day out, and to some extent it still is in the financial media, but you know, the playing field is widened. So we are talking about things in what I consider PUSS finance, home ownership, social security, tax management, state planning, and so on. We're also talking about how money meets life, things like behavioral finance, things like money and happiness. And I think the next big focus within personal finance is trying to bring this down to the individual level, not just making you know, broad generalizations about you know, investors have this behavioral bias or that behavioral bias. Not talking in generality is about how you can use money to boost happiness. But you, as an individual, you know what sort of individual are you? Are you a savior, are you a spender? You know what is it from your past that is triggering you. I think that in the years ahead, we will start focusing more on that and that will lead to even more interesting conversations about money as people get to know themselves better and that works into how they manage their money.
So let's talk a little bit about your announcement. Last year, you received a stage four lung cancer diagnosis. You're a non smoker, so this is the genetic variation of the disease. Tell us a little bit about that diagnosis and what motivated you to share it so publicly.
So back in May of last year, Barry, I started having balance issues and I thought I might have an ear infection. I couldn't figure out quite what was going on, so I on a Sunday decided to go to an urgent care clinic and the doctor told me that the urgent care clinic must have realized something that was going on that you know, was obviously I was missing. So I got dispatched the emergency room and the next thing you know, I was stuck in the stroke victim really ward at at a hospital in Philadelphia. So it was sixteen beds up there, guys who are intbated, plus me sitting on the edge of my bed, like what am I doing here? So after some scans, some MRIs, they realized that I had not had a minor stroke. Instead I had cancer. They found ten lesions on my brain and a gulf ball size growth on my lungs, and after some some genetic testing and so on, they discovered that I had a relatively rare form of cancer that tends to flick people of Asian origin and women, called eachfr exon twenty and it's a relatively aggressive cancer. The median life expectancy for people who have each gfr x on twenty is sixteen months. So by the time I got into see the ecologist, she suggested I might have a year to live, and that was in June of twenty twenty four. Since then, I've had a couple more lesions on my brain and the cancer has also spread my spine. In both cases, the the cancer my spine was dealt with with radiation, similarly to the new lesions on my brain. I've also had recently had a to hour procedure to shore up my spine because of the damage done by the cancer. Otherwise there's a risk I was going to fracture my spine. So as of today, I'm feeling okay. But you know, the cancer is you know, isn't my blood. It's likely to crop up somewhere else. I think I'm gonna beat the one year mark that I was given. I'm hoping I'll make it through twenty twenty five, but you know, realistically, it's unlikely that I'm gonna make it much beyond them, though of course I would love it. I mean, I have to say this, Barry. Yeah, I love every day and I want every moment I can get, But you have to be a realistic and you know, this is stage four cancer. There is no recovery. You know, it's just a matter of trying to control the cancer. And do I have the good fortune that came into this in reasonably good physical shape. So I've coped with the treatment fairly well. You know, I'm having chemo immunotherapy every three weeks, taking countless medications. You know, I've had these radiation treatments. As I said, I just had my back operated on in order to shore it up. But you know, at some point, you know, cancer is gonna win. I just don't know when. So come back to answer the question that you asked, So, Yeah, after I got the diagnosis, I wrote about it on my website and you know, put out the word on social media, and the response to me was quite surprising. I mean, not only did I get, you know, an outpouring of love heard from people I hadn't heard from in years, readers have shown a lot of love that People also said, you know, you're so brave for sharing your diagnosis. I was like, brave. I've spent my entire life writing about my own fine answers. Why would I Why would I stop now? And you know, is it that people don't talk about this stuff because of denial? Is it because you know, they're just they're embarrassed? Is it because fear of death? I don't know, but it seems like the most natural thing in the world to write about it, And to my surprise, I seem to have done a fair amount of good by doing so. People really appreciate somebody talking openly about what it is, what it's like to have a terminal diagnosis. I would also say to you that a short life expectancy, this notion that your life is finite. I mean, of course that's true for all of us, right, but it really does make you focus on the day to day. I mean, when I, you know, get up in the morning, I really noticed the taste of the coffee. When I take a walk, I really notice how beautiful the trees are, how lovely the sky is. It really does focus the mind. And if anything, because I know the time is finite, I'm joined the day to day even more. It's strange, but it's true. And I would say to people, you know, even if you don't have a terminal diagnosis, you know, try to be sort of more purposeful and more mindful about each day because you will get greater happiness out of each day.
Well, that that's really good advice. You wrote a Wall Street Journal piece some final personal finance advice, and some of the things you discussed were really, I don't want to say funny, but just the way you phrase them, we're so blunt and matter of fact, it was really intriguing. Let me run through a few of these, and I'd like to get your your thoughts on it. The first one that leapt off the page was death is hard work explain.
So I've always had my finances pretty well organized, but until you know that you're about to pop off, you realize how much, sorry to use the phrase, how much crap you've accumulated, and you realize how hard it will be for your family to figure out your finances. So in the weeks and months that followed, I've done all kinds of things. I got a new will, powers of attorney. I closed accounts so that there is there are fewer accounts for my.
Everything was consolidated in one place.
They were already consolidated. But for instance, I had a a wroth for one K, and it's like, I'm I'm not gonna I'm not gonna fund this anymore, so I'm going to close it and roll it into my regular IRA. I had an inherited diarray from my father. It didn't have very much in it, so I closed that out. But also downe in the basement, I had a box of papers, a couple of boxes of papers. Some of them went back to when I was in college. It's like, what I had every Christmas card from nineteen eighty six? Why do I need every Christmas card from nineteen eighty six? So I just started trashing all of this stuff. And you carry around this stuff for decades, one day you're gonna look at it. Well, this was my moment to look at it, and you know what I didn't. I just started sticking in the recycling bind. So there was a lot of work to be done in order to simplify things for my for my wife and for my kids. And I still have more work to do. So I all the utilities are currently in my name, and in the weeks ahead, one of the final things I want to do is to make sure that I move you know, the internet, the cell phones, the gas, the water, the electricity olint Elane's name, so that this one less thing for her to do after I'm gone.
Huh, really really very thoughtful.
The other thing that really leapt off the page was so much talking.
So two days after my diagnosis, both my kids were in town and was in town. I sat them down. I explained my estate plan, and of course all this was obvious to me. You know, while there's this traditional iray, there are these roth iro rays, the regular taxable accounts, there's you know this account that yeah, and they're looking at me like like during the headlights, like what is all this about? And it's when I realized that the stuff that's second nature to me isn't second nature to my kids. So had an hour discussion then and so many discussions since then as I've tried to explain, you know why you should not spend the roth ira until the end of the ten year period, but you'll have to draw down the traditional ira over time because there's going to be taxable income on top of your income. Lots of stuff like that. That second nature to me, just wasn't clear to them.
And the last thing was simply taxing matters. How I'm assuming your state is not going to be in the taxable size, So what do you discuss with your wife and kids about taxes?
So my kids will be subject to the Pennsylvania inheritance tax four and a half percent, and so you know, that's why I've started to distribute money to them now. I had written a private mortgage for my daughter. It was currently a little over three hundred thousand dollars, and I forgave that loan and then adjusted how much she's going to get versus how much my son is going to get. And as long as I make it through to July past the one year mark, then Hannah won't have to pay the inheritance tax on that money.
It becomes part of the estate and it's non taxable at that point.
Well, it's not part of the estate at all, so she won't have you know, she won't have to pay the inheritance tax on that three hundred thousand dollars. Okay, So there are a variety of things like that that you know, I've done in order to make things a little less taxing. For my kids. It's also why as soon as January one past this year, that's why I made them a gift for twenty twenty five. Similarly, for my grandchildren, you know, I funded their five twenty nine plans early in the year so that I can get that money, you know, out of my estate and hopefully I'll make it past the one year mark, so it's not subject to the inheritance tax.
Really really intriguing.
So given you your diagnosis, has your perspectives on money and happiness at all changed? How have you thought about some of your previous philosophies and views.
I think one of the things that makes me happy through this period is not even that I don't have to worry about money. With everything else that's going on, money is not a worry. So when I go back to the twenties and thirties, and the sacrifices I made, I'm glad I made them so that I have that financial security today, so that amid everything else that's going on, money is not something that's top of mind for me. Truth is, I haven't really worried about money for years, but you know, it would be terrible to be faced with huge medical costs potentially and not have the finances to cover it. I've also, however, you know, thought about you know, this is my retirement, right. If I don't enjoy my retirement now such as it is, I'm never gonna enjoy. So yeah, I have been spending more freely. You know. We went to London recently, we went to Ireland. I took the family on a fairly luxurious long weekend. This month, we're going to Paris. We've got other trips planned in the months ahead. There's a limit how far I can plan ahead because I never know where and I'm going to get derailed by some bad diagnosis and I hate the idea of the cancelation fees. But you know, we do have trips planned, and we've booked the hotels, but I haven't booked the flights because I don't have to cancel them.
Huh.
So, So we talked earlier about money and happiness. I'm curious as to how you think about the relationship between life satisfaction, well being, and what money does.
And does not help you obtain.
So money, I believe can do three things for you. One, it can allow you not to worry about money. We've talked about this already in many ways. You know, money doesn't buy happiness. It lets you avoid unhappines it's the unhappiness of being broke. But two, money can buy you the financial freedom spend your days doing what you love. If you love your job, that's great, that's the greatest combination get. But a lot of people clearly don't love their jobs. So what they want is the financial freedom to do whatever it is they wished to be able to do. And you get that by saving diligently a year after year, decade after decade. And then third, money can allow you to have special times with friends and family and you know, whether it's you know, the barbecue, the special vacation, flying across the country to see the grandchildren, whatever it is, money can allow you to do that. So those three things, avoiding on the unhappiness of being broke. Two doing whatever you think is fulfilling, and three is spending special times with friends and family. That's what money can do for you. That is the way that money can buy happiness.
Huh, very intriguing. So you've mentioned a lot of your earlier in life financial decisions have set you up in a good financial situation today. What what decisions do you look back and say, oh, I'm really glad I did that. What were the with hindsight, with the benefit of hindsight, what were the choices you made that you most appreciate today.
Probably like everybody you know, Barry who has you know, mass and wealth on their own, The smartest thing I ever did was to be a good saver. You know, if you know, if you're a good saver, you know everything else is, everything's going to turn out fine. Even if you're not a great investor. As long as you're a good saver, you know, good things will happen. If you're a lousy saver, but a great investor, you know, it's unlikely that you're going to succeed financially. So yeah, saving with the number one thing, and then too, I was very early as you might imagine on the indexing train, and that has also rebounded to my benefit. But it's it's been a saver that was not the list.
So so let me flip that question around. What do you think most people get wrong? What are some of the biggest myths in investing in finance that we often have a hard time getting passed?
Well, suddenly, you know, this focus on investing, this focusing on beating the market is the wrong place to you know, be spending your time. But let me let me broaden it out, Barry, So something that I've been thinking about a lot of late, which is most people, and this was true of me in the early days, spend too much time worrying in general and worrying about money specifically. And I think this is hardwired into us. You know, we are here because our hunter gather ancestors survived. And why did they survive Because they were worriers, right, They worried about everything, you know, they wanted to make sure that they were going to be okay no matter what happened. Well, guess what, you know, the sabretooth tiger is not going to leap out of the bushes. We do not need to worry the way our ancestors used to. And yet people worry constantly. I mean, people are serial warriors. It's like the hedonic treadmill. We talk about how, you know, we strive towards goals, hoping that they're gonna make us happy forever, and then boom, we achieve whatever it is, and we immediately saw us driving off to something else. We can't get off that treadmill. But there's also a worry treadmill, and we worry about something blah blah bah bah bah. Choose away from us. The worry goes away. We're onto something else. People cannot escape their worries. And what I would want for listeners and I want for my reader is is please find some way to worry less. Because if you do the right stuff financially, you live bene your means, you're not crazy with your investments. Hopefully you index, you know, hopefully you don't take on too much debt. You know you're not gonna get it all right, but good things will happen in the end. You don't have to spend thirty forty years worrying about retirement. You don't have to get to retirement and worry that you're spending a crazy amount of money because you're going to get derailed by the stock market or whatever it is. Things are likely to walk out just fine. We are not you know, back you know in you know, like our hunter gather ancestors, you know, worried about every threat. You know, it's it's time to like go of those worries. That to me is the biggest mistake people make. And I don't have a magic cure for getting away from those worries, but I do believe that is the number one thing we could do for our own happiness.
Huh really really very interesting. Of all the things you've learned over the course of being a personal finance columnist first for Forbes and for the journal and everything you've done at the Humble Dollar, aside from worry less, what do you think is the most important piece of financial wisdom that you want to pass along that you want to have outlive you What what's the most significant thing you wish people would embrace then it would make their life better.
I think what people need to do is know themselves right much more than you know, what's the expensive issue on their index funds or you know, which is the best age of which claim social security. Know yourself, because everybody has different financial needs and different financial worries and so on. So if you customize your finances to your own needs, not to somebody else's needs, not to what your brother in law says, not to what you heard on the TV. If you focus it to your own needs, what you worry about the most, that is likely to lead you to have a happier financial life. I think one of the problems is that we live too much under the influence of others. It's not just the influence of people today. You know, our friends and family and the people we see in the media, but also we live under the influence of the past, what our parents told us or what they modeled for us. People go through their life buying what their parents bought because they thought it made their parents happy, and so they think it's gonna make them happy. Probably not gonna work out that way. So try to think for yourself and try to know yourself.
Good good advice. Let me throw you a curveball. I remember last summer, towards the end of July, you were the focus of a New York Times piece headline a money guru bit big on a very long life. Then he got cancer. You're usually the author of pieces like that.
How odd was it to.
Be the subject of a piece I know you as a humble person, not just because of the Humble Dollar website. You're not seeking to be the center of attention. How strange was that entire experience?
Well, Barry, to be honest, sitting here getting quizzed by you is not that difficult from different from getting quizzed by Ron Lieber at the New York Times. But that's it. Yes, Yeah, I personally do not want to be the center of attention. I would like the focus to be on my writing rather than me as a person. But you know, I knew Ron was not gonna be unkind. I've known Ron for decades. He's a friend of mine. Much more on couple actually was the photo shoot where I have to sit there and try to smile for now. But it sort of goes back to what I was talked about earlier about the amount of publicity that my diagnosis has generated. I mean, since that came out, you know, I had the Wall Street Journal article that I wrote, I had, I wrote a piece for the Washington Post. I've got a piece coming out in the ARP magazine. Ron Lieber wrote that piece for The New York Times. I also wrote a piece for my father's old paper in London, the Telegraph, which was a lot of fun. Well maybe not fun, but it was great to be in there. So Yeah, the focus on my diagnosis is a little bit odd and Cerddainly, it's uncomfortable for me to be the folks of attention wrong on my writing. But I feel in some way in a way that I didn't really realize that it's it's it's doing some good and being of service to others has always been really important to me. I mean, I feel like if I'm not doing some little good in the world, I'm I'm not spending my days usefully. I never want to spend the days focused solely on my own needs.
But you were able to use the opportunity to amplify the good message that you had for people, which was, hey, here's just a fundamentally smart way to go about managing not just your investing but your personal finance and your life. That focus must have been gratifying to get that message out.
No, absolutely it was, but it was also a little bit uncomfortable.
Yeah, I can, I can certainly see. Knowing you and knowing your personality, I can see it was something like, all right, let me uh, let me make this trade off and and but it all seems to have accomplished the goal of spreading what you wanted to share with the public.
And you know, for as long as I am able, you know, I want to be able to continue writing. I do have a whole bunch of articles that I still hope to pen. But you know, I know this, this ride is gonna it's going to come to an end, probably sooner than I would like. But you know, for now what I can still write, well, I can still get my fingers on the keyboard. I hope to keep punching out a few more articles.
So normally at this point I shift to some of the favorite questions I ask all of my guests.
I'm not sure how relevant.
These are, but but let's uh, let's run through them for posterity stake. What's keeping you entertained these days? What are you doing if you just want to kick back and relax a little bit.
Yeah, that's not a thing. I'm very good at kicking back and relaxing. That said, as I mentioned, if I'm gonna be retired, which I don't think I'll ever be fully retired. This is the moment, right. If I don't do it now, I'm never gonna get to do it. And for the first time, probably twenty years, I actually started watching sports again on TV HM and it sort of takes me back to being a teenager and so on, sitting on the couch. I'm not sure I could ever sit through a whole football game, but maybe I could watch the final quarter, and so I've been trying a little bit of that.
So, yeah, have you played with red zone at all?
No? My nephews are just crazy about it.
It's just the highlights of every big game kind of all at once. It's just it's an amazing If you're a football fan, you might want to explore that. It's pretty bonkers.
So I live down in Philadelphia, So the Eagles are an obsession. Yeah, and you can't help but catch a little bit of the fever. On a Sunday afternoon, half the people and this is not actuation, half the people you see walking on the street are wearing Eagles gear.
Wow.
I mean, that's how much of an obsession it is in the city. And it's fun. You know. I've been taught by my son in law that when you go into a store in Philadelphia, you know, to buy something on a Sunday, what you have to say when you leave is go birds.
That's very funny.
Tell us about your mentors who helped shape your career.
So I would call out one person, which was the editor of this little newspaper that I worked for when I was nineteen. Her name was Leslie Levin, and she had just got out of the American University Journalism school, and she had all of this knowledge about journalism that she was anxious to pass on, and literally she taught me how to write, she taught me how to report. It was a great experience. I was so fortunate. And in fact, this was all before I went to college, and I took the advice that she gave me about, you know, how to run a small newspaper, and then I took it and I used it when I edited the student newspaper at Cambridge, and I've used it ever since. So if I ever, for instance, see a piece of copy with an exclamation mark on it, immediately here Leslie's voice in my back my head, saying, you only ever used the exclamation mark if it's World War III, otherwise no exclamation marks.
That's really interesting. Tell us about some of your favorite books.
What have you been reading recently.
Lately? I've been doing a lot of reading about Philadelphia and about the neighborhood where I live. I live very close to the School River, across from the Pence the Penn U Penn campus and where I live now used to be full of Irish immigrants who worked on the wolves along the schookel and next to me is a very an elderly lady. I think she's probably in her nineties, and her son lives with her, and he's in his mid sixties. And Charlie tells me that when he was growing up in the neighborhood there were two Italian families and everybody else was Irish. And the fact that he was aware that there were only two families in the neighborhood who were Italian and everybody else was Irish tells you something about that neighborhood at the time. So I enjoyed reading about Philadelphia. But in terms of favorite books, the best time in terms of learning about finance was when I was at Forbes in the late nineteen eighties. Back then, the workplace was less pressured. There's less drive to produce, and there was more time to sort of sit, kick back and relax and read. And Forbes had a great library. So back in those days, you know, I read Burton Malkiel's ran Walk Down Wall Street. I read all the books of Wall Street history by John Brooks, and I picked to remember.
Once upon a Time in Galanda's that the Go Go years right.
And then there was this little book that I discovered in the Forbes library called Investment Policy by Charles Ellis. And Investment Policy, I believe, came out in nineteen eighty six, and I think the original edition was ninety four pages, and it just seemed like Charlie went through and picked out every word in that book with enormous care. Since then, the book has ballooned a little bit. It's over two hundred pages. But that and it's now of course called Winning the Losers Game. That's right.
That in fact, that began life as a research paper. I don't remember if it was the CFA Institute, but it was published.
Somewhere I think with the General of Portfolio manage.
I think that's exactly right. But it was a short twenty thirty page thing which has persisted.
Winning the Losers.
Game is one of my favorite finance books. And you know he Charlie has a new book coming out this year.
Yep, Charlie's Unstoppable. Yes, if you can find Charlie's original book, Investment Policy, which is the one that I believe came out in eighty six, you know, it's ninety four pages, it's a great read, and that I think was probably the most influential book on investing that I've ever read.
Wow, that's a that's a big deal. I'm gonna have to hunt that down. I may have to reactivate my eBay account to get that. Our final two questions, what sort of advice would you give to a recent college grad interest in the career in financial journalism or investment?
Well, so, I think I already obnsered the financial journalism one, which is don't do it. I'm not a tilly serious. I mean, journalism is the most fun you can have while keeping your clothes on. I mean it's you know, newsrooms are great places to be. You know, you will never meet a group of people who are more fun to be with and more cynical. I mean it's just so much fun to be in a newsroom. So yeah, go and be a journalist for a couple of years, learn how to write, learn about the world, and then go and make do something will make you some money. But spending a couple of years in journalism in your twenties when you don't really need to worry about making a lot of money is a great thing to do. So yeah, I would encourage people to do it, but don't imagine you're gonna make a career out of it.
And our final question, what do you know about the world of investing today? You wish you knew thirty years or so ago.
That's an interesting question. Why do I wish I knew? I guess what I wish I knew was to was that if I did the right things for long enough, everything was going to work out just fine. If you know, as long as I say, as long as I didn't fiddle around too much on my portfolio, if I just let it ride, you know, I could just go off and worry about other stuff, not worry about it at all. You know, things generally do work out today. You know, there are not many people you know who go into the world, out into the world, and you know are reasonably prudent and managing money and soon who don't successfully get to retirement. You don't need to fret about it every step of the way. You don't need to analyze every month spending in quicka and you don't need to find tune your portfolio every month. Just you know, set up a sensible acid allocation, buy some index funds saved regularly, and good things will happen.
Jonathan, thank you so much for being so generous with your time and your incredibly insightful advice. We have been speaking with Jonathan Clements. He is the author of numerous finance books that you can find at your favorite bookseller, as well as the Humble Dollar blog. If you enjoy this conversation, well, check out any of the five hundred or so we've had over the past ten years. You can find those at iTunes, Spotify, YouTube, wherever you find your favorite podcast, and check out my new book, How Not to Invest The bad ideas, numbers, and behavior that destroys wealth and how to avoid them. I would be remiss if I did not thank the Cracked team that helps me put these conversations together each week. My audio engineer is John Wasserman. Anna Luke is my producer. Sean Russo is my researcher. Sage Bauman is the head of podcasts at Bloomberg. I'm Barry Ritolts. You've been listening to Masters in Business on Bloomberg Radio.
