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 I’ll hit some mental block and I just can’t turn the material I have into a reasonably intelligible piece of copy. But so far—touch wood—it hasn’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, it’s a huge amount of work. It isn’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. That’s the goal of a columnist: Facts aren’t enough, you also have to have an opinion.
JLP: What’s the one thing you think all young people should know when it comes to personal finance?
JC: If you’re in your 20s and you haven’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. It’s so simple—and yet so few people manage it.
JLP: What’s your favorite personal finance book?
JC: I would vote for “Winning the Loser’s Game” by Charles Ellis. It packs more wisdom into 142 pages than any other book I know. Charley’s book was originally called “Investment Policy.” 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 advocate—I don’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, what’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, it’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 aren’t brilliant investors and, no, they didn’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.