• Nate Baim, MBA, CFP®

Is Owning a Home All That Great?


Enjoy this week's edition of the Planner's Beta


Beta (n) - climber's jargon that designates information about a climb This digest's purpose is to share observations, ideas, and treasures found this week which you may also find insightful. Sharing does not mean it's an endorsement. I am endorsing the pursuit of knowledge and exploration.




Something from Nate

My Grandpa, for the longest time, called his 1984 Ford Escort the "Money Maker." In this short video, I share my experiences with that old car, and what I learned about my Grandpa and what he valued in life.



Something about Planning

Don't Bog Yourself Down with Too Many Goals (Harvard Business Review) - I am guilty of it. I can be very ambitious and think I can do it all. Usually, this translates to a lot of "goals." And in my mind, I call them "goals," but let's be honest. I don't sit down often enough to write down my objectives and make them specific, measurable, actionable, timely, and attainable. And even if I did, there would be too many goals to achieve. Focus is needed. Focus is a critical element which drives wealth (whether material or otherwise). So, how can one become focused? What steps can someone take not to get bogged down by having too many goals? Clark, in this HBR article, argues there are four steps one can take to become more focused. They are 1). Align you your goals with your strategic vision 2). Create a timeline of your goals 3). Identify the target(s), which makes other goals even more attainable. 4). Limit your time toward each goal. Clark argues these steps will increase your focus and reduce the risk of being overwhelmed by too many goals.


Something about Economics / Finance

How an Obsession with Homeownership Can Ruin the Economy (The Economist) - A common goal for Gen X and Gen Y is to own a home. My wife and I share this goal. However, starting a business and saving for our first family member is more important. In light of these goals, maintaining flexibility, and thus renting is our best tactic, for now. Mobility is also essential for dynamic economies. Looking at the current housing market, we can see it is becoming more and more difficult for folks to own their own home. And when they do own a home, people tend to be unhappy with their decision. They become tied down. So, homeownership may not be what it is all cracked up to be. This piece from The Economist dives into the policies which distort the availability of homeownership. If you are thinking of owning a home, I encourage you to watch this short. You'll walk away with a basic understanding of how housing markets work and how policies influence the costs and benefits of owning a home. If most of your wealth is going to be in your home, you should at least understand the market influences which impact the value of (likely) your most significant asset.


Something else about Economics / Finance

How'd Active Funds Do in 2019? So-So (Morningstar) - Have a 401k, 403b, or another employer-sponsored retirement plan? More often than not, these plans have active and passive investment options. And it can be difficult choosing funds. Active funds are pools of money managed by individuals who are seeking to outperform their benchmark. Passive funds are designed to track their benchmark index (i.e., do as good, but not better than their index). Knowing what to invest in can be hard. Information about fund performance may aid in this decision. Data shows investors are more likely, on average, to be better off investing in passive funds instead of active funds. In 2019, about 40% of active funds generated higher net returns than their benchmark indexes. Additionally, the likelihood of an active fund outperforming its benchmark for the past two consecutive years falls to 12%.


 

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