The Best Interest Blog
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Hello! I'm Jesse Cramer, the creator of The Best Interest. I started The Best Interest in 2018. It was started as a creative outlet, but it gained recognition for explaining complex personal finance ideas in simple terms. You can read articles on Money Basics, Behavioral economics, Investing, and Retirement.
The Best Interest Blog
4d ago
You might have heard Danny Kahneman died on March 27, at age 90. Today, we’ll discuss his best idea and why it’s so important to long-term investors.
Kahneman (and his late research partner Amos Tversky) revolutionized the understanding of human decision-making with groundbreaking work on cognitive biases and heuristics. Their research, particularly in prospect theory, has profoundly influenced fields ranging from economics to public policy. They won a Nobel Prize for their work.
Tversky (L) and Kahneman
What’s Prospect Theory?
Prospect theory, often called “loss aversion,” turned the world on ..read more
The Best Interest Blog
2w ago
All too often, I speak with current or future retirees who think along these lines:
“We don’t want to assume Social Security will be there for us. Let’s just focus on the assets in our control.”
“I know Social Security is there, but it’s so small. Let’s play it safe and ignore it for now.”
“Social Security is only $2000 monthly, whereas my IRA has $900K. Social Security is a drop in the bucket.”
These ideas are not only wrong but perilously so. To overlook Social Security is an unreasonably conservative retirement assumption.
In fact, when I reframe Social Security in a different light, peop ..read more
The Best Interest Blog
2w ago
There’s a growing problem in DIY investing. While passive investing is terrific (and a pillar of The Best Interest), there’s more to passive investing than meets the eye.
The problem I want to highlight today is the investor who thinks, “I’m all passive, therefore I’m all set.”
That’s risky thinking. Not all passive portfolios are built the same. While some genuinely reflect global investment markets, others are dangerously concentrated. Many investors are blissfully unaware of their investments’ concentrations and might not realize their mistakes until after a nasty streak of underperformance ..read more
The Best Interest Blog
3w ago
My friend’s daughter (~21 years old) just bought her first car. It was a big financial move, and she had lots of options.
Look for a used Honda? Lots of frugal experts would point in this direction.
New-but-reasonable? This is what I did. In May 2012, I bought a brand new 2012 Toyota Rav4. I’m still driving it today.
Go all out! There are places to be and people to impress…I want a cool car!
For better or worse, this young woman went with Option 3 and bought a 2024 Ford Bronco (for roughly ~$45,000). It’s a cool car (one of the most popular cars in America since the Bronco came back to life ..read more
The Best Interest Blog
1M ago
Kelly and I are expecting a baby in June, so we recently enrolled in a series of birthing classes. The curriculum is eye-opening, especially for an ignorant guy who’s never been forced to empathize with a pregnant woman before. Shame on me!
In Monday’s class, one quote caught my eye:
“You can’t control the waves, but you can learn to surf.”
Jon Kabat-Zinn**
**Kabat-Zinn, coincidentally, is the son-in-law of Howard Zinn – a big friend of The Best Interest. The elder Zinn famously wrote, “If you don’t know history, it’s as if you were born yesterday.” He didn’t intend for this to be an invest ..read more
The Best Interest Blog
1M ago
After a few real-life conversations and my running the math, I’ve decided that a “50/50” rule for college saving achieves the best of both worlds.
The rule is:
~50% of your college savings goals should be saved via a 529 plan.
The other ~50% should be saved via a taxable brokerage account.
Why is that the case? Let’s discuss what we do and don’t want from our college savings plan.
PS – if you want further background reading on 529 plans, here are some other useful articles…
529 Plans: A Complete Guide
The Important Details Behind 529-to-Roth Conversions
What We Do and Don’t Want from Coll ..read more
The Best Interest Blog
1M ago
I didn’t know how to pronounce Les Miserables until 2017. Now I know all the songs. My wife bought us tickets to the show for my birthday this year. What a triumphant masterpiece! 99% of children dislike art museums, musicals, and reading the news. But many adults find beauty or intrigue in those same ideas.
One day more!
A similar “boring-to-not-boring” transition happens in personal finance. The problem is that the fun doesn’t last. We had fun getting our personal finances under control. We got hooked on that fun. It lasted for months or even a few years. Money went from a scary unknown to a ..read more
The Best Interest Blog
1M ago
After I wrote a simple primer on Roth conversions a couple weeks ago, several readers reached out asking for more details. A few specific snippets of those questions include:
I see many articles like this about lowering your tax bracket when doing Roth conversions. But, what about the amount of money that can be made by not doing Roth conversions and letting the taxable [sic: qualified, or not taxable] money grow in an account like an IRA or 401K? Is that math too hard to explain?
Sure your RMDs will be higher and you will be taxed more, but how much more money will you make by letting that t ..read more
The Best Interest Blog
2M ago
I don’t usually dive into odd niche topics like this, but I just spent 12 hours car shopping over the weekend. That’s a lot of test drives and awkward conversations with over-enthusiastic salespeople. Sorry, Clayton, I can’t picture myself driving this car off the lot today…why do you ask?
Long story short, I’ve compared tons of cars recently. Hybrids, as you might know, are always more expensive than their all-gas counterparts. But…aren’t hybrids cheaper to operate? Which means…could they save us money in the long run?! This got my finance brain whirring to life.
I wrote an article in 2020 a ..read more
The Best Interest Blog
2M ago
I grew up east of Rochester, in Upstate New York’s apple country. New York produces ~30 million bushels of apples per year, second among the 50 states (behind Washington).
But apples start to rot 5-7 days after they’re picked. So how does New York harvest 30 million bushels of apples in September and October without eating 30 million bushels over the following week?
The answer is cold storage.
Apples can be stored near 35°F for 6-12 months without decay. We gain an entire year of “freshness!” But first, we must put forth an effort of time, resources, and money to build that cold storage infr ..read more