Apprise Wealth Management's Selected Readings for the Week of October 8, 2018

Planning

October 9, 2018
Planning

At Apprise Wealth Management, we want to help people make better decisions about money. We also read constantly and like sharing some of the commentaries we enjoyed reading the most each week.

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Here are this week’s articles as well as a brief description of each:

1.   Ignore Sunk Costs. Have you ever read the first 100 or so pages of a book that you were not enjoying and felt like you had to keep going because you had already invested a couple of hours of time in reading it? Companies are in this situation often as well. They start a project and find it is not going as planned. Rather than stopping or canceling the project, they continue with it because of the time and money that has already been invested. Rather than follow a predetermined path, there are times we may be better served by going in a different direction. Sometimes we would be better off if we simply walked away from whatever was not working for us. This post was also inspired by Seth Godin’s podcast on the topic (Akimbo or Apple).

2.   7 Tax-Free HSA Distributions That May Surprise You. As we wrote a few months ago, Health Savings Accounts (HSAs) are an often overlooked tax benefit. HSAs are triple tax-free in that contributions are made with pre-tax dollars, amounts in the account can grow tax-free, and they can be withdrawn tax-free as long as the applicable rules for distributions are followed. In general, amounts withdrawn from an HSA can be used to pay for qualified medical expenses. This article shares some of the lesser known types of expenses that can be paid for via a tax-free distribution from your HSA.

3.   Your Brain on Reading (Why Your Brain Needs to Read Every Day). Reading is like exercise for our brains. If we read every day, it can slow down late-life cognitive decline and help keep our brains healthier. Reading a book can be better than reading (or watching) the news as it helps reduce stress. (Research has shown that reading a book can reduce stress levels up to 68%.) It also helps to improve the brain’s connectivity, benefiting our attention spans, focus and concentration. Watching the news is often stressful. It can also be distracting. When it comes to managing our portfolios, watching the financial news too much can cause us to sell low (out of fear) and buy high (out of greed). That is one of the reasons we believe it is important to hold diversified portfolios and periodically re-balance to keep the weights more in line with targeted levels.

4.   Dear Investor, That Cocky Voice in Your Head is Wrong. I was a Psychology major when I started college at Duke University. While I ended up getting an Accounting degree from Rutgers, I still have interest in the behavioral biases that can impact us as investors. Over the summer, I gave a presentation on Behavioral Investing for the third time. Two behavioral economists (Daniel Kahneman in 2002 and Richard Thaler in 2017) won the Nobel Prize primarily for their work analyzing the psychological aspects of financial decision-making. The Wall Street Journal’s Jason Zweig regularly writes columns on the topic as well. He also wrote a book on the subject: Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich. In “Dear Investor,” he provides an overview of some of the behavioral biases that can impact investors. None of us are immune from them. Being aware of these biases can help us limit their effects, but it is hard to eliminate them altogether.

5.   On Being a Father. As parents, we often have to balance providing for our families versus spending time with our loved ones. As our kids grow – our oldest is a college senior, our second is a high school senior this year, and we have two more – the amount of time we have with them, how much we get to talk to them, and how well we truly know them diminishes. Even when our children are young, we are often forced to make choices between spending time with our family and focusing on our careers. Like the author of this article, I am sure that many of us wonder if we are good parents or not (I know I do). It is important that we leave our kids with positive memories. In the end, the experiences we share are likely more valuable than the material things we provide.

We hope you find at least some of the above posts helpful. If you would like to talk to us about financial topics such as your investments, creating a financial plan, college, healthcare, or retirement savings please fill out our contact form, and we will be in touch. We can schedule a call, a virtual meeting via Zoom, or a meeting at Apprise Wealth Management's office in Northern Baltimore County.

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