Avoid These 8 Common Mistakes and You'll Live a Happier, Healthier Life!
This. Is Motley Fool answers a mouse in Southwick and I'm joined as always by Robert broke camp personal finance expert here at the Motley Fool hey bro Happy, New Year everybody happy new year in today's episode bro, is going to see how the expert. Predictions. For 2018. Actually. Panned out and forget, about New Year's resolutions I'm playing, the much longer game with advice to help you avoid having regrets on your deathbed. On. This episode, of Motley, Fool answers, so. Allison what's, up well bro this is the time of year when people start thinking about New Year's resolutions or, at the very least they wake up from the fog of the holidays and realize, that they spent way too much money or gained too much weight, so. Then roughly apparently, 2/3, of us make New Year's resolutions, do you make New Year's resolutions I do you, do oh yeah what's here what's your batting average for keeping them oh. Probably. 50/50. And. Let me guess most of your New Year's resolutions, have to do with your health or money yes yes absolutely right so that's not unusual most, are along the lines of eat healthier, get more exercise save, more money and then of course we completely abandon them around February, but, but. What, if we take the longer view and see what people truly. Regret, in their. Old age and then we'll. Work backwards with steps we can take to avoid being truly miserable after, having lived a wasted life so. Let's head to the research let's do it we're gonna go to the Legacy, Project out of Cornell I feel like you've mentioned the Legacy Project on the podcast before coming, out here it's. So it's led by some. Researchers, out of Cornell and basically they gathered responses from 1,500. People over the age of 65, about all kinds, of things including their. Most common regrets in life so here, are in no particular order, the eight most, common regrets. That, the. Wise elder, people in our life have ready I'm ready all right number one not. Being careful enough when choosing a life partner, oh yeah I'm sure. This. Is getting better as. A society, hopefully, young, men and like, they have more options and that your, twenties aren't just a big game of musical chairs where, you got to choose the closest, one when the music, stops one, person that they talked to for their research said that it was better to not get married than to marry the wrong person yeah, that's probably true I think we are getting better isn't the divorce rate going down oh, yeah.
We Talked about that in the past about how Millennials are better at marriage than baby boomers good job. All. Right number two, second. Another, regret that people have not resolving. A family, squabble, so, some of the most unhappy. People in their old age researchers. Said were those that had a rift with a family, member like a child or a sibling or a parent and never reconcile. All. Right number three putting off saying how you feel, apparently. Not expressing. Love frequently. Enough was a common, regret of older, men. That's. A generational thing I feel like today's. Man is a little more sensitive, and effusive but maybe I'm wrong I don't know. You. Guys do and, you too listeners, I, think. You guys are pretty. Okay all right number four not. Traveling. Enough some. People chose to wait until retirement, to travel, but, the researchers, said that putting it off means that your health could have already started. You've. Had a chance to do your lifelong. Dream of a trip to Italy or whatever so, many of the older people said that they should have taken, a. Trip, sooner, and. That travel, should have been more important, than like say a kitchen, remodel, nor. Does travel, even have to be the cost of a kitchen remodel the, older people they talked to said you should just get out there more and just travel yeah good, v, common, regret spending, too much time worrying, apparently. Many of the people they talked to regretted, about anxiety from, worrying over things that never happened, or they, didn't have control over the. General advice was just stop worrying. That's. What but that's why they didn't happen because I worried about it right I didn't worry about it what happened right right so for those of you who are like okay I'm ready to stop worrying I guess you can go back and listen to our episode, on cognitive. Because. I don't know how you just like literally the advice was just don't worry so, much as if it's like that easy right yeah. All right number six not, being, honest. I'm apparently, lying, and deceit, Naz. Away. At you slowly but surely and, then there you are on your deathbed thinking, about how you were a lying liar who lied, you're. About to be judged. Yes. Number, seven not, taking enough career chances, so. People they talked to were in favor of taking more risk when it comes to your career they regretted opportunities. That they passed on or, weren't brave enough to try, and. So this one could potentially haunt me cuz I feel like it's awfully, cozy here at the Motley Fool I. Am. Actually in a room with two men who have been working at the same place for, twenty. Years twenty. Years next year yeah so. Yeah, that one my touching. Chord here that's a warm bath it's really hard to get out. All. Right number eight not surprisingly. Of CO of course when you're older and everything, hurts you're gonna regret not taking, as good care of your body, so. When you're young you're thinking that smoking, or eating poorly or not exercising okay fine whatever I'll die a little sooner but the problem is is that you don't get to die thanks. To the marvels of modern medicine, you get to suffer, through years of chronic disease.
So. Enjoy that so, none of them were fine none of them were like I wish I had saved more for retirement or anything like that no. But. I don't know that there's really a definitive, study, on the area of what people regret in life because there was lots of, books. That, people wrote, after. Having live after having had a career in hospice. Care or something like that so, there was this is there's probably room for more rigorous. Research, in, the area of regret. Right, I have read a recent. Study that we published on. Fool.com about. In. Terms of money what did what are the biggest threats regrets, and one of them is I wish, I had saved more money I mean one. Of the biggest determine. As we've talked about this before of a happy retirement is number one health but. Then financial, security, and it's hard to enjoy your golden. Years if your kind of racked with financial anxiety right, well most of like that and that's that falls in line with New Year's resolutions, right this short term like those. Decisions, of I want to save more I want to be healthier I want to do this whereas, a lot of the life regrets, had a lot to do with like relationships. And really. Like relationships, with family we're like not being honest. Really so family. Squabbles, and not choosing, the right life partner a lot of the lifelong, regrets actually had to do more with your relationships, with people than, your relationships, with money or although. Health isn't so, as your recommendation, for people, as you think about your resolutions, for this year to just think of those things that anything sort of ring. A bell strike, a chord in. My, notes what's my take away because, bro is such a stickler, for a takeaway. Yes. As, I, was naming those things if any one of those single regrets made you catch, your breath or, your heart skip a beat or you were like yeah. Okay, alright even doing just one thing in the coming year that could get at that to help you have a happier 2019. And beyond, so is there, someone that you could bury the hatchet with is there a trip you could plan flossing. None, of these things are necessarily, easy, but, they aren't all dependent on building. Or changing habits which as we know is really really hard you, know one well, said, I love you could apparently make a difference for the rest of your life but. Also definitely floss, every day all right and bro that's what's up. At. The time of taping this. Things. In the world I would say are a bit unstable the, markets are unstable, the. Economy, is I, don't know does anyone ever really know that's. That, is a good point does anyone have a period, I should have just yes does anyone ever really know not. Rhetorical. But, here's the problem, much. Of investing, in financial planning, does. Rely on a. Little bit of knowledge in fact a little bit of foreknowledge in fact you have to make basically, a prediction, when you're buying one stock versus, the thousands of others you are predicting that that is going to be the better investment, if, you're deciding to put a little bit more an international, or US, stocks you're trying to make prediction, of which is going to be the better. The. Whole point of retirement. Planning is doing. Something so that when. That time comes 10, 20 30 years from now you're gonna have enough money so you have to make some predictions.
There's. A problem and that, is. Humans. Kind of stink at predictions. And. I find it kind of interesting. I'm a bit of a collector of predictions, I even have a folder, in my Evernote, because, partially. I want to see who's particularly good at predictions partially, because when people make predictions, they have some interesting points to make and supporting. The predictions. But. The bottom line is generally. People aren't very good at it one of my favorite, examples I think I've used on the show before was. One, of those end-of-the-year. Articles. In Business. Week was the end of 2007. They, asked six highly. Paid finally, attired Wall Street types how, they thought the Dow would end in 2008. Now at the point the. Dow was a little over 13,000. Every, single one of these people expected, the Dow go to go up about an average to 15,000. What. Happened in 2008, not good not good it dropped to about 8,000, so a 40%, drop worst year for the stock market since, the Great Depression, and. It's one of those glaring examples of how you have people, who. Have all, the, resources, that you supposedly could ask for, to. Make these predictions and they, all got it wrong. And. They're plenty studies that have looked over bigger, periods, of time, one. Is, under. Study that was done by cxo, advisory, they call it their guru grade so what they did from 2005. To 2012, they collected, six. Thousand, five hundred and eighty two forecasts. About the US stock market from, 68, experts, you. Know they didn't even just look at the, predictions from that time period they went back to their archive so the oldest, prediction. Went back as far as 1998. What. Was the average guru. Accuracy. 47. Actually what they call it guru accuracy. Guru accuracy. 47.4%. Wow a coin. Flip a little. Worse than a coin. Flip the most accurate person, was right 68%. Of, so still wrong, one, out of every three times. Worse. By the way with an accuracy rate of 20%. Yet. This person still, has a money management firm and still isn't the media making predictions. It's quite it's quite remarkable, so. Once. Again we're here at the end of the year you are probably reading all kinds of, articles about what. 2019. Is like I always. Like to take this opportunity look back at some of the predictions from 2018. To, see what happened and there were a few that jumped out at me a couple, that were highlighted, in an article on market watch by Sean Lang Louis I don't know if I got his name right there highlighted. Two people in particular one, is Ray. Dalio he is considered. One, of the greatest investors, of all time we talked, about that in a previous episode he runs the biggest hedge fund in the world world. And. At that time of the year he said investors are quote going to feel pretty stupid if they sit around in cash in 2018. He expected, a pretty, big rally partially. Because of the jolt coming, to the economy from the tax cuts of. Course as we sit here we are recording this before the end of the year but, as we sit right now the stock market is down for the year now, he, is his fund, itself has actually made money this year, but. Again, another really. Smart, guy, thinking. Things are going to be pretty good this year for the stock market it didn't turn out that way another is Bill Miller who. Was. Famous, for beating the S&P 500, 15. Years in, a row. Unheard. Of unheard, of he got undone, with. The Great Recession and, that his, performance tanked. Considerably. Like horribly, you, were covered a little bit and his record has been mixed since then he. Predicted, at, the beginning of 2018, that we'd, have another year like 2013. Which. Is when the stock market went up 30%. Didn't. Turn out that way now. Some folks did think it things partially, right like Geoff Gunlock who's considered, sort of the bond King he co-founded, double. Aligned capital. Runs. One of the biggest bond, funds out there very smart fellow, predicted. That stocks would go up at the beginning of the year and then and the. Year down which was right he. Predicted that Bitcoin had peaked he was right. He also predicted that one of the best things to invest in for 2018, it would be commodities, he. Was wrong, commodities, actually have performed worse, than. Stocks, so, far this year, so. You can get some things right maybe. Not everything right and that's part of just invested you're just not gonna get it all right so. Recently CNBC, is Thomas Frank Dobson article, which reviewed the predictions of 13 of the biggest firms on Wall Street what, they were saying for 2018, what they're predicting for 2019.
And The most accurate for last year was also the most bearish that, was Morgan Stanley's Michael Wilson he basically predicted. That the S&P 500 would, make just a little bit of money actually. It lost money but he was still the most accurate so. You might ask what are these people expecting, for 2019, well he is also again, the. Most bearish he doesn't think the S&P 500 will actually make much money at all in 2019. On average these, folks think, that the market will earn about 15%, in, 2019. Oh, that's. Not bad it's not bad so they were either predicting. There, we are currently in the longest bull, market in history they're. Predicting that we have another, year left of it will. It matter I, think. We've already established we, don't. Think that they'd any one can really predict, that what, I thought was most interesting, what I think is most worth paying attention to is a little. Bit more pessimism. Has, crept in to these prediction. These sort of articles, and these every, firm off often will put out some outlook, report on what happened to see happening, in the year ahead it's. Much more pessimism, in them, this year for. A couple of reasons, that I think are pretty. Valid, number. One the. Fed is still. Raising. Rates, probably. Will slow down not raise them as much in 2019. As people expected but. Still probably rates are going to go up that's usually it. Does the whole intention is to slow down the economy to keep inflation in check and, that's probably what will happen a couple, of other interesting things that are generally. Indicators. Of a slowing economy if, not, recession, indicators, one of them being the inverted, yield curve are. You familiar with this at all oh it's my favorite. Favorite. Thing anyway so generally. There's a way to go every time, except. That, the yield Kermit yield, curve is inverted every time before. A recession, so, it's it's a bad, it's, a bad sign, it's my favorite bad sign it's really low so, basically, you should get, paid more to. Buy a bond with a longer, duration than a short duration you should get paid more to. Buy a 10-year bond than, a two-year bond because you're tying up your money for a longer marry time period of time that's, a normal year yield curve it goes up and to the right okay, but sometimes the.
Yield Curve becomes flat meaning, you don't really get paid much more to go out further, and. Sometimes. You actually get paid more for a shorter term Treasury. Or a bond usually it's looking at Treasuries and that briefly, has just started to happen so, currently, you actually get paid more to, invest in a 2-year Treasury than you do our three or five year Treasury that's. Generally, not a, good sign, what. People most look at though is either the difference between the three-month. Treasury. In the 10-year or the 2-year Treasury in the 10-year that's still slightly positive, but. It's unquestionably, a sign that things are slowing, down there have been some false, signals. With an inverted yield curve but. Every recession, in modern, times has either been preceded. By an inverted. Yield curve or, it happened right around the same time another. Interesting thing that I read in a report, from Schwab. Was. That another indication, of a slowing economy is, when the, unemployment rate and the inflation rate, get. To be very similar so. After. A recession unemployment. Unemployment. Rate, is high, because. People have lost their jobs an inflation, rate is low because businesses had to cut their prices to get people to buy stuff as the. Economy recovers though the. Unemployment rate drops. Inflation. Rate ticks up and. When they get to a point where, they're very close it's usually not, a great sign and the difference between the two now is only about one one and a half percent so it's, certain things like that another signal that I think is interesting now is it household. Ownership, of stocks is near. An all term out an all-time high, really, yep so we're about at the same amount, as. 2007. Right before the Great Recession and. We're only slightly, behind where we were right, before the dot-com crash the, reason it's a bearish, signal is because, basically. Households. Have put in as much as they can in the stock market, they. Don't have as much on the sidelines, to put, into the stock market doesn't. Mean the markets gonna crash tomorrow doesn't even mean it's gonna crash in a year or two but. It's a sign that people are highlighting. As things like you know what it might be time to be a little bit more cautious, a little bit more defensive. So. All that said, given. That we, don't really, know. What's going to happen but there are some certain signs on the horizon. Here. Are some predictions, that I'm mostly, sure I'll be right about. Man. Number. One is. You. Have to make a prediction so, regardless. Of whether. You're going to be accurate you have to make some predictions and one that comes to retirement planning one. Of the key predictions you have to make is what is my portfolio.
Going To earn, generally. Speaking, most. People expect. Below, average returns I particularly. Like vanguards. Like, annual, market outlook and. Their, guidance, for a globally. Diversified, portfolio. For stocks. Over. The next decade earn on average four, and a half to six and a half percent a year I think that's a reasonable, assumption hopefully. It'll be do better but it's better to assume something like that, for. Bonds. Current. Interest rates are always the best indicator of future returns at least for the next 5-10 years right. Now so that's about three percent but there's, something a little different, going on in the bond market now. If. You want your bonds, to be particularly, safe you want them to make money. When. The stock market goes down you, should stick with Treasuries. The. More you go into corporate bonds, the. More you're taking on a risk and they might not hold up quite as well so for example during. 2008, when the stock market dropped 37%. The. Vanguard, intermediate term corporate, bond fund lost about 7%, so not horrible, but you lost money. But there's some evidence that corporate. Bonds are actually even riskier, now than, they were then and. That is because, the. Bond market is broken up into basically two big segments, investment. Grade that, means they're rated BBB, or above by Moody's and S&P and Fitch in those folks, being. A B and above is investment grade below that is speculative, grade called, junk. 15-20. Years ago when you look at the whole investment, grade market, maybe. 25, to 30 percent of it was BBB. Basically, a notch above junk. Today. Half, the investment, grade market is just, a hair away from junk, so. The corporate bond market nowadays, is riskier. Then. It's been in the last 10 15 20 years so. As you look at your portfolio if you're choosing to invest in bonds or bond funds you. Have to take that into account take.
A Look at how much exposure you have to the bond the carbon bonds what's if you look at a bond fund you can look at Morningstar, and see its average credit, quality. If. It's BBB. Close. To that you've, got a pretty risky bond fund you just have to be prepared that probably will go down if we do if and when we do go into a full recession, you better beware right, I. Need another B in there then I go that, was good yeah I wasn't, and, as we're cash we've talked about before these. Days you should be able to earn 2% you just got to put in a little effort so, put. That all together if, you have a portfolio, of cash. Bonds. And stocks, you. Should only assume you're gonna be earning you. Know 4 to 5 or 6% a, year as you, do your retirement plan contributions or, it could be also if you're calculating whether you're saving up for a college, or something like that so. I think that's a reasonable expectation. Number. 2 prediction. Saving. More increases, your chances of success, okay I know that's not very exciting. Controversial. Hot tape. But. The bottom line is there's. Nothing that will help you through. Recession or economic, downturn than having more cash in the bank or more in your portfolio, and the good news is we talked about before in. 2019. Retirement. Account. You see limits go up 19,000. For 401ks, with another six thousand if you're 50 or older IRAs. Go up to 6000, with another 1000, so take. Advantage of those higher contribution, limits and save more number, three your. Tax bill or your refund will, be very different than the previous year so this was the first year of the new tax law if. You, didn't change anything you're gonna get a bigger. Refund, chances. Are though, there is a good 10 to 15% of people they. Actually gonna have a higher tax bill and they're, either gonna get a smaller refund, or they're gonna owe some, money, so. This, is particularly, important. This year I think to get your taxes, done early, to know your situation if you're getting a refund get that money as soon as you can if you owe money you, don't have to file your taxes then you're, gonna wait until April 15th but you got to start building on that money so you have that cash on hand but, it's also important, to know okay this is the tax situation taxes. Are not going to change very much in 2019. Unless, you do something different so. It's better to start earlier, in the year to adjust your withholding, so. If you're gonna get a refund you get that money sooner, or if, you're gonna owe money, you. Want to make sure you adjust your withholding, because if you owe too much you'll have to pay some, sort of penalty. Number. Four another, boring one paying. Down debt is a guaranteed, winner with. Interest rates going up debt is more expensive credit. Card the interest rate on credit cards are at all-time highs now. Like. 17, or 18 percent for a regular, card but, then when you get into like the store card just like 25, percent is but, the same it's also say mortgage rates have gone up auto. Loan, rates have gone up. So. It's better to pay that off it's a guaranteed, winner. It, also gives you more flexibility.
One Of the issues what. Happens with it during recession, is if you're retired your portfolio goes down or if, you're working you might lose your job the. Less debt you have the. More you can weather that type of storm if you're retired. Your. Portfolio, and your portfolio goes down one. Of the best things you could do is, just leave your portfolio, alone and if, you don't have a lot of debt you have a lot more flexibility, with your budget if, on the other hand you, have a credit card a car, bill and a mortgage, your. Portfolio's, down you, can't hold. Off you have to pay those bills in the priority of credit, card. Car. Mortgages. Right exactly. And. Number, five. You're. Always better off looking for ways between enhancer human capital that is basically, your. Value, to your customers, and everyone. Has a customer, obviously, if you're self-employed you have, customers, but even if you work for somebody you. Have customers, your boss the. People who run the company your, colleagues, I think. It's important to always be looking for ways to show. That you are valuable, to the people who are your customers, because, what happens during a recession number. One people need to get laid off or people, you don't people aren't just employers, aren't as generous with raises the. More value, you can demonstrate to, the people you work with or the people who are your customers more. Likely you're gonna be better off what are you intending to do to improve your human capital in 2019. Honestly. Yes no. I want you to live it so. I actually have begun a few, discussions, with people about. How I can increase the engagement on. The. Services, I work on the full particular, the rule your retirement service. So. I've had a few meetings about that I have another meeting on Friday like what are the things we can do to, make it more valuable to the people who subscribe, oh. God. You had an answer. So. When you were looking at all these prognosticators. Were. There. Many. That were kind of like a broken. Clock is twice, right twice a day, kind of thing we're like I'm the perma bear I'm the one who always thinks the markets gonna crack there's. No question so one. Guy is John, Hussman who. I enjoy. Reading super. Super smart guy became. Famous by being very bearish before the great recession of course market. Did drop so he was right. Here's, generally. Not always but generally been very bearish, since then and it has not gone what's, been tough it's been a tough ten years. Yeah so in November. He. Predicted, that the sp500. During. The next downturn is gonna drop to. Below 1000. Keep. In mind that right now it's about 2600, so he's talking for it wasn't half right yeah right so, I don't. Know if that's gonna be right yeah. But. There are those people and there are people who still. Think inflation, is gonna go nuts so I read a few prediction of where people think gold is gonna go to $5,000, an ounce or something like right now it's 1,300. Oh but, they have been saying that since. The Great Recession because, as you may remember with, all the stimulus, from the Fed they were saying it's going to spark outrageous, inflation, and the. Best place to be was as gold and extra gold since. 2011, is down I don't, know 50, percent something. Like that so. You certainly come across that and I think it's a that. Is an important, distinction as you read, these things but, even the John Hussman right I got it he's obviously been wrong. But. So much of his analysis, is so enlightening, because, it brings so much. Market. History so, even if someone doesn't, get the bottom. Line right you can still learn a good bit from. Reading their analysis, because, in the end, you. Have to make some, sorta prediction and in in, my in your mind. There. Has to be that little, bit of possibility, like well what if he's, right what. If the, market goes down and, we did have the Great Recession at, one point we, did have the Great Depression where. Stocks went down 80% there, has to be that part, in your mind but that that, could happen and have some, portion. Of your portfolio that will do at least okay, in that scenario. It's. Gonna be a great year it, is going to be a great year it is gonna be a great year even if it's not a great year because. We're, all here together we've got each other something, like that cuz I love you guys everyone. That's. So, great Slugger. Thanks. Well, Happy, New Year bro Happy, New Year Allison, that's. The show it's edited prog-rock, stick. A ting ly by, Rico. Frog. Rock get, it okay. Is. Answers, at fool.com. If. You want you can also follow.
Us On twitter where at answers podcast and. We're, also on there individually, there's also a Facebook group you can join it's. A private Facebook group to keep out the trolls so, knock, and you will be let in it's a Motley Fool podcast, I believe it's the group on Facebook, all. Right well. That's, it I think Happy, New Year feminine police. Say that like 20, times. Robbers. Broke in five miles in Southwick, stay foolish everybody. You.