| Bite-sized money insights across a broad range of topics—from budgeting, taxes, buying a car or home, to investing, equity comp, crypto and more. |
|
| | Here's the Gist today Happy Tuesday Origin Member. Don't peek ahead — today's trivia is about purchasing power. Back in 1995, when Gen Z's parents were buying homes, the average mortgage consumed about 22% of their gross monthly income. Can you guess what that percentage is today? A. 31% B. 38% C. 40% Here are the topics for today: - Move Over Mint
- The Paradox of Choice With Investing
- Soft Landing, Hard Landing — Try No Landing
- Gen Z Is 'More' Successful Than Their Parents, With Less to Show For It
|
|
|
| The day is almost here…Mint's shutdown. As a refresher, in October, Intuit announced that it would shut down its flagship budgeting app, Mint, in 2024. The official shutdown date? March 23 aka in 4 days. So, what does this mean for you? If you use Mint, you'll need to find a new budgeting app, and we've got a great alternative for you. Yes, it's Origin. Hear us out. We've got a ton of new spending features, and we're excited to share them with you. 3 ways to break down your spending: - Custom categories: It's important to organize your money in a way that makes sense for you — a solution that suits your needs is one you're far more likely to use consistently. So, consider adding custom categories to help you break down your spending, your way. Some popular ones: Coffee shops, pet care, and home renovation.
- Custom date ranges: Break down your spending when you sort or filter by custom date ranges. Maybe you need to see what you spent in March specifically, or maybe you want to check how much you spent last weekend, whatever the need, this flexibility allows you deeper insights into your spending patterns over specific periods of time.
- CSV export. Some folks want the ability to analyze their spending data on their own. If that's you, you can easily export your transactions from Origin to a CSV, even applying filters and custom date ranges.
Don't let Mint's shutdown be the reason you fall out of rhythm financially. Now is the time to make the transition — keep budgeting, saving, and managing your money with an even better option.
Ready to get started? Explore Origin here.
|
|
|
| The Paradox of Choice With Investing |
More is less, and less is more. This is the theory put forth by the book "The Paradox of Choice", published in 2004. But it isn't just a book or a theory, it's an observable reality in many realms of decision-making, one that's been studied and validated extensively. Researchers and consumers alike find quite often that those presented with more options are less likely to make a choice at all, and more likely to be dissatisfied with it if they do. This is analysis paralysis and fear of missing out at work. This is a valuable insight we can apply to all areas of life, but it's more costly in some than others — namely, investing. How choice overload can weigh down your portfolio Inaction: Being smart, thinking things through, and weighing your options are all good things, but anything in excess can become harmful. When we allow ourselves to survey too many options, it's easy to intellectualize investing, but this often leads to inaction and making poorer conclusions that take longer to come to.
Over-diversification: The idea of diversification has been drilled into our heads in recent years, and while it is important, taking it too far can also lead to "diworsification", as the late Charlie Munger would call it. You don't have to own every 'good' stock, in fact, it's impossible.
Time lost: If investors put off getting started because they want to formulate the most perfect investing strategy and analyze every stock, mutual fund, ETF, or fixed-income asset available to them, that often ends up being time wasted, and compound interest lost. Solutions to this — simplification Zoom out; go broad: Instead of trying to add stocks and funds from various sectors to your portfolio, realize that, more often than not, a simplistic broad market index fund will also do the trick, and at a lower cost/risk level too.
Set up a sustainable allocation: It can certainly be tempting to go for a more risky allocation, even as you enter your older years. But, it's not as sustainable from a risk perspective and may entice you into analysis paralysis more often. If you want a portfolio you don't have to micromanage or worry with regular rebalancing, choosing an equity-to-income ratio that's sustainable across your years is wisest.
Relegate your niche investments to a secondary portfolio: You can still engage in a little analysis, but just make sure it's secondary to your long-term, passive portfolio. Allocate enough of your investing money to your long-term, simple retirement portfolio first, and consider keeping a separate account for any extra play money you might have to invest in individual stocks and niche, active funds. | |
|
| Soft Landing, Hard Landing — Try No Landing |
The pandemic era of basement rates and abundant stimulus came to an abrupt end, and we then realized we had a problem. Inflation had gotten out of control, and as a result, the Fed acted swiftly to deliver a slew of rate hikes across 2022 and 2023. This rate of monetary tightening was unprecedented, and even less fervent hikes have been known to trigger a recession. So, rationally, most presumed that the U.S. economy was likely setting itself up for at least some degree of a downturn — it never happened. The current situation Calm conditions: Inflation has come down, but consumers have remained up according to most data. The IMF has upwardly revised its 2024 global growth outlook to +3.1% GDP, with +2.1% growth expected for the U.S. economy. Low-risk outlook: According to a December survey from the National Association for Business Economics, 76% of economists surveyed put the odds of a recession over the next 12 months below 50%. Resilient data: Unemployment remains low at 3.9%, consumer spending grew a little in January, economists expect continued resilience, and the Fed is sustaining a pause on rates for the moment, with consensus expectations awaiting a drop in Q2. So, no hard landing? We're not in any kind of "recession risk" moment right now. Inflation isn't perfect but has dwindled, the labor market is healthy, consumers are spending, and rates may be on the decline. The best way to describe our current situation is that we might have already pulled off a soft landing, or at least, the runway is in sight — pray for no crosswinds. Going forward, the biggest risks to landing this pandemic-era plane without incident come from the potential for an inflation rebound if rates are dropped too quickly. With an already resilient economy, a monetary policy that's too lax could have consequences. | |
|
| Gen Z Is 'More' Successful Than Their Parents, With Less to Show For It |
Using our traditional measures of success, Generation Z is actually doing better than their ancestors in many ways. They're more likely to have a degree, work full-time, have more women in the workforce earning more, and are often more knowledgeable about finances than their parents. And yet, Gen Z is also less likely to get married, have children, or own a home. The discrepancy lies in the affordability. The generational difference If Gen Z's parents built or bought their first home back in 1995, it would've cost them about $138,000, and with a 7.5% interest rate, that comes out to about $1,164 per month. With a median household income of $61,400 back then, their mortgage would've consumed about 22% of their gross monthly income. In 2024, those numbers are — $417,000 median sale price, about a 6.5% average rate, a $2,478 monthly payment, and about 40% of their gross monthly income. Elsewhere: The average cost of a new vehicle has also risen 152% to $45,000, health insurance premiums rose 121% to $8,435 per year, and we now also bear the burdens of wifi, phone plans, and more.
We can clearly see where this is headed. Inflation over time is a normal part of a healthy economy, but when incomes don't increase accordingly and it costs tens of thousands of dollars to qualify for those careers (student debt), younger generations won't be able to keep up.
|
|
|
| By the way 🏠 Yes, it's C. — about 40%. (Source: Math) 🏦 What to expect from this week's Fed meeting (Axios) 📱 Apple's AI endeavors may include a Google collab (TheVerge) 🏢 Most adults think a decline in unionization is a bad thing (Pew) |
|
|
| How did you like
today's newsletter? |
|
|
Advisory services are offered through Origin Advisory Services LLC ("Origin RIA"), a Registered Investment Adviser registered with the Securities and Exchange Commission and a wholly-owned subsidiary of Blend Financial Inc. DBA Origin Financial. Origin RIA's registration as a Registered Investment Adviser does not imply a certain level of skill or training. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions.
The Origin app is only available to U.S. based members. |
|
|
|
No comments:
Post a Comment