1. finance
2. investing
3. stocks

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Smart money moves aren’t
more complicated than you
think. They’re simpler.
Cut through all the jargon
and pontificating and technical stuff, and everything you
really need to know about
personal finance fits into less
than 1,000 words—no more
than three to four minutes.
By Brett Arends
James Bennett
even go up, when stocks
crash.
 Never buy a lottery
ticket. The lottery runs a
profit, which means the players run a loss. And a study
once found that the people
who won ended up no happier
than those who lost.
 Know thyself. Don’t pursue complex financial or tax
strategies if you’re not a details person. Cut up your
credit cards if you’re a shopaholic. Invest more conservatively if you’re apt to panic in
a crisis.
 Buy
high-deductible
home and car insurance. It’ll
The Bottom Line
Change in the three leading U.S. stock indexes since the debut of
WSJ Sunday, 9/13/99-2/6/15.
75%
Nasdaq
s 64%
50
25
DJIA
s 62%
0
–25
S&P 500
s 52%
–50
’01
’03
’05
’07
’09
Source: WSJ Market Data Group
’11
’13
’15
The Wall Street Journal
NEED TO KNOW (2030 EDITION)
While we’re looking back over the 15-year life of the
Sunday WSJ, we thought we’d also look forward 15 years,
to items you might have read in a 2030 Need To Know column.
1
Crisis: The number of elderly homeless is projected to jump 10% by
2035 as more seniors have
mortgage debt and face rising
health-care costs. Developers
of low-income senior housing
smell a bonanza. “Demand is
off the charts,” says one executive. —VD
2
Bullish: As the S&P 500
Index neared 9000, a
majority of analysts
surveyed by The Wall Street
Journal dismissed fears that
the eight-year-old bull market
is due for a correction. Some
84% agreed with the statement “this rally is different
from previous rallies.” —CG
3
Still at It: The leading
edge of Generation X
turns 65 this year, but a
new survey finds 94% plan to
continue working. The top
WSJ.com/Sunday
Everything You Need to
Know About Personal
Finance in 833 Words
 Ignore economic and
financial forecasts. Their
purpose is to keep forecasters employed. Most professional economists were
blindsided in 2008 by the
biggest financial collapse in
70 years—and by the stock
market’s recovery.
 Ignore “expert” stock
picks. The stocks that Wall
Street experts like most generally fare no better than
those they like least—or
stocks picked at random.
 Keep it simple. Complicated financial strategies and
investments are mostly designed to enrich managers
and salesmen. A simple, diversified portfolio of low-cost
index funds, rebalanced
yearly, will do just fine—if not
better.
 Buy individual stocks
only as a gamble. Never buy
fashionable investments.
 Put most of your longterm portfolio into equities.
While equities are volatile,
they generally produce the
best long-term returns—typically about 4% to 5% a year
above inflation. But remember
to hang on when they plummet.
 Invest globally, not just
in the U.S. Foreign stock markets, in the aggregate, are no
riskier than U.S. markets and
offer terrific diversification.
 Buy Treasurys, too: In
addition to stocks, own some
long-term Treasury bonds and
some Treasury inflation-protected securities. These are
likely to hold their value, or
–75
1999
THE WEEKLY GUIDE TO MANAGING YOUR MONEY
reason: a competitive job
market with five-figure signing bonuses in a health-care
industry struggling to serve
the 10 million Americans who
are older than 85. —AC
4
Bookless: UCLA is the
latest university to announce it’s abandoning
printed undergraduate textbooks in favor of tablets and
e-books. State university systems in Colorado, Texas and
Florida have also banned
printed textbooks. —DCJ
5
Reunited: Federal regulators are expected to
clear the merger of Verizon and AT&T, in effect restoring the communications
behemoth broken up in 1984.
The new “Back-Door Bell,” as
critics call it, will have 278
million subscribers, 98% of
them wireless. —CG
The Numbers
The price growth for four representative stocks over the life of
The Wall Street Journal Sunday
C
RSH/RSHC
99.7%
84%
4,200%
264%
BRKA
BRKA
Radio Shack
Berkshire Hathaway
Apple
Citigroup
$51.13
9/10/99: $61,800
$2.77
$303.42
$0.13
2/6/15: $224,880
$118.93
$49.14
Lawrence Rout, Senior Editor
[email protected]
David Crook, Editor
[email protected]
Christopher Gay, News Editor
[email protected]
Mark Tyner, Art Director
[email protected]
Lorri Wagner
Business Partnerships
(609) 520-4235
[email protected]
Paul Carlucci Jr.
Director of Sales
(212) 597-5636
[email protected]
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save you money. Insurance is
necessary, but is generally expensive.
 Protect yourself from
disaster. Have disability insurance, either through work
or directly. Buy term life insurance to cover dependents
if you fall under a bus.
 Save early, save often.
Time and patience are the investor’s best friends. Invest a
dollar for 10 years at 4% and
you’ll have $1.50. Invest it for
40 years and you’ll have
nearly $5.
 Use those free shelters.
Contribute as much as possible to your company’s 401(k)
plan or equivalent (such as
403(b) or 457), and at least
enough to get the company
match. If you can, contribute
to individual retirement accounts for yourself, and a
nonworking spouse, as well.
 Make the most of what
you have. Don’t pin too much
hope on the next pay raise or
stock windfall. The more we
have, the more we want. Psychologists call this the “hedonic treadmill.” The only way
to have enough is to master
the art of being satisfied.
 Plan for a long life. A
third of your adult life could
come after you’re 65. Try to
pay off your mortgage, and
save at least 10 times your annual salary, by the time you
retire. Delay taking Social Security for as long as you can
up to the age of 70, to maximize each monthly check.
 Don’t buy a vacation
home as an investment. The
carrying costs will absorb
most of the price appreciation
each year.
 Pay off credit cards.
Don’t carry a balance from
month to month unless you
are planning to default and
file for bankruptcy. Card interest rates are extremely
high—partially to account for
the borrowers who will default. Make paying off that
debt your overriding priority.
 Cut the waste. There’s
fat in every middle-class budget. Most cellular bills are too
high. Most cable bills are too
high. Most people waste too
much money on their cars.
Few habits bust the budget
more than eating out regularly.
 Beware of buying your
employer’s stock. Your job
there is probably financial exposure enough.
 Tune out advertising. If
you consider it all to be a
pack of cynical lies designed
to steal your money, that’s
about right.
 Don’t spend money
showing off. Designer brands
and “luxury” labels are created to overcharge the desperately insecure. They’ll
mark you out as nouveau
riche. Old-money families
keep it down low.
 Protect your nest egg.
Don’t drain your retirement
savings to pay for your child’s
college education. Likewise,
don’t empty your 401(k) or
IRAs to start a business. You
will be taxed and penalized on
the withdrawals even if you
lose the money. And so long
as the money remains in
those shelters, it’s protected
from creditors.
 Teach your children
about money. Teach them
early and often. No one else
will, and they will have to
make their own way.
 Value your money.
Work out how much you take
home, after-tax, for each hour
you work. And remember that
number—especially when you
shop.
 Share. Finally, if you
think giving to charities and
good causes is the lowest-priority item in your entire budget each year, re-examine the
budget.
Thanks for Sharing Your Sundays With Us
This is the 805th—and last—
issue of The Wall Street Journal Sunday.
It’s with the deepest sadness
that I write that.
I conceived of WSJ Sunday
in 1998. With the help of hundreds of colleagues at The Wall
Street Journal, Dow Jones & Co.
and our partner newspapers
around the country, we
launched on Sept. 12, 1999. Hundreds, if not thousands, of dedicated people have sustained it
over the years.
We’re going out with our
heads high. We were born the
largest personal-finance publication in the U.S., and we still
are. We premiered in 10 part-
ner papers reaching 4.5 million
subscribers. We peaked in
2005 at 84 newspapers in
nearly 11 million homes. Today’s edition runs in 67 papers
going to 6.2 million households.
But even today’s rather large
number masks a sobering reality: Each of those partners
reaches fewer people than it
used to, and advertisers are
abandoning broad, middle-market media.
Our unique business arrangement with our partners—
shared revenues and shared expenses—has kept us going over
the years. But now, though we
exit still in the black, it’s no
longer enough.
In our first issue, we promised “the most timely and helpful news and commentary anywhere about managing your
money.” I hope we’ve delivered.
More importantly, I hope
we’ve lived up to our fundamentally democratic belief that
you—a regular person of modest means and no professional
financial background—can take
control of your money and
build a comfortable future. I
hope that we have helped you
make your life better, more secure, more free.
As we prepared today’s edition, I kept in mind something
one of my journalism heroes,
the late advice columnist Ann
Landers, once said: “I would
rather have my column on a
thousand refrigerator doors
than win a Pulitzer.’’ I’m with
you, Eppie.
Even in the age of email and
Facebook, there’s still a lot to
be said for those yellowed clips
sharing bites of ancient wisdom
whenever you’re in the kitchen.
We won’t be here for you
next week. So get out your scissors.
And thanks for having us in
your homes these past 15 years.
We’ll miss you.
—David Crook
Editor
[email protected]
JONATHAN CLEMENTS
How to Live a Happier Financial Life
It all comes
down to this.
I wrote for
the first edition of The
Wall Street
Journal Sunday. It seems fitting I should help bring down
the curtain.
Parting thoughts? With my
final 750 words, here are five
notions that—I believe—are
indispensable to a happier financial life.
Biggest time waster:
Commuting
I don’t look back at my career with many regrets—except commuting. NJ Transit,
the commuter rail system that
runs trains into New York City,
stole countless hours that I
would love to have back.
I have come to view the
classic trade-off—accepting a
long commute as the price of
a big house in the ’burbs—as a
pact with the devil. Indeed, research suggests commuting is
terrible for happiness. One example: A study in Sweden
found that a long commute increases the risk that a couple
will separate by 40%.
Best investment attribute:
Humility
Wall Street wants you to
believe you can beat the market, because market-beating
efforts are a big moneymaker—for financial firms. But
it hasn’t worked out so well
for investors.
Yes, Warren Buffett has
beaten the market over a life-
time of investing. But there
aren’t many others.
The math of investing is
brutal. Before costs, we collectively earn the market’s return. After costs, investors—as
a group—must inevitably lag
behind.
Trading stocks may offer an
adrenaline rush and buying actively managed funds can allow
us to dream of riches, just like
lottery tickets. But managing
money should be about making
money, not entertainment. If
you want to notch decent returns, put your ego aside and
put your money in broadly diversified index funds with
rock-bottom annual expenses.
spending, be in better shape if
you lose your job, and need
less income to sustain your
standard of living once retired.
Most important, low fixed
costs make it easier to save a
hefty sum every month—and
that, more than anything, will
drive your financial success.
I’ve met thousands of ordinary
Americans who have amassed
seven-figure portfolios. The
vast majority share one attribute: They’re great savers.
Best way to spend money:
Experiences
I believe money can buy
happiness, but you have to
spend with care. My advice:
I’ve met thousands of ordinary Americans
with seven-figure portfolios. The vast majority
share one attribute: They’re great savers.
Key to financial success:
Cheap housing
A third of the money spent
by the typical household goes
toward housing. Add car payments and other transportation costs, and you’re at more
than half. My advice: Try to
keep those two costs well below 50% of your income, especially in your early adult
years.
The less you spend each
month on housing, cars, utilities and other fixed costs, the
less financial stress you’ll suffer. You’ll also have more
money for discretionary “fun”
Use your spare cash for experiences, not possessions. Pay
for the family vacation. Go to
a concert. Head out to dinner
with friends. This will strike
many as counterintuitive. Possessions seem appealing, because they have lasting value,
while experiences leave us
with nothing tangible.
But this is also the reason
experiences can bring more
happiness: We have not only
the event itself, but also the
anticipation before and the
fond memories after—and
those memories aren’t soiled
by the messy reality of some
object that gets dirty, breaks
down and is eventually discarded.
Top financial goal:
Not working for money
Unless you have enough
saved for retirement, you
need an income. But if possible, never work just for a
paycheck. I believe the keys
to a fulfilling life are spending our days doing what
we’re passionate about and
our evenings with friends and
family.
Problem is, the career that
makes us happy in our 20s
may not be satisfying in our
40s—and the new career we
want to pursue may not be as
lucrative. What to do?
Avoid the acquisition treadmill of bigger homes and better cars, and instead save like
crazy in your 20s and 30s. Do
that, and you could buy yourself the freedom to spend the
rest of your life on your terms,
rather than one dictated by
car leases, credit-card bills
and mortgage payments.
Many readers of this column have become my regular
correspondents—and I hope
that’ll continue. From now on,
I will be writing for Saturday’s
Wall Street Journal, while also
updating my book, the Jonathan Clements Money Guide,
every year.
Keep tabs on me via JonathanClements.com, my Facebook page (Jonathan Clements
Money Guide) and Twitter
(@ClementsMoney). Email:
[email protected].