A time for work and play - prepare for both!
Mike Hofer
10/4/20267 min read
The Final Out
Emotional alert for anyone who believes “there is no crying in baseball.” Sorry, Tom Hanks. There is.
This week, I watched Justin Verlander’s final Major League Baseball out about as many times as I have watched Star Wars: A New Hope. That is a lot.
If you have not seen it, watch the clip. His daughter runs to the pitcher’s mound. He tells her, “I love you.” She appears to ask why he is crying, and he answers, “Because I am happy.” It is a short exchange, but it says a lot about work, family, sacrifice, and what success is supposed to make possible.
Most parents can relate. We work hard, make sacrifices, and try to give our children what they need to succeed. We are not perfect. I have yet to meet the parent who received the instruction manual, but we keep trying to leave things a little better than we found them.
The public moment made me think less about the Verlander family’s finances and more about a question every family faces: How much do we give today, how much do we save for later, and how do we keep money from becoming the point of the whole exercise?
One of my favorite ideas is often credited to Warren Buffett and I paraphrase:
“Give your children enough so they can do anything, but not so much that they can do nothing.”
Every Choice Has a Cost
Life is full of trade-offs. Athletes trade time and comfort for performance. The rest of us do much the same in our careers, although fewer people ask us for autographs at the grocery store. We work, learn, move, stretch, and occasionally eat dinner over a keyboard because we hope today’s effort will create better choices tomorrow.
Early in our careers, many of us run a little out of balance. We work longer, move faster, and sometimes trade health for the hope of wealth. Then we get older and begin asking the reverse question: How much wealth would I trade to get some health back?
I think about future choices too. Someday, I hope my children have children so I become a grandparent. I also hope my wife and I keep traveling, including to places that are exclusive not because they are expensive, but because most people never think to go there. Time with my wife will be wonderful. Time with my kids and grandchildren will be wonderful. Unfortunately, my calendar has never learned how to put two wonderful things in the same hour. Choices will still be required.
That is where money enters the story. Money is not the final score. Its value is in the choices it can create: time with family, freedom to leave a bad situation, the ability to help someone, or the opportunity to see more of life. Investing is one way we sacrifice a little today to create those choices later. Plant now, harvest later, but do not spend your entire life in either season.
How to Begin Without Sharing Your Bank Statement at Dinner
Talking about money can feel uncomfortable, especially with friends and family. I do not recommend announcing your salary, savings balance, and retirement account total before the appetizers arrive. Some things can stay private.
However, we can talk about financial principles. Whether someone earns $40,000, $120,000, or more than $400,000 a year, many of the same basics apply: spend less than you earn, protect yourself from emergencies, use tax-advantaged accounts when appropriate, diversify, and start before you feel completely ready.
A Few Questions That Can Start a Useful Conversation
You do not need to ask for anyone’s net worth. Try questions that invite experience instead of numbers:
“What do you wish you had started doing earlier?”
“How do you invest for long-term goals?”
“Who has helped you make financial decisions?”
(discussing with kids) “What are you willing to give up today for something you want later?”
(discussing with kids) “When you spend money now, what future choice might you be giving up?”
A Simple Order for Saving and Investing
Build an emergency fund with roughly three to six months of essential expenses.
Contribute enough to capture the full employer retirement match. Please do not leave free matching dollars sitting lonely on the table.
Pay down high-interest debt.
Use tax-advantaged accounts that fit your situation, such as a 401(k), Roth IRA, or HSA.
Invest consistently in diversified, low-cost funds.
Save for education or other long-term goals, including a 529 when appropriate.
Add a taxable brokerage account when it supports your plan.
Consider a side income so every financial egg is not sitting in one employment basket.
Boring Can Be Beautiful - when it relates to investing
Timing the market is very difficult.
If an investment sounds too good to be true, it usually has excellent marketing.
“It is different this time” are five words that deserve careful attention.
Broad, diversified markets have historically recovered from major declines, but individual companies can fail completely.
If you enjoy choosing individual stocks, consider doing it only with money you can afford to leave invested or lose. I think of that as entertainment money wearing a business suit. I have learned that just when I am certain a stock should rise, the market finds a creative new way to remind me that I am not in charge.
A “boring” investment might be a diversified, low-cost index fund held for many years. Boring does not mean risk-free. It means the plan is based less on excitement and more on patience, consistency, appropriate accounts, and a time horizon long enough to let compounding do some work.
Historically, broad U.S. stock-market indexes have recovered from major declines, although some recoveries have taken years. Past performance does not guarantee future results, and the experience of a diversified index is very different from the experience of owning one company that goes out of business.
What Market Recoveries Have Looked Like
Broad U.S. stock-market indexes have historically recovered from major declines, but the ride has rarely been smooth. The time required to break even has varied widely depending on the market, the measurement method, and the severity of the decline.
Historical Market Events
The Great Depression (1929)
Peak-to-trough decline ~86%
Approximate time to Break Even ~25 years (or ~4–5 years if accounting for deflated prices and reinvested dividends)
The Dot-Com Crash (2000)
Peak-to-trough decline ~49%
Approximate time to Break Even ~7 years
The Great Recession (2008)
Peak-to-trough decline~57%
Approximate time to Break Even ~5.5 years
The COVID-19 Crash (2020)
Peak-to-trough decline ~34%
Approximate time to Break Even ~5 months
Note: Recovery figures depend on the index, whether dividends are reinvested, whether inflation is considered, and the dates used. The numbers are a historical illustration not a promise that every investment will recover on the same schedule.
That said, there has never been a time in history that the stock market has not recovered and set new all time highs. Let this sink in, there has never been a time that the USA stock market has not recovered from a downturn or crash. In essence, it is consistently going up over time.
History does tend to repeat itself, so you when you hear “it’s different this time”, it likely is not.
This is also really positive too, because every USA stock market “crash” has been a massive recovering and the stock market averages have rebounded and gone higher.
That said, many companies have also gone out of business and their stock is worthless. In my experience: Enron, Lehman Brothers, and WorldCom are reminders that this 100% recovery rate applies to broad, diversified indices, not single ticker symbols.
Just when you think you have a great idea on why a stock should go up a lot. Something changes, so if you feel the urge and enjoyment of picking stocks, do it with money you don’t need for some time, some call it play with the “houses” money. Essentially, treat it as gambling and only play with what you can lose or play with earnings from other investments
What is a “boring” investment. These still have risk, but low cost index funds proved over time that they are wise investments for the long haul, which means you start early, have some patience, stay consistent with investing in the ups and downs of the market, and invest into right accounts and funds.
Putting the Principles to Work
Some places to open your investing accounts:
Charles Schwab | A modern approach to investing & retirement | Charles Schwab
Reputable brokerage firms such as Fidelity and Charles Schwab provide individual, retirement, and education accounts. The company matters, but the habits matter more: understand the fees, know what you own, diversify, and automate contributions when you can.
VTI: a broad U.S. stock-market ETF.
VOO: an ETF that tracks the S&P 500.
QQQM: a more technology-heavy ETF with greater concentration and volatility.
SCHD: an ETF focused on dividend-paying U.S. companies.
SPAXX: a money-market fund intended more for cash management than long-term stock-market growth.
Your mix should reflect your goals, time horizon, and ability to tolerate losses, not simply your age. Younger investors often have more time to recover from market declines, but every investor still needs a plan they can follow when the market gets noisy.
Start Small, Start Early, and Make It Automatic
Compounding can feel almost magical, although it is really math wearing a cape. The examples below use a hypothetical 10% annual return for illustration. Actual investment returns will vary, and a lower return would produce a lower ending value.
Investing $150 per month for 18 years at a hypothetical 10% annual return could grow to roughly $90,000.
Investing $400 per month for 35 years at the same hypothetical rate could grow to roughly $1.5 million; over 40 years, roughly $2.5 million.
The power of compounding is starkly demonstrated by this example....a penny doubled every day for 30 days reaches more than $5 million dollars.
If you do not have 40 years ahead of you, do not get discouraged. Start with what you have, where you are. The best time may have been earlier; the next-best time is now.
Remember What the Money Is For
I have focused here on the investing hand. Saving and spending belong on the other hand and sometimes making a decision means choosing one hand and letting the other one complain for a while.
We do not live to work; we work to live. Still, a rich life usually requires periods of focus, patience, and sacrifice. The right path may be hard, but hard and worthwhile frequently travel together.
You cannot live in perpetual harvest mode. You also should not spend every season planting and never enjoy the crop.
Do the little things. Make them automatic. Keep learning. Common sense becomes valuable only when it becomes common practice.
Action absorbs anxiety. If you do nothing, nothing has a remarkable record of producing nothing. Start somewhere, adjust as you learn, and keep moving.
The point of investing is not simply to finish with the largest number. It is to create choices, and then have the wisdom to use those choices well. Plant for the future, but remember why you planted. Someday, the final out will come. I hope we reach it grateful for both the work and the people who made the work worthwhile
This entire website, opinions, and all content are for your entertainment purposes only.