Tuesday, March 31, 2015

Is money a burden?

I think many would say that it depends. For many it depends on how much you have. Typical belief is that if you are a billionaire, it can be a burden, and if you are poor, it is a blessing.

But how it is for those of us, who are stuck in the middle? How is it for those of us, who patiently save for their retirement?

Saving is a burden

The questions came to me after my last conversation with my mother about her investment portfolio. Over the last few years I managed to steer her portfolio towards cheap and efficient investing. That is why it surprised me to find there two funds of funds with an average expense ratio over 3% during my last portfolio review. How did they get there?

I remember the answer included "you were traveling", "I got some spare money" and "the bank staff advised". And then it hit me - making savings decisions is a burden. We want to make decision fast, without much thought and forget (and earn high returns with no risk).

What can we do?

My intuitive answer is automation. The less decisions you have to make every time extra money comes in, the better.

My second answer is education. My mother, like many other people, do delegate understanding of financial topics and there is nothing anyone can do about it. The only way to help is to explain how to identify a good advice.

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