I don’t do New Year’s Resolutions but I decided to make this my ongoing resolution for the foreseeable future: Make Fewer Things Matter. This dawned on me when I learned how to cut a pineapple.
I grew up in a northern climate. Because transportation wasn’t very good back then, pineapples were a rare treat. Whenever I saw them as a kid, they were cut by the purveyors into this delicate spiral shape. I always had two impressions of pineapples: (a) they were expensive; and (b) they were difficult to cut.
I saw pineapples around last Christmas in a grocery store with a big sign: $2. I thought I’d spring for a treat for only $2. There goes my first wrong impression from childhood. Pineapples aren’t that expensive.
The next step was to learn how to cut it. Naturally, I went to YouTube and I watched the first video from the search.
To my big surprise, it was amazingly easy to cut a pineapple.
How come I got the impression they’re difficult to cut? YouTube’s autoplay feature served up the next video:
Now a light bulb went off. It’s not difficult to cut a pineapple. It’s only difficult when you want to maximize the amount of flesh. If you don’t care about maximizing the result, you can enjoy pineapples much more easily.
The lesson from cutting the pineapple connected the dots in so many issues in personal finance and investing. I came up with this motto: Make Fewer Things Matter.
The first emphasis in Make Fewer Things Matter is “make.” Things don’t stop mattering on their own. You don’t just ignore them. You do something to make them not matter. The next emphasis is “fewer.” Some things will still matter, but you reduce the number of them. Make a big list of things you think are important. Look at each item and look for ways to make it not matter. After you go through everything and you try to make them not matter, you’re left with a few things that truly matter.
Warren Buffett instructed that trustees should invest 90% in S&P 500 and 10% in short-term government bonds for his wife. Is 90% in stocks a good asset allocation for people her age? And the S&P 500 has only large cap U.S. stocks? And short-term government bonds pay close to zero? Warren Buffett made it not matter how the money for his wife is invested.
While it’s hotly debated whether the 4% rule still holds in the current environment of high equity valuations and low bond yields, FIRE leaders make it not matter by keeping a positive cash flow.
Over at my post on Medicare IRMAA income brackets, people wanted to know where the income cutoff would be for next year. Because inflation used in the calculation hasn’t happened yet, it’s impossible to make an accurate projection within $2,000. But it’s dead simple to make it within $10,000. If you don’t mind leaving a larger margin of error, precisely what the number will be doesn’t matter.
I stopped updating my post on Social Security Cost of Living Adjustment (COLA) because the story is the same every year. Seniors complain COLA is too low. COLA is low because inflation is low. The most recent COLA was 1.3%. Legislators proposed making it 3% for one year. The average Social Security benefit is $1,500/month. 3% versus 1.3% would increase it by $25/month. Rather than waiting for new legislation, which didn’t pass anyway, you can make it not matter by having your retirement budget not depend on $25/month one way or the other.
A reader asked me about the HSA rollover. Because you can only do one rollover every rolling 12 months, and the rollover takes some time to complete, the question was whether the 12-month clock for the next rollover starts on the day the money comes out of the old account or on the day it goes into the new account. While there’s a technically correct answer, you can make it not matter by spacing your rollovers every 15 months. That way you’re in the clear no matter how the 12 months are counted.
Another reader asked me whether the RMD is required when the surviving spouse takes over an IRA in the year after the owner’s death. Again there’s a technically correct answer but you can make it not matter by simply taking the RMD even if it isn’t strictly necessary. At most, you take the RMD one year too soon. Delaying it by one year doesn’t matter that much anyway.
If you read personal finance and investing articles, it would seem at least half of investing is about taxes: whether you should contribute to Traditional or Roth accounts, which accounts you should put money into first after getting the employer match, which investments should be held in which accounts, which accounts you should withdraw from first after you retire, whether and how much to convert to Roth, and on and on. But if you ask me “How important is tax strategy for building wealth?” I must agree with the Bogleheads it’s not that important. While a good tax strategy is helpful, whether you become wealthy doesn’t depend on it. You can still make it work if all the tax-advantaged accounts go away and dividends and capital gains are taxed as regular income.
If you look for ways to make things not matter, you’ll see a way out in almost everything.
Ward Off FOMO and Sales Pitches
Making fewer things matter helps you zero in on things that really matter. It also helps you ward off FOMO (Fear of Missing Out) and sales pitches. FOMO and sales pitches always try to grab your attention by saying you’re making a mistake. When you don’t mind making a mistake because you made fewer things matter, the sales pitches slide right off. It’s like someone telling me I’m cutting my pineapple wrong.
“You should invest in real estate.” It’s probably a good way to make money but I’ll let others do it.
“You should buy stocks of Tesla, Nikola, NIO, and the electric vehicle industry.” Because they’re in my total stock market index fund, I’ll benefit already if they become successful.
“You should put some money in cryptocurrencies.” Maybe they’re onto something. I’ll let others have at it.
“Look at this. It’s tax-free.” I don’t mind paying more taxes.
You’ve made it when you can afford all the “mistakes.”
Say No To Management Fees
If you are paying an advisor a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice.
Frugal Professor says
On pineapples: I eat the core because I loathe waste. I haven’t died yet.
My inlaws raise chickens and give them food scraps. They accumulate these scraps in a bowl before distributing them every night. It’s hilarious because I’ll frequently scavenge from the chicken scrap bowl because there’s a lot of good food on it.
On the other stuff: I largely agree, but I think taxes can make a big difference. It’s not rocket science, but I think optimizing on this dimension compounds over a many-decade investing horizon into something non-trivial.
Harry Sit says
It’s a progression. If taxes matter now, the goal is to make them not matter at some point. You build robustness when fewer things will knock you off course.
I know this was not really about pineapple but there really is a better way to cut one.
I’d need to develop a serious pineapple addiction before I would spend $20 on a dedicated slicing tool that adds to the clutter in my kitchen 😉
One of your best posts yet.
When you’ve set yourself up to win the game, you can afford to not be efficient in every single decision in life.
Looks like Taylor Larimore endorsed your article over at bogleheads forum. Pretty cool Finance Buff!
Wow, it sounds that I’ve had this epiphany for quite a time!
However, thanks to reading PF articles or whatnot financial ‘porn’, I did sometimes question if I’m wrong to think differently… Then I came across different articles that support my thinking (the latest were about the ‘when/if to convert to Roth IRA’ myths) and concluded that KISS strategy in thinking is helpful for a lot of people who are fine not to seek Alpha in their lives on the consistent basis. I find it exhausting after a while.
Accidentally Retired says
One of my favorite articles of the year. Love the pineapple analogy. Simplicity is always better. It’s just a good reminder to not over complicate things. The simple approach is often the best approach.
Paul Collinson says
Thanks, Harry. A profound and timely posting. Much appreciated.
Have enough that you have margin to truly enjoying your non- working time including the harvest years (retirement).
Reminds me of Mikaela ‘s method. She trained hard enough during her training time that she could relax on race day and not need to get 99% out of every turn, but instead just a reasonable amount, and still come out ahead.
agree with the other posts – this was a fun read and rings true in so many ways… .I just spend too many hours on a spreadsheet figuring out if filling up income to 80k with capital gains or Trad IRA withdrawals is more beneficial for tax purposes!! I know I obsess (at times), but this read reminded me … a few dollar savings here or there probably don’t matter in the big scheme of things…. the pineapple still tastes good no matter how you cut it !
Curious, have you altered any of your strategies from this post:
Harry Sit says
I only made minor tweaks to my withdrawal strategy, which I added to that post as updates within the context.
Nice! I guess you should eventually do a post on MYGA’s. I’m assuming the reason you used them in IRA but not taxable is because your MYGA maturity dates aren’t after age 59.5.
Your perspective on “good enough” has given me much to reflect on to apply to various areas.
Excellent advice. For me the pineapple cutting secret was using a serrated bread knife. Cut off the ends, stand it on one end to slice off the peel in strips and turn it upside down to slice off any bits you missed. Cut a straight slice down both sides of the core leaving a rectangle, then lay jt down and slice off both sides of the core. Discard the square core. Lay down the semicircle halves and slice segments the long way to leave spears. Eat as spears or cube into whatever size you want. It’s much easier and less messy than carefully slicing individual triangles off the peel. But the serrated knife was the game changer.