What You Should Be Reading #23: August 2022

The most important investment goal–retirement

Authored by Ryan Munson, this paper talks about Pensions, Crypto, and Trust: Digital Assets and Retirement Funds. The paper talks about the efficiency of retirement planning and how people’s asset mix has changed over time. People have branched out from a conventional investing practice including stocks and bonds to invest in crypto currencies. As funds struggle to meet their return targets, investors demand they provide access to new and potentially riskier products.

The crypto market has had a turbulent history, particularly of late. Volatility has been the norm, with soaring peaks giving way to extreme drawdowns and vice versa.

The most intriguing and “I told you so” bit was when crypto was near its all-time highs, studies showed that a small allocation to digital assets as part of a diversified portfolio could increase returns and lower the portfolio’s maximum drawdown. Amid the latest crypto downturn, such conclusions may no longer be plausible. Even still, there is a large crowd who want quick money and end up investing in crypto.

Percentage of Those Investing in Cryptocurrencies by Age Group

All facts discussed, crypto’s turbulent volatility declassifies it as a retirement fund investible asset. Pension plans must take the long-term views on investment growth and carefully consider and responsibly manage any allocation to new asset classes, argues Ryan.

@Esha



Emotional Expense

Financial literacy is considered the secret to taking control of your finances, but information alone won’t change people’s money habits. Emotions drive your money decisions. A person’s relationship with money and the emotions it brings up starts when we’re young.

People often get told what to cut when budgeting, but they also need joy, rest, small pleasures, and self-care - things that often involve spending money.

Making budgeting mistakes comes with shame, and this can lead to giving up on budgeting altogether, however tracking your spending will help you create realistic financial goals based on your actual spending habits.

This article talks about how we can cultivate financial self-compassion and improve our relationship with money.

@Shruthi



Think about retirement

We’ve all had those days where we think of retiring early and living a carefree life. Or perhaps even the idea of starting something we like at a later stage and having a sufficient savings runway. The one question that keeps coming up is if you will be able to keep the same lifestyle if you retire or start something new.

On the other hand, the current reality makes even thinking about retirement painful. Inflation hit a 40-year high at 9.1%, and borrowing rates have gone up, making it more difficult to start something new.

If you look at the pandemic years 2020 and 2021, you’ll see that while few companies laid off employees, but many individuals on their own choose to leave their jobs and pursue new careers. Once again, the question is whether you can build a runway that will last till the new journey takes off.

Keep this long weekend free to plan your retirement and streamline your personal finances. Here’s a podcast from last year about how you should think about retirement and a module from Varsity on personal finances, which is a must read and covers chapters on retirement.

@nithin_kumrr



What to listen:

https://open.spotify.com/episode/6qoye9yGOu60KHBu5d5fkn



So what have you been reading, listening, watching? Share below :point_down: