Periscope Depth

a hundred dollar bills, look at you! look at you!

I think I ought to speak to a financial adviser.

“Professor,” you ask in a robust chorus. “Don’t you have a degree in economics from a prestigious university?” I do; thank you for reminding me. But that doesn’t make me qualified to invest wisely. I know I’ve used this metaphor in the past, but: asking an economist for stock tips is like asking a physicist to build a bridge. Engineers (the people who build bridges) need to know physics, but their education doesn’t end there. Similarly, I have my private theories about what the economy will look like in 2016, but that doesn’t tell me which funds to buy.

But I remain chary about just walking into the closest Ameriprise office, dumping my financial statements on the desk, and asking, “Whaddaya got?” I have little faith in the ability of advisers to build an investment plan to weather a crisis they never saw coming (or hurried along, depending on their employer). So I need someone I can trust.

The first step: knowing about myself. What do I know?

  • I have good saving habits. When I moved from my job at The Company to my job at Internet Inc., I got a pay raise of x%. Almost all of that x% goes into savings. I’m living at the same standard of living I did before – which is easy; I’m used to it – and banking whatever extra money I make.

  • I hate managing my investments. Burton Malkiel, in A Random Walk Down Wall Street, ranks categories of investments on a “sleeping scale,” in which instruments are ranked on a scale by how much sleep you’ll lose worrying over them. Bank accounts are “semicomatose,” money-market accounts are “long afternoon naps and sound night’s sleep” (though any editions published after 2008 might offer, ahem, a mild caveat), real estate is “tossing and turning, vivid dreams” and gold is “insomnia.” The farther down you go on the scale, the more you have to manage the investment.

    I have more important things to do with my time than log on to a website and track a portfolio every day, or crunch numbers on my homemade spreadsheets. I like my investments the way I like my rotisserie grills: something I can set and then walk away from.

  • I’m allergic to risk. I hate the thought of losing money. A decent rate of return would be nice, but right now I’d be happy with a vehicle that simply kept its value year over year. I wouldn’t invest at all, except the knowledge that my savings accounts and money-market accounts will lose value due to inflation spurs me on. Real losses have finally started to scare me more than nominal losses.

  • I have a 401(k) through my current job, a 401(k) from my old job, some stock in my old company, an IRA that I started when I was a teenager but have not touched since college, an online stock portfolio, a savings account and a checking account. I have zero debt and zero real assets (unless you count a car that needs minor bodywork and a new CV joint).

  • Goals: get to that mythical “three months of expenses” savings mark. Save up for various trips outside the country. Saving for retirement’s less of a priority – I’m not of the mindset that puts off the fun parts of life until age 65, and I spend a lot of my spare time pursuing a job that I can still do in my golden years. But I’m not going to stop saving for retirement.

Having examined my financial life, let’s see if it’s worth living.

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