Jonathan Clements - "If Money Can Buy Happiness, Then Why Doesn't It?" "Because People Don't Spend It Right." | #19

Episode 19 is a fun, unique episode, delving into the connection between “more money” and “more happiness.” Turns out, Jonathan has literally written the book on this complex relationship. Do you know what studies suggest is the “line in the sand” for annual income, separating happy and unhappy people? Good chance it’s lower than you think. But why? Jonathan tells us. That dovetails into a discussion about how people should spend their money in order to optimize their happiness. It turns out that spending our money on “experiences” with important people in our lives produces far more intrinsic happiness than money spent on “things.” Next, Meb leads the discussion into familiar territory – investing. Jonathan notes two major traps most of us fall into when investing: 1) overconfidence, and 2) loss aversion. These two Achilles Heels tend to inflict significant damage to our portfolios. So what’s our best defense? Jonathan gives us his three-pronged strategy. The topic then moves to portfolio construction, with Jonathan noting how his own approach has changed from a U.S.-centric, core-holding starting point to a global-market-portfolio starting point. Next, they move to a topic less discussed on the podcast: retirement. Jonathan gives his thoughts on withdrawal rates, portfolio management strategies in retirement, and even timing suggestions on when to start taking Social Security. There’s far more on the show, including what studies say about the effect of kids on happiness, why we need to flip our advice to our children (instead of “pursue your passions early in life” it should be “work your butt off early and save, so you can pursue your passions later”), and finally, specific action steps you can take right now to be a better investor. What are they? Find out in Episode 19.