Oh goody! Please let this be another article from a self-proclaimed “expert”, blathering on about long-term plans and investing wisely.
It is not, to be clear. You are safe here.
So what the hell am I going to talk about? Why, it is indeed about investing, and probably wisely, and definitely with the long-term in mind. But I am not an expert. There’s the difference, I suppose.
My employer migrated our 401ks to Fidelity. I poked around in there for a while, using their retirement score projection algorithm to make some adjustments both to my investment strategy and my contributions. It was really riveting stuff, but necessary if I ever want to leave cubicle life. Then they gifted me some restricted stock units (stock I don’t get until I add another 2 years to my tenure), which got me interested in exploring Fidelity’s full site, and not just the dumbed-down version the company maintains for retirement snapshots. And I admit, it looked cool, in the way a well-designed spreadsheet of data does.
I had never consciously invested for a variety of reasons:
I never had the liquid assets to buy stock shares
I knew very little about how the stock market works
I was afraid
It looked like a lot of work
But then I heard of Index Funds. Well, I had heard of them before but never gave them much thought. Their mention tended to pop up on podcasts and news segments, so the seed had been planted well before I seriously considered buying them outright (I don’t consider my 401k to be that granular–though it technically is investing in index funds under special tax benefits, albeit about as hands-off as you can get).
And after some rather very basic research, discovered that:
Many of them required no minimum investment and have very small fees
I didn’t need to know much to benefit from them
Risk could be mitigated with preference–how safe an index I was willing to buy
The investment strategy for them is passively managed and I could auto-invest, requiring almost no effort on my part
Okay, sounded kind of fun. I searched for Fidelity-owned index funds that matched these qualifiers. I decided to “diversify” with 3 of them, ultimately choosing 4 so I could have a dividend-paying index to add to the mix:
I linked my savings account for EFTs and bought $10 of each, then configured their auto-invest feature to automatically perform an EFT and buy $10 for each one on a rotating weekly basis. I was an official investor!
Then COVID-19 struck and I subsequently lost 17% of my investments. Ah well, I suppose they’ll go up again eventually (I won’t even mention what it’s done to my 401k!).
My investment of $50 is now worth $41.26. Awesome.
But stocks are up today! I might make a buck or two back! Time will tell how well this works over the long term. And I now have one more old man hobby to occupy my hours of solitude in the basement.
Liz has threatened to tell her father I’m investing so we have something to talk about.
My Grandmother died, and Coronavirus COVID-19 is officially now a pandemic. These events are, fortunately, unrelated. She died of late-stage dementia.
COVID-19 itself has a low mortality rate, but 3% of the world’s population is a lot of people. Schools have disbanded. Liz and I have been sent home to work. And I’ve lost 15% of my retirement with the stock crash.
Things will no doubt recover. But for posterity, these are bad times.
Ah the 90s. In all honesty, I didn’t much care for them, but that’s because I was a kid and being a kid sucked. Then again, as I discussed in the prior post, nostalgia is part missing something that can never be reclaimed, not simply the state of mind I was in at the time. So, what’s been lost to the annuls of history, or will one day be lost, yet iconic to this decade?
I enlisted Liz’s help for a list (this is not a list post–I hate those). Here’s what we came up with:
Shopping malls: The family day trips with acquisition objectives. Someone always needed shoes it seemed, and there was never a dedicated trip to a shoe store. No, instead the clan was loaded up and sent off to the South Plains Mall (AKA “The Piece of Bread and Three Candy Bars” mall–my sister though that’s what the sign looked like), where mom and dad would divide and conquer, dragging us to multiple outlets for everything else that was running out or no longer fit. Socks, bras, and jeans were the common items, and the proper brands for each were never at the same store. On second thought, this might not be nostalgia at all. Then again, there were the stops at the aquarium store, the nature store, and the McDonald’s–all in the mall. Maybe it’s the idea of actually shopping that’ll be missed, replaced by the instant online ordering and one day shipping. Searching for the right item was miserable, but allowed for instant gratification.
Cash: My dad still pays with cash. I find it cumbersome now, yet it’s tangible. At one brief point in my life I worked for tips, and while the pay was paltry, the envelope of $1 bills in my lockbox sure seemed like a lot of money. Cash was fun, and exciting, and still somewhat of a mystery. How did they get that security strip in there? And a fat wallet sure made me feel rich.
Driving: I don’t see us as a society ever fully getting away from personal automobiles, but with the advancements of autonomous vehicles, it’s well within the realm of possibility. And ride-sharing programs will fill the gaps. In short, there will be far less of an immediate need for personal cars in early adulthood.
Bookstores: Once upon a time these were the only place to get books. We were at the mercy of whatever they stocked, but that also made finding a certain book more exciting. Now we can buy whatever suits our whim, and with endless choice comes decision anxiety. Maybe this is more of a commentary on ecommerce as a whole, but the bookstore especially was such a fun place to explore endlessly.
I realize now that much of what defined the 90s was the technological advances, specifically the internet; or rather, the calm immediately preceding the technological storm. The 90s was the last truly tangible decade, before the digital world. It wasn’t necessarily disconnected, but the connections were slow. Navigating the world in the 90s was more deliberate and time-consuming. I daresay that it was a simpler time as a result.
Like many American kids, I had an allowance. I received a monthly $10 bill, and combined with the regular birthday/Christmas checks from relatives, created a small sum, locked away in a little green cashbox, awaiting some future purchase that would bring me joy.
Norwest Bank, which has since merged with Wells Fargo
Then my mother decided that I should open a savings account, wherein I deposited my entire “fortune”–secured now by a financial institution (Norwest Bank) and FDIC. I was told that the purpose was to keep the money safe, earn interest, and learn how to save for the future. In reality, I learned that my money had instead been taken from me, I couldn’t use it to purchase anything, and I couldn’t withdraw it without my mother’s co-signature. The goal I can only conclude was to teach me how to save money, but instead taught me the futility of wealth acquisition–further exacerbated once mother instituted a fee penalty system for not doing chores, which quickly exceeded the total monthly allowance. Monthly payday became instead a bitter ritual in which mother produced a ledger, and after reading a laundry list of chores I hadn’t done (which during a month’s time, were chores I didn’t even remember anymore), and concluding I had a negative balance, and subsequently demanded immediate payment. In the end, she didn’t teach me financial responsibility, she taught me the meaning of unregulated capitalism. Like…sharecropping almost. Or wage slavery. The hopelessness of working under a system designed to prevent any sort of meaningful gain. It was a useful lesson, but not the intended one.
In short, I failed to learn the meaning of money. It was merely an abstraction, because when I had money I wasn’t allowed to spend it, and what little I had was fleeced from me anyway. I learned that work was a pointless exercise, and that you couldn’t take anything from me when I had nothing to begin with. So naturally I felt little compulsion to contribute to the family. I also dragged my feet when forced to find a high school job. You can’t motivate someone to play a game they know is rigged.
I didn’t wish to repeat these mistakes with my daughter. I concluded then that you have to learn how to spend money before saving it, for why work if you can’t enjoy the fruits? I also believe that the allowance should operate more akin to a business model. The kid contributes, and so she receives a stipend. Companies don’t get to fine their employees for oversights. There are consequences, sure, but they can’t, for the most part, impact the immediate paycheck. Instead, the employee receives a wage based on the level of contribution and thereby has a stake in the company’s equity. The kid will have good weeks and bad weeks, but the amount should remain constant until a more thorough review is performed.
And with that, here’s premise 2 (and with it the main story): the stipend must be provided in a manner in which the kid understands. Cash may be king, but it’s rarely the primary means of storage and/or transaction. Money is digital. It’s plastic. And to further confirm this point, the kid has demonstrated an excellent understanding of gift card balances, while failing to conceptualize paper. She understands the math, but not the physical. I concluded that she would need a checking account and debit card.
Yet it’s interesting how truly behind we as a society are in that we expect digital transactions, yet not readily allow children to make these digital transactions. Some internet research revealed that many banks do not permit children to hold checking accounts because, as minors, they can’t use checks, which are essentially signatory legally-binding agreements to money exchanges. I could understand that much, but that didn’t explain why I as a 17-year old could still acquire a checking account prior to leaving for college (though it did have to be co-signed by my father). So what were the implications of using a debit card as a minor? None that I could find. I decided to reach out to our primary bank: Wright-Patt Credit Union.
Over the course of 4 emails, I was advised that such an account was indeed allowed:
“This is an account that we offer with certain requirements. Your daughter can have an account in her name as long as she has a government issued ID and a debit card can be issued if a parent or guardian is joint on the account with her. Your daughter and the jointer [sic] member will need to sign a Minor Debit Card Indemnification Form before a debit card can be ordered. This form identifies the joint owner as responsible for the minor’s use of the debit card and overdraft. Since this is a regular checking account it will be able to have online banking, receive direct deposit, and we can set up a special access that will allow you to transfer between your account and hers.”
And that…
“Overdraft can be disabled for the debit card causing it to decline instead of taking the account negative and receiving the subsequent charge, however, the Idemnification [sic] form will still need to be on file.”
Fair enough. So I would to get her a state ID (https://www.bmv.ohio.gov/dl-id-idrkids.aspx)–something that I had been planning to do anyway. So one fine Friday afternoon, I took her to the BMV with all the requisite paperwork. The IDs however were no longer printed on site, so we needed to wait for the US Postal Service. In the meantime, they issued a temporary ID. Gambling that this would be sufficient, we drove to the local banking branch.
After a lengthy wait in line, an officer ushered us to her office. I explained what we were wanting to do, and she reaffirmed that it was indeed allowed, but she couldn’t accept the temporary ID. We would need to wait.
The ID eventually arrived, and we made the trip yet again. After waiting in line, another bank officer–a notably much younger one at that, took down our request, but then advised that they didn’t normally open checking accounts for kids until they were teenagers (I wasn’t given an exact age requirement). I responded that I had already discussed this at length previously and had been given the green light. She said that she would have to ask her manager, and left.
Upon returning, she confirmed that the decision was a judgment call of the manager on duty, and that she had been advised to not open the account. As if to appease, she suggested that we open a savings account instead. Mentally recounting my childhood experiences with a savings account (which I laid out at length above), I declined. I considered raising a fuss with the manager, but didn’t feel it a good use of my time as I doubted they’d reconsider just because I complained. Instead, I made a mental note to issue a formal complaint regarding the conflicting information, and left without further discussion.
I immediately drove to my second bank: Day Air Credit Union. I initially took my car loan out with them in 2007, and after some initial aggravation with them not processing my proof of insurance paperwork properly–leading to a fight over them purchasing their own auto insurance for me on their behalf and adding it to the loan (this was eventually straightened out)–I had abandoned them until I opened a separate emergency savings account. They always struck me as one of those “old people” banks–not the most technologically-modern, but willing to cater to specific needs with extreme patience. I explained my plight to the teller, and she admitted that while she didn’t know if they could accommodate us, the officer would make that determination.
The officer did indeed make that determination, and in our favor. The kid now has a checking account with a debit card, with weekly direct-deposits scheduled to it.
So why exactly did Wright-Patt give us the runaround? I did some digging along those lines to see where it fell into “fairness”. But while checking accounts are indeed managed by the CFPB, since it’s not borrowing anything it doesn’t fall under any sort of Fair Lending clause. And while the decision to open a checking account is based on reporting agencies (https://files.consumerfinance.gov/f/documents/cfpb_consumer-reporting-companies-list.pdf), since the kid would have a complete lack of any checking account history, I suspect that bank instead made a judgment call which fell under the right to refuse service (you know, what casinos do if you win too much).
So be it, I guess. There were other options, so the ultimate success of the mission soothed the fury of the experience. And I’m happy to report that the kid has already made some discretionary purchasing decisions, weighing the short-term happiness an overpriced item might have brought against the depletion of the account and the longer-term goal of having money to spend on vacation.
I intend to make this a multi-part post. I will initially discuss the concept of time-period nostalgia by analyzing the iconic 1950s, compare that to my generation’s equivalent: the 1990s, and conclude with a more personal annotation regarding my hopes for the 2020s.
Our present society holds a strong nostalgia for the 1950s. Yes, there are hundreds of columnists who point out the fallacy of this filtered view of history, because everyone needs to criticize everything, I guess to make one’s name known as a writer. Yet I’d hazard to make the assumption that the majority of the population is aware of the good and bad of this time period, and that few would actually want to live in that world right now. But that’s not the point, so shut up. (Oh, and we also know that Christopher Columbus wasn’t the nicest guy to the natives, Martin Luther King Jr. had an affair, and Henry Ford only instituted the 8-hour workday because longer hours negatively impacted the bottom line–we get it, people are dicks).
Freedom from Want – admittedly a little before the 50s
The filtered view of history is intentional and self-imposed. And everyone understands that it can’t be fabricated by any means, because you can’t go home again.
So why exactly is there nostalgia for this time period? Without doing a deep research dive, I’ll make a theory based on my immediate knowledge as a historian. First, what was gained:
The post-war economic boom combined with the prevalence of American manufacturing and the more democratic tax code at the time allowed for a large middle class. This was because high-paying jobs were widely available to those of diverse skill sets and education levels, and the tax code de-incentivized wealth consolidation to the upper echelon. In short, a lot of people made enough money to have a quality standard of living.
Second, the melancholy side of nostalgia evokes a longing for what once was but has now been undeniably lost. This is a little more subjective, but I’ll make a few guesses:
Television: this was a new technology that gradually became affordable enough to be ubiquitous. Early television programming was therefore more innocent, simple, and family-friendly.
Societal acceptance of children being outside: The older Boomers go on and on about this (yet locked their own children away). Ironic that it’s actually a fallacy that the world was safer back then, but that’s the perception anyway, and the belief has undoubtedly shaped our attitudes about how we let our children play today.
Housewives: I know this is a controversial subject, and I don’t care. Gender roles aside, if one person was free from requiring employment, then that freed up a large amount of recreation time for all parties in the family. Plus, there’s evidence to support a man’s sense of self-worth is correlated to how he stacks up to his wife’s economic viability. Again, not popular, but you can’t ignore ingrained biological behavior.
Societal Expectations: A bit of an irony, but limitless choice causes anxiety. A more structured society therefore frees up the persistent mental debates over long-term goals.
Conclusion: people had more time, money, “freedom”, and clear behavioral guidelines. Lack of life choice ambiguity and a reasonable guarantee of good wages, plus a generally positive view of the world being safer and more innocent, kept chronic stress to a minimum. It may not have been the ideal time to break the mold, but it was a good time to live a secure and simple life.
Next: The 1990s
–Simon
Further Reading (just scratching the surface of the above bullet points):
My employer migrated our 401ks to Fidelity. I poked around in there for a while, using their retirement score projection algorithm to make some adjustments both to my investment strategy and my contributions. It was really riveting stuff, but necessary if I ever want to leave cubicle life. Then they gifted me some restricted stock units (stock I don’t get until I add another 2 years to my tenure), which got me interested in exploring Fidelity’s full site, and not just the dumbed-down version the company maintains for retirement snapshots. And I admit, it looked cool, in the way a well-designed spreadsheet of data does.
In short, I failed to learn the meaning of money. It was merely an abstraction, because when I had money I wasn’t allowed to spend it, and what little I had was fleeced from me anyway. I learned that work was a pointless exercise, and that you couldn’t take anything from me when I had nothing to begin with. So naturally I felt little compulsion to contribute to the family. I also dragged my feet when forced to find a high school job. You can’t motivate someone to play a game they know is rigged.
