Jill Schlesinger on Why Smart People Make Dumb Money Moves

Image of Jill Sclesinger and her book cover The Dumb Things Smart People Do With Their Money

We talk with CBS business analyst Jill Schlesinger about smart people making dumb money moves and how to avoid these traps – if you’re smart enough.

On The BIGG Success Show , we talk with Jill Schlesinger. Jill is an Emmy-nominated and Gracie Award Winning Business Analyst for CBS News, a weekly guest on NPR’s Here and Now, and a Certified Financial Planner. She writes a weekly syndicated column, Jill on Money, and serves as the host of the nationally syndicated radio show and podcast, Jill on Money.

She joins us to talk about her new book, The Dumb Things Smart People Do with Their Money: Thirteen Ways to Right Your Financial Wrongs*. Here’s a summary of that discussion.

What’s wrong with trying to time the market?

Jill says it’s a classic mistake. Market timing requires two perfect decisions. First, you decide when to sell. Perhaps the market is at an all-time high. But how do you figure out when you’re going to get back in? It’s nearly impossible. And very few people can consistently time the market long-term.

She adds that Warren Buffett, in an annual letter a couple years ago, told his heirs to invest 90% of their inheritance in a S&P 500 index fund, put 10% in bonds, and go to sleep at night.

Jill tells us about a time when she tried to time the market. She became an instant celebrity. Then she flamed out in public. Simply click the PLAY button to hear the full story.

How is investing like “defensive driving”?

When her dad taught her to drive, he told her that – even though she was smart and had great hand-eye coordination – she needed to be defensive.

She thinks the same thing applies to investing. Set a reasonable financial goal. See how much risk it will take to reach that goal. Don’t take on risk because it’s fun. And don’t try to reach for the stars.

She adds: Of course, you can’t take too little risk or you risk not getting yourself where you need to go. Create a portfolio that will see you through the ups-and-downs of the markets.

Is investing a game? Jill doesn’t think so. Hear why by clicking the PLAY button above.

What should a couple do if one is an adventurous investor and one isn’t?

Jill suggests figuring out what you need to do to get where you need to go. Take the least amount of risk possible.

Then, set up a fun money account. The adventurous partner can go nuts with it. For most people, this account shouldn’t be more than 5% of your total invested assets. So if you have a $1,000,000 portfolio, you have $50,000 to play with. If you can accept it may be worth $0 at the end of the year, then do it. Just don’t put your entire financial plan at risk.

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Should you buy your home or rent?

Jill says she did a TV segment last week about this subject. The emails flooded in from young people saying they feel so much pressure because their parents are really pushing them to buy.

Homeownership has become the cornerstone of our financial life. Jill says she’s not anti-ownership. Rather, she’s opposed to making a knee-jerk decision.

So if you’re considering buying a house, she advises you to run the numbers. Are you better off buying or renting at this point?

Jill says renting isn’t throwing money away. It’s actually buying something you don’t get if you buy a house. Listen to this episode to find out what it is. Simply click on the PLAY button above.

When it comes to retirement, what’s a dumb thing smart people do?

Jill asked a number of CFPs (Certified Financial Planners) and CPAs (Certified Public Accountants) about retirement. Saving money for retirement wasn’t an issue among their clients. She says, to a person, they all agreed that the biggest mistake people make is spending too much early in their retirement.

She notes – it’s true you don’t know how long you’re going to live. While some use this as a reason to spend, you don’t want to risk running out of money.

She suggests being thoughtful about your retirement. What do you want your life to will look like? How will you spend your days? What will you do after you retire?

If you don’t know what you want to do after you retire, Jill has a suggestion. Click the PLAY button above to find out what it is.

We highly recommend Jill’s new book, The Dumb Things Smart People Do with Their Money: Thirteen Ways to Right Your Financial Wrongs.

Here’s to your BIGG success!

George “The Professor” & Mary-Lynn
signatures: George & Mary-Lynn
Co-Founders, BIGG Success

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