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Author: Jim Wang

The Particular Misery of College-Admissions

As a father to a kid who just entered middle school, college is on our radar but it’s far into the future. I met up with a friend who just went through the college admissions process a year ago and he told me it’s absolutely insane.

The amount of pressure and the “games” you have to play are astounding. He recommended this book by Jeffrey Selingo titled Who Gets In and Why: A Year Inside College Admissions (I’ve yet to read it but with our kids going into college in 7+ years, it was lower on my list at the time).

To parents with kids thinking about college, I salute you.

The Particular Misery of College-Admissions TikTok [The New Yorker] – “A common theory of teen unhappiness says that kids these days are under an inordinate amount of pressure to compete. The evidence is all over social media.”

Beware the Private Markets pedestal [Real Returns] – “I think private markets probably are inefficient and so can throw up great opportunities. But none of these things are the same as saying that private markets are always inherently great investments. In fact, if the only thing you know for sure about an illiquid asset is that you can’t sell it when you want, then the staring point is kind of the opposite.” What Dan is saying here about “private markets” are things you’d probably consider “alternative investments,” investments outside of the stock market. They’re sexy, hence putting them on a pedestal, but you have to prove they offer better returns on a case by case basis.

How to psychologically recover from a major financial setback [Million Stories] – “Rasure recommends giving yourself a safe space to acknowledge what you’re feeling and pay attention to your physical senses. “Go for a walk, exercise, meditate, breathe,” she suggests. “Get grounded.””

The Age of AI has begun

With Apex Money, I try to share interesting and eye-opening articles about personal finance.

Sometimes, the articles aren’t about money directly but they are so important that I think you should read it anyway.

Today’s first article is one about Bill Gates’ thoughts on the rise of AI. As someone who helped, and benefited greatly from, the rise of the personal computer, I think his thoughts on this revolutionary technology is worth reading.

The Age of AI has begun [Gates Notes] – “The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone. It will change the way people work, learn, travel, get health care, and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.”

http://Free Roth 401k Calculator (Beware—The Roth Cost Me $379k) [Life and My Finances] – “I started investing in a Roth ten years ago, thinking it was earning me more money. It wasn’t. I should have done the math.” Always do the math!

Instant-Issue Term Life Insurance: What Are The Costs Of Low-Hassle Coverage, And When Are They Worth It? [Kitces Nerd’s Eye View] – “Although these policies make it possible to fast-track the insurance application process for some individuals (who might otherwise be stymied by the traditional underwriting process), they aren’t necessarily right for everyone. For instance, because instant-issue policies require insurers to arrive at a decision without knowing the full details of an applicant’s current health or medical situation, they are generally only offered to the healthiest individuals – while those with pre-existing health conditions (who might still be eligible for insurance through the traditional underwriting process) might be declined after applying for an instant-issue policy. Which frustratingly can make it more difficult (or expensive) to subsequently be insured through traditional underwriting, since the fact of having been declined – albeit for an instant-issue policy with higher health standards than traditional underwriting – can create a ‘black mark’ on the individual’s health history.”

The Nothingness of Money

The Nothingness of Money [More to That] – “Nothing passes through the great wall of death. Whether you’re a billionaire or a homeless person, everything goes to null in the face of the great equalizer. The only thing you may be able to preserve is a legacy, but that legacy is for other conscious minds to perceive, which is no longer a luxury you have upon hitting that wall.”

When Will AI Take Your Job? [Uncharted Territories] – “Naturally, many people fear for their job. But this fear is not new. It’s been here since the Industrial Revolution. Ten years ago, Frey and Osborne rekindled it when they claimed that nearly half of jobs were at risk of automation. In the last few months, this fear has exploded with the arrival of AIs like those of ChatGPT. New papers suggest that these technologies spell danger for telemarketers, teachers, lawyers, psychologists, mathematicians, accountants, proofreaders, assistants… Which jobs are really going to suffer? How can we know?”

12 Rules to Break on Your Path to Wealth AND Happiness [Accidentally Retired] – “I retired at 36. Yet, I never worked over 40 hours a week, rarely traveled for business, and changed careers multiple times. I ignored society’s rules.”

What YouTube hustle gurus are really selling you

Another era, another set of “gurus” trying to sell you the dream. 🙂

(spoiler alert: the one making money that dream are the ones selling it)

What YouTube hustle gurus are really selling you [Vox] – “YouTube and TikTok are plagued with 20-something “passive income” bros who want your attention — and your money.”

The 8 Most Eye-Opening Money Attractions in the U.S. [Wise Bread] – “Some of my most memorable vacations have centered around money — and didn’t require spending much of it at all. I had my photo taken next to a $1 million stack of bills at Binion’s on a recent trip to Las Vegas. Another memorable experience was visiting the Bureau of Engraving and Printing in Washington, D.C. to see millions of dollars of being printed on the production floor.”

This last one is an interesting story about an art class called the Locked Room.

A 1969 Experiment in a Locked Room Changed Art History—and Predicted Remote Learning [ARTnews] – “In September 1969, newly arrived first-year sculpture students at Saint Martin’s School of Art in London were handed name badges and a cube of polystyrene wrapped in brown paper, and ushered inside a bolted and padlocked room. Inside, they found their names pasted at distanced intervals on the floor, along with a list of rules. Students were told that they were not allowed to leave the room between 10 a.m. and 4:30 p.m., except to fetch tools, and were silently supervised by at least one professor at all times.” It’s interesting that different people took away different things from the experience, which I suppose fundamental to art. Note the publishing date, May 20, 2020, as we were in the 2nd month of Covid lockdowns.

I’ll be going to a retreat next week and will not be able to send out updates. We’ll still have our Wednesday email going on, courtesy of our friends at the Plutus Foundation, but I’ll be back on Monday, March 27th!

How To Read Your Financial Aid Award

It’s March and if you’re off to college in the Fall, hopefully you got financial aid. Here’s a guide to understanding what you got:

How To Read Your Financial Aid Award [The College Investor] – “Welcome to the annual interpreting of your financial aid award. While there are some guidelines for schools to follow when creating financial aid awards, for whatever reason, there aren’t any strict standards on formatting. This often leaves many schools using unfamiliar formats and terminology. Unfamiliar language and cryptic codes can be found throughout many financial aid awards. Loans and grants can be lumped together. Codes such as “L” or “LN” are sometimes the only indication that an amount is actually a loan. In fact, most financial aid students receive come in the form of student loans.”

An Extra Dollar a Day For the Rest of Your Life [Physician on FIRE] – “In other words, if you want to spend an extra dollar a day in retirement, you’ll want another $10,000 or so saved and invested. That works out to a 3.65% withdrawal rate, which makes perfect sense given that a normal year has 365 days.”

Why is there an empty frame behind President Biden? (thanks, and happy 25th birthday!)

I don’t care about bank ratings

I’ve been asked by readers a few times if I ever look at “bank health” or ratings. I don’t. I don’t because of FDIC insurance and how it covers me up to $250,000 (and oftentimes more).

My blogging friend Jonathan echoes that sentiment and in his post he shares that those bank ratings are not that useful anyway. “Most of Silicon Valley Bank’s deposits were from start-up businesses, but individual households had accounts with them as well. I don’t mean to pick on DepositAccounts, but they are a respected site and they gave Silicon Valley Bank a Health Grade of A. This is why I don’t care about health grades for banks from anyone. As a depositor, either they have FDIC insurance, or they don’t. Big name banks can fail even if their assets are greater than their deposits.”

I agree 100%. It’s FDIC insurance that matters.

Too Many Employees Cash Out Their 401(k)s When Leaving a Job [Harvard Business Review] – “According to research of over 160,000 U.S. employees from 2014-2016, 41.4% cashed out at least part of their 401(k)s when leaving a job — and 85% of those drained their balance entirely. Why does this occur at this moment in particular, despite evidence that it can damage your ability to retire and despite warnings from experts that it’s a bad idea? The answer is a combination of bureaucracy and psychology — how cashing out is explained to employees (or automatically occurs if balances are low), and how contributions (particularly if they come largely from the employer) are seen as a source of ready cash.” Don’t cash it out!

What’s Your #1 Travel Tip? [Cup of Jo] – “When choosing a hotel, I go to TripAdvisor and, instead of looking at the hotel’s professional photos, look at the travelers’ photos. That way, you can get a real sense of the place. Does the pool look crowded? Are lots of kids at the restaurant? Do the rooms feel dark?” (read the comments!)

Silicon Valley Bank Bust

You probably heard that Silicon Valley Bank went into FDIC conservatorship last Friday but you might not have fully understood why.

The short version is that it was a classic bank run. SVB put deposits into long dated Treasury bonds (like 10 years) and when interest rates went up, those bonds lost value. That’s fine if you don’t cash out the bond, you only lose opportunity cost. When the bonds mature, you get your money back and some interest.

But if you have to sell, like if depositors want their money and it’s stuck in a bond, then you take a loss. That’s the short version of what happened.

Now, if you want more juicy details… that’s what today is all about. (also a bit about Silvergate, a crypto-friendly bank that also went under)

Silicon Valley Bank: What Happened? [Stop Ironing Shirts] – “I haven’t watched something like this unfold for 14.5 years, specifically since I was sitting at a hotel breakfast as a young banker watching the news about Wachovia Bank. Fortunately or unfortunately, I’m a bit of a nerd when it comes to banks and many people are asking me questions, so here it goes.”

Crypto Bank Had a Boring Collapse [Matt Levine for Bloomberg] – “Take a bunch of deposits from one industry, invest them in safe but long-dated stuff, and then rates go up, your assets lose value, and your concentrated depositor industry vanishes. But Silvergate’s depositors really vanished, and it is shutting down; Silicon Valley’s story is more “a slowdown in VC funding” and “cash burn at many of its clients.” There is still a lot of franchise value there, which is why it can plug the hole in its balance sheet by selling stock instead of by shutting down.”

What about other banks?

Finally, here’s a link to a solution if you have a large balance and don’t want to open a lot of bank accounts – IntraFi. Not an endorsement, just mentioning it.

Money can buy happiness… especially if you’re happy already

You’ve probably heard the idea that our happiness goes up as our income goes up but only to a certain point.

A 2010 paper by Daniel Kahneman and Angus Deaton shared that “emotional well-being,” which is happiness, increases with income but flattens around $60,000 to $90,000 (more significantly, it stops growing past $75,000). It’s a little more nuanced than that but that conclusion is useful enough.

It turns out there is more to the story… as is often the case.

This 2022 paper by Matthew A. Killingsworth, Daniel Kahneman, and Barbara Mellers discovered (be re-examining the data) that this flattening is restricted to the least 20% of the population.

Income and emotional well-being: A conflict resolved [PNAS] – “A reanalysis of Killingsworth’s experienced sampling data confirmed the flattening pattern only for the least happy people. Happiness increases steadily with log(income) among happier people, and even accelerates in the happiest group. Complementary nonlinearities contribute to the overall linear-log relationship. We then explain why Kahneman and Deaton overstated the flattening pattern and why Killingsworth failed to find it. We suggest that Kahneman and Deaton might have reached the correct conclusion if they had described their results in terms of unhappiness rather than happiness; their measures could not discriminate among degrees of happiness because of a ceiling effect.”

Why some travelers fly across the world without leaving the airport [The Hustle] – ““Mileage runs” allow hardcore travelers to maintain elite status. Are they worth it?” Many years ago, I remember reading about mileage runs and it amazes me that it still happens! Back then, they were considered inefficiencies in the airlines’ systems but I guess they don’t care that much!

Lastly but not leastly, did you know there’s a cafe that sends food through pneumatic tubes?

I’d definitely check it out if I find myself in New Zealand!

How To “Lie” With Personal Finance

Karsten, author of the fantastic Early Retirement Now, disagrees with JL Collin’s argument that homeownership is a terrible investment.

Here’s his take:
How To “Lie” With Personal Finance – Part 2 (Homeownership Edition) [Early Retirement Now] – “This one is about the rent vs. homeownership debate. Is homeownership a wise financial decision? I’m not going to answer this question here. It’s a calculation that’s highly dependent on personal factors. I lean toward homeownership over renting but that’s because of our idiosyncratic personal preferences – our ideal early retirement lifestyle involves having a stable home base in a good school district.”

It’s funny to read too… “… you cannot move into your Vanguard account, you dummies!!! ” 😂

12 Life-Changing Millionaire Lessons I Learned From Working with the World’s Richest People [Financial Imagineer] – “Over the years, I’ve had the opportunity to meet hundreds of millionaires and learn valuable millionaire life lessons from them first-hand on and off my job as their wealth manager. While their backgrounds, lifestyles, and fortunes vary greatly, there are some common traits that all millionaires seem to share. In this blog post, I will share with you 12 life-changing millionaire lessons that I’ve learned from the world’s richest people.”

6 Ways Mario Kart Tour Triggers You Into Gambling Your Money [Grow.Design] – This is a really cool way of telling a story and making a point in a cartoon format. Also, a little shade at Mario Kart Tour for it’s monetization strategy.

Stay in the Game

Today I just have one post for you and I hope you will read it.

I guarantee you that, not only will you like it, it will move you.

Stay in the Game [Albert Bridge Capital] – “He was an amazing child, and became an amazing young man. But he had his demons. And just before he turned 16 years old, those demons arrived with a vengeance. I will spare you the details, but for the next three years, he went through a personal hell. Imagine all the things you don’t want to have happen to your teenager. They happened to him. For three years my wife and I would wait on our front stoop until 5:00 am, in the shadow of the Albert Bridge, hoping that he would come home. On those nights that he didn’t, we would call the hospitals, and call the police. And sometimes the police would call us.”

Stay in the game.