This is Part 2 of an interview with Jonathan Clements. You can read Part 1 here.
JLP: Is it difficult to come up with material for your columns?
JC: As you might imagine, the recurring nightmare is that the well of ideas runs dry or that Iâ€™ll hit some mental block and I just canâ€™t turn the material I have into a reasonably intelligible piece of copy. But so farâ€”touch woodâ€”it hasnâ€™t happened.
In a sense, my greatest value lies in providing readers with the reassurance that, yes, saving diligently and diversifying with index funds really is the best long-run strategy.
At the same time, I continually push myself to learn more about areas of finance where my knowledge is sketchy. For instance, in recent years, I have spent considerable time reading up about annuities, 529 plans, happiness research and intra-family finance. Every time I tackle a new topic, itâ€™s a huge amount of work. It isnâ€™t simply that I need to understand the issues involved. Rather, I need to get to the point where I not only understand the topic, but also understand enough to have a point of view. Thatâ€™s the goal of a columnist: Facts arenâ€™t enough, you also have to have an opinion.
JLP: Whatâ€™s the one thing you think all young people should know when it comes to personal finance?
JC: If youâ€™re in your 20s and you havenâ€™t yet learned how to delay gratification, your life is likely to be a constant financial struggle. Saving money on a regular basis is the key to financial success. Itâ€™s so simpleâ€”and yet so few people manage it.
JLP: Whatâ€™s your favorite personal finance book?
JC: I would vote for â€œWinning the Loserâ€™s Gameâ€ by Charles Ellis. It packs more wisdom into 142 pages than any other book I know. Charleyâ€™s book was originally called â€œInvestment Policy.â€ At that juncture, it was just 81 pages and, I thought, even better. But the current version is pretty darn good.
JLP: Which of your columns receives the greatest amount of feedback?
JC: I probably get the greatest feedback in response to columns where I write about my own finances. I think people are comforted to know that I do all the things I advocateâ€”I donâ€™t live lavishly, I save heaps of money every month, I avoid debt, I have the vast majority of my portfolio in index funds, I am striving to raising financially responsible children.
JLP: Finally, whatâ€™s the most important thing you have learned about since you started writing about personal finance?
JC: Financial success has very little to do with your ability to pick winning investments. Instead, what matters is stuff people never think about. Go back to question no. 7. There, I mentioned that the ability to delay gratification is critically important. Similarly, a lot depends on maintaining steady employment, staying in good health, avoiding divorce and whether you have children.
Consider this last issue. I have two children, and I am not swapping them for all the money in the world. Still, you have to be realistic: If you have kids, itâ€™s much harder to retire. I regularly receive emails from people who boast that they retired in their 40s. What do these folks have in common? No, they arenâ€™t brilliant investors and, no, they didnâ€™t luck out by signing on with some successful start-up company. Instead, the defining characteristic of these folks is that they never had children.
JLP: I want to thank Jonathan for taking the time to do this interview.