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Apex Money Posts

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.

Stop Using Finance as Your Coping Mechanism.

Hey Plutus family, it’s that time again. Check out what we have for you this week!

The Important, and Unimportant. [J L Collins] — “Important: becoming financially independent. In doing so you have bought your freedom. Freedom to spend your life and time as you wish without the need to trade your labor for money. Unimportant: whether you choose to retire from your job or keep working once you are FI. Being FI doesn’t require you to quit a job you enjoy. It just means you get to choose.” (Submitted by J. Money.)

Myth Busting Women’s Banking for Women’s History Month. [Femme Frugality] —”I keep seeing articles and some allusions on big financial sites that say something along the lines of, “It was illegal for women to have bank accounts in their own name before the 1960s.” (Submitted by Tarsha.)

Stop Using Finance as Your Coping Mechanism. [We Want Guac] — “Money is no substitute for relationships or achieving your goals. Money can certainly give you a nice roof over your head, food, clothes, experiences. It can even set you free from working for the rest of your life, if you so wish. It just won’t replace your need for a deep connection with others, nor will it truly fill the void with the less tangible qualities of life.” (Submitted by J. Money.)

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.

Portfolio career

What Is A Portfolio Career & How To Build One [I Like to Dabble] – “I was scrolling through TikTok one day when I came across a video that said that calling your income streams “side hustles” could negatively impact your mindset around the work you do. Using a term like “portfolio career” more accurately represents a multihyphenated approach to work without diminishing it.”

I like the term portfolio career and I think it does a better job of explaining “side hustles.”

The 5 Habits of Financially Responsible People [Darius Foroux] – “The way you treat your money is a result of the habits you have. This is what sets financially responsible people apart from others. And I’m not only talking about the habit of spending.”

Why You Shouldn’t Take Investment Advice From TV Personalities – After The Cut [Hasan Minhaj on The Daily Show] – Great advice! (the whole episode is great)

Finding balance

Finding balance in life is always challenging because we always tend to focus on one thing. That’s literally the definition of focus.

When you try to juggle too many things at once, you’ll inevitably drop some. And when it comes to finding balance in life and family and health and everything else, you don’t want to drop any of them. You want to keep them up in the air.

But it’s impossible.

Family vs Work: The Everlasting Struggle for Balance [Accidentally Retired] – “After having kids, AND taking on the CEO role for my company all within the same time period, it became clear that there was going to be a push and pull between work and family. But no matter what I tried, my mental focus continued to drift back to the urgent, pressing, and hard to solve problems of running a company. The longer this went on for, the more clear it was becoming that something was going to give.”

Health Care Sharing Ministries: Understanding the Risks and Bankruptcy Examples [My Money Blog] – “Back in 2020, I wrote a post Do Not Buy List: Healthcare Sharing Ministry As Health Insurance Alternative. Although they may present a lower-cost option that even aligns with your faith, they can also contain hidden and unpredictable risks. Since then, membership has grown but many have also found themselves stuck with large and unexpected unpaid bills.” Jonathan has not been a fan of healthcare sharing ministries… I can now see why.

Here’s the main article he cites in his piece:

A Christian Health Nonprofit Saddled Thousands With Debt as It Built a Family Empire Including a Pot Farm, a Bank and an Airline [ProPublica] – “Despite a history of fraud, one family has thrived in the regulatory no man’s land of health care sharing ministries, where insurance commissioners can’t investigate, federal agencies turn a blind eye and prosecutors reach paltry settlements.”

Millions of Americans nearing retirement age with no savings

This first story scares me a little bit.

I look at U.S. Census Bureau data from time to time and it’s incredible that nearly half of those ages 55 – 66 have NO retirement savings. Zero. It’s astonishing.

Millions of Americans nearing retirement age with no savings [CBS News] – “Millions of Americans nearing their golden years are still financially unprepared for retirement. According to U.S. Census Bureau data, 50% of women and 47% of men between the ages of 55 and 66 have no retirement savings.”

Why your house is a terrible investment [JL Collins] – “So a few weeks back I was at an awards banquet and sitting at our table of 10 with me was a woman I know. She began talking about how she was encouraging her young son to buy a house. You know. Stop throwing away money on rent and start building equity.

I suggested that, since her son was single, living alone and without children maybe he didn’t actually need a house. That if he didn’t need one and since they are lousy investments (and here I gave her a few reasons why this is so), maybe he should consider some alternatives instead. Or at least run the numbers first.

This didn’t sit well and it was a short conversation. It ended when she said, “Well, he’d be better off buying a house than a clapped-out Camaro!”” LOL

ECB confronts a cold reality: companies are cashing in on inflation [Reuters] – “Data articulated in more than two dozen slides presented to the 26 policymakers showed that company profit margins have been increasing rather than shrinking, as might be expected when input costs rise so sharply, the sources told Reuters.” Hmmmm…

A wonderful talk given by former NFL head coach Tony Dungy about the difference between significance and success:

See you next week!

Quitting is underrated

Why Quitting is Underrated [Annie Duke] – “This is the issue with grit. It can get you to stick to hard things that are worthwhile, but it can also get you to stick to hard things that are no longer worthwhile – like after your fibula snaps at mile eight. Throughout our lives, it turns out we are not very good listeners when the world tells us that we should stop.”

Today’s 5-year-olds will likely live to 100. What will their lives be like? [National Geographic] – “According to demographers, today’s five-year-olds have a better chance than ever of living to be centenarians, and by 2050 it’ll likely be the norm for newborns in wealthier nations, such as the United States, Europe, or parts of Asia. That longevity means Peggy, and others of her generation, will live lives that are not just longer, but fundamentally different than the lives of their parents and grandparents.”

J.D. sent this first one along – The Cost Of Retirement Around The World, Mapped [Digg] – “Using Numbeo’s cost of living data, NetCredit broke down how far an American savings account, in USD, would take you around the world in terms of retirement. Their analysis factored in an average retirement age of 61 and life expectancy of 76.15 years to calculate what retiring comfortably meant.”

Cheat On Your Bank-It’s Not Your Girlfriend

No one likes to be cheated on but is it ok to cheat on your bank.

Check out what we have for you this week Plutus Family!

Cheat On Your Bank-It’s Not Your Girlfriend. [Bitches Get Riches] — “When it comes to banks, I am a proud philanderer. Practically a libertine! A player! I keep money here, I keep money there… it all depends on what’s most useful and effective for both my long- and short-term money goals. Here’s where I keep my money and why.” (Submitted by J. Money.)

Episode 24: Grants for Autistic Family members with Sheletta Brundridge. [Mom Autism Money] —”You can use this money to fund therapy and healthcare needs, on top of everyday needs like weighted blankets, trampolines, fences, and home security systems. We’ll talk about how to find grants, how to write a successful application essay, and how to avoid scams as you conduct your search.” (Submitted by Tarsha.)

Trust Where You Are. [Millennial Money]— “Remember, this is not a race. This is about building a life you love on your own terms and in your own way. There is no set path. Only your path. All progress is progress.” (Submitted by J. Money.)