The “Boxy But Good” of Finance

John D. Perrings

BUY VOLVOS. THEY’RE BOXY BUT THEY’RE GOOD.

My job is kind of like Dudley Moore’s when he made this Volvo ad in the movie “Crazy People.”

So many people are in very weak cash positions because of their tunnel-vision on getting a high rate of return.

We are taught and, in fact, incentivized to keep very little cash. Holding on to cash seems like a bad financial move because of today’s low interest rates and tomorrow’s inflation. But if you could earn a respectable rate of return on your cash, how would that change your behavior?

Four problem areas I see with today’s typical financial advice, regarding *real* savings, aka cash:

  • Not having any savings at all…
  • Saving money but keeping it in a place where it isn’t earning anything
  • Conflating investing with saving and keeping “savings” in a place where it can’t accessed without jumping through significant hoops and/or paying penalties to get it — e.g. retirement “savings” plans, primary residence home equity
  • Conflating liquidity with certainty and keeping “savings” in a place where it’s exposed to risk and market timing. Real financial emergencies often coincide with market corrections. Liquidating investments at a loss during an emergency violates the #1 rule of investing: Buy low, sell high. — e.g. retirement ‘savings” plans, ETFs, dividend stocks, bond funds

I’m not saying don’t own any of the above investments. I’m just saying they’re not good places to store cash….

A viable, often-dismissed alternative is dividend-paying whole life insurance. Guaranteed, liquid, and earns very respectable tax-deferred growth (up to 40x that of a bank).

Circling back to the movie “Crazy People”: the plot is that so-called crazy people write these ultra-honest ads — that then actually work — because their honest. It begs the question: who are the “crazy people” in this movie?

The rest of the copy in the ad:

“We know they’re not sexy. This is not a smart time to be sexy anyway, with so many new diseases around. Be safe instead of sexy.”

LOL – does this lampooning not also apply to the financial industry with all the new, fancy ways to get a “high rate of return” that nobody understands but blindly jumps in on?

The ad restated for my world: SAVE MONEY. IT’S BORING BUT IT’S GOOD.

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About the Author

My mission is to teach people how to strategically accumulate capital in a way that makes all of their other financial activities perform better, and with less risk.

What are you doing, today, to ensure that you are in a position to take advantage of change, rather than react to it?

John D. Perrings