Articles by Oakleigh Wealth
Retirement: Math Problem vs. Human Problem
I came across this fantastic illustration by British retirement podcaster and financial planner Dan Haylett a couple of weeks ago. It perfectly captures a dynamic I’ve written about on this blog more than a few times. Namely, the misperception we all have that financial planning is a math problem; an equation to be solved having either a right ora wrong answer.
How much is enough? A parable from Jimmy John’s
My best friend, a Jimmy John’s sandwich shop regular, alerted me to a story that hangs on the wall in the restaurant, entitled “How much is enough.”
This story hit home, but not because it’s a prescient critique of certain American attitudes about money (though it is that ). Rather, as I struggle to launch a business while juggling all of the demands of family life with young children, I realized how easily I fall into the same trap as the “poor” fool in this parable.
This simple vignette illustrates the folly of the arrival fallacy (I’ll have enough when…) and the universal difficulty we often have distinguishing between wants and needs, while also recognizing the value of what we already have.
Enjoy, then go grab a sandwich!
Risk Tolerance & Risk Capacity
Determining the right investment strategy is crucial for achieving long-term financial goals. Two key factors that play a pivotal role in shaping an individual's investment approach are risk tolerance and risk capacity. While these terms are often used interchangeably, they carry distinct meanings, each influencing how investors should approach investment selection.
Merging Financial Accounts In Marriage
The Atlantic recently published an article on the often-asked, titular question: “Should Couples Merge Their Finances?” Rather than give a direct answer, author Joe Pinsker presents a nuanced overview of the plusses and minuses of the three basic approaches: joint, separate, and hybrid. Crucially, he also points to the deeper truth that “the notion that you can keep your finances truly ‘separate’ is to some degree an illusion. Navigating the financial tensions and answering this question in the context of your marriage requires more than statistics about marital satisfaction or awareness of underlying gender equity issues.
Open Palm vs. Closed Fist
In the delicate act of holding a feather, we are presented with a profound metaphor for life itself. We can clasp it tightly within a closed fist or cradle it gently in the open palm of our hand. Each approach reflects a unique philosophy.
The closed fist represents our instinct to cling to what we cherish, to shield it from the unpredictable wind of change. It's an act of guarding, protecting, and controlling. We often do this out of fear or the desire for certainty and assurance. But, as we clench our fists, we inadvertently obscure the very beauty of what we hold. And what’s more, life rarely conforms to our demands for control.
Two Logics
We live in a culture that has become wildly imbalanced, like a bodybuilder who has pumped his right side up to excessive proportion while allowing his left side to shrivel away
Musings on the Dunning-Kruger Effect In Investing (and Life)
The Dunning-Kruger Effect is a cognitive bias first quantified by psychologists David Dunning and Justin Kruger in their 1999 paper “Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments.” Their study demonstrated something we all know to be true from experience: people with low levels of knowledge, skill, or competence tend to overestimate their own abilities. This seminal work led to a wave of similar studies in various arenas and has assumed popular cachet as a pseudo-scientific explanation for any number of phenomena and as a source of endless comedy. It has broad application to the world of investing and personal finance and to the human experience more broadly, yet the original findings have been muddled in popular cultures’ appropriation of their important findings.
Invest or pay off debt?
No one likes the feeling of being indebted, whether it’s actual debt (student loans, mortgages, credit card…), or more generally in the sense of feeling an obligation to return some favor. And as this opening observation demonstrates, the decision of whether to pay down debt is often as much one of emotion as it is cold financial math. Therefore, answering the question of whether I should pay down my mortgage early or try to invest the savings in the market requires looking at both the math and the emotion of debt.
