Strongly Held (Dis)Beliefs About Investing
Plus how Gen-Z likes to learn about money
I am trying out something new this week….
Writing an actual ‘newsletter.’
MOAM has never been a newsletter, it is mostly a blog delivered via email. I have not converted anything that could be remotely considered a trending topic or news.
I mostly just write “evergreen” articles summarizing financial research to help my readers get smarter with money. While that will continue to be the main focus of this publication, I have been reading a lot more personal finance/investing articles from other writers lately
Here’s a new format I am trying today:
Sharing the most interesting personal finance articles I’ve read in the past week and giving my take on each topic
Sharing a finance research paper, I’ve read this week—One that I will briefly summarize and link to and might write a longer piece about in the future
I’d also be interested in briefly answering reader questions in future posts. So, if you have a personal finance/investing question, leave a comment or send me an email: info@benlefort.com
Two Interesting Personal Finance Articles I Read This Week
#1—Some Things I Don’t Believe About Investing by Ben Carlson
Ben Carlson (author of the blog A Wealth of Common Sense) wrote this article about some of the things he believes investors should NOT do.
I agree with almost everything on the list below
I have also written extensively about most of these beliefs. If you want to learn more about the evidence supporting them, I will link to an article I have written about many of them.
Here’s what Ben says does not believe:
I don’t believe there is a sole way to invest
I don’t believe anyone has the ability to predict what’s going to happen next with regularity
I don’t believe politics should ever play a role in your investment decisions
I don’t believe there is a perfect portfolio
I don’t believe you should make investment decisions based on what Warren Buffett is doing
I don’t believe you need to outperform to achieve financial success
I don’t believe following the news makes you a better investor
So, I like Ben and a lot of the personalities at Ritholtz Wealth—a financial advisory firm that has been insanely effective at growing its online presence through podcasting and blogs.
If I have one gripe about the firm’s content, it’s its philosophy of “there’s no wrong way to invest.” They have a running segment on their Podcast called “Talk Your Book,” where investment firms can pitch their product to listeners—everything from crypto to private equity to so-called ‘thematic funds’ that offer people to invest in ‘things they believe in.’
(I’ve written here about why I stay away from thematic investments.)
So, while I agree there is no “perfect” or “only” way to invest (low-cost index funds are the closest thing to that—that doesn’t mean we should take that t mean that all investments are created equal.
Always examine the evidence before adopting an investment philosophy—and always be willing to examine new evidence that might challenge that theory.
Anyway, here’s Ben’s blog if you want to read more of his work.
#2—I know I’m supposed to be investing. How do I start?
Nicole Dieker Finley responded to the following reader question in her column on Vox:
I’m currently 27 and am fortunate enough to still live at home with my parents and have a solid-paying local government job. I could be more financially literate in a lot of areas, however, investment is one that I should probably focus on now. I have not been using any of my life earnings to grow a larger sum.
This is a very common question for a 27-year-old to have.
I was a bit surprised by Nicole’s response, which challenged the reader to consider whether they should bother investing at all.
Which, I think, is a fine thing to challenge people to think about. And I like some of the points Nicole made, for one being that people in their 20’s should not feel bad if they can’t invest $1,000+ per month.
Nicole also points out that past average returns of the stock market are not guaranteed in the future.
Agreed.
But, what I disagree with in this post is that it does the opposite of what a lot of financial writers do in that it overemphasized the downsides of investing and undersells the upsides of investing.
No, returns are not guaranteed.
Yes, a 27-year-old can expect to experience multiple recessions and market crashes during their career.
But, a 27-year-old with a 30-40 year time horizon before retirement and who is asking for help to get started investing—SHOULD ABSOLUTELY BE ENCOURAGED TO INVEST AND LEARN HOW FINANCIAL MARKETS WORK.
Shameless plug here, but I have written a book that could help a 27-year-old who wants to learn how to invest.
How Gen-Z learns about money
I read an interesting research paper this week titled “Digital vs. in-person financial education: What works best for Generation Z?:
It covers a topic that I’ve written quite a bit about, which is what is the best way for people to learn about personal finance.
In this paper, the researchers tested two approaches on 650 high school students in Italy.
One group attended a classic classroom course with a financial advisor, while the other used a digital learning platform featuring interactive quizzes and videos.
They found that both approaches effectively boosted students' financial knowledge in the short term.
However, only the traditional, advisor-led sessions delivered lasting results, with students retaining their improved literacy three months later.
Interestingly, both methods also helped students better assess their own financial knowledge and limitations—a critical skill to avoid overconfidence when managing money.
If you're looking for a deep dive into the dangers of overconfidence, I’ll leave you with this article I wrote about the Dunning-Kruger Effect:
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.
I love that new format... interesting topics summarized combined with your opinion 👍😊
Investing is better than not investing and one should absolutely not compare themselves with others (=aim for the highest returns).