Focus on longterm saving during recessions

Economic shocks are good times to focus on the longterm. Look to the fundamentals.

After an impressive year on the stock market in 2019, I’m certainly not expecting that to continue. I’m projecting a slower year of growth for my company. Many are waiting for the next economic shock. Last year 70% of economists predicted a recession for 2020.

Of course it may not happen. (In December 2018, we thought there was a recession looming.) But the critical point for (fairly) passive retirement savers like myself is that even if there were a major slowdown (recession or otherwise), we have to keep focused on our longterm goal.

This became a common refrain during last month’s Personal Finance Day, a goofy, somewhat-tongue-in-cheek annual event I host with two childhood friends. This was the fifth year.

Below I share a few notes from this year’s installment.

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Your retirement savings goal to strive for should mean you never dip into principal

Americans are rotten at saving for retirement.

It’s at least in part because of the seismic market change from 20th century-era defined benefit offerings (the pension you might have gotten working at a company in 1972) to today’s climate of defined contribution plans (the 401k you have at work or the IRA you might have with a company like Vanguard). More recently the Great Recession complicated the story more.

Whatever the case, we know one in three Americans has less than $5,000 in retirement savings. Two-thirds of Americans say they’ll outlive what they have saved, including the half of households that have no retirement-specific savings at all. Rules of thumb to the contrary abound: you ought to have the equivalent of a year’s salary by the time you turn 30, and you might want at least 10 times your top earning salary saved by the time you do retire.

When things are stressful, I tend to try to find some way to make them more approachable.

It’s in part why for the last several years, two childhood friends and I have gotten together once a year to discuss what we’ve tried, learned and accomplished on the subject the previous year. With a bit of nerdy glee, we call it Personal Finance Day, and we just held the fourth annual earlier this month.

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There’s no such thing as a safe investment worth making: ‘Personal Finance Day’ notes

I’ve shared before what a strange nerd I am. I tackle learning in a full-force kind of way, and I love to pair seeing old friends with new experiences and ideas.

For the third year, two childhood friends and I came together Saturday for dinner and drinks and elaborate slide presentations sharing lessons we had learned about the difficult and tricky and complex world of business and retirement planning and, yes, wealth creation.

Indeed, it was the third annual Personal Finance Day.

I wanted to share a few things we talked about that might transfer well. And use this as a reminder: when something as stressful and arcane as personal finance intimidates you, find friends, make whiskey sours and dive in and discuss. You’ll be surprised how much fun you can have.

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What I learned at our second annual ‘Personal Finance Day’

Following up on last year’s inaugural, two friends and I returned to the rural county we grew up in together and had a day-long nerd out on personal finances.

Yes, after cocktails and dinner and catching up, we literally gave presentations and shared tips on things we were learning about navigating the very complicated personal finance world. It’s all about fun and self-improvement.

We shared and discussed and debated over ideas and rules of thumb and data — like the above pictured Zillow chart predicting longterm real estate growth in my neighborhood of Fishtown.

Below, I share a few notes that aren’t top secret.

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A few things I learned at a ‘Personal Finance Day’

The act of learning something I can use has maybe always been one of my favorite acts (that’s why I used to collect extra printouts from school printers). And the mysteries and vagaries of finance have perhaps intimidated me more than most — particularly as a business reporter.

It’s a system that benefits from its complication, making it easier to separate us from money. So I try to take as many opportunities as I can to learn and share to pick up and trade tips on personal finance. As a middle class kid, I had the privilege of being introduced to basic banking from an early age but the more complex instruments were ones I discovered as I pursued greater understanding through high school and college.

I’ve continued that learning and want to share some recent lessons here.

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