In the age of blogging, vlogging, podcasts, and TikTok, bite-sized personal finance instruction is abundant. And if you have the time and discernment to sift through the rafts of schtick, platitudes, and outright deception, there is some helpful insight worthy of your consideration.

But. (You felt a “but” coming there, didn’t you?)

But, where even some of the best insight fails is not in what it says, but in what it doesn’t. Yes, simplification is good and helpful—I believe it—but the problem we often face today is in oversimplification, especially in the form of dualism.

We'll discuss the dangers of dualism and bring you up to speed on the market's "big week."

Oh, and don't forget that it's actually an hour later this morning!

In this FLiP weekly you'll find:

• Financial LIFE Planning:
  • The Danger Of Dualism
• Quote O' The Week:
  • Lisa Kemmerer
• Weekly Market Update:
  • Three Letters: SVB

Financial LIFE Planning

The Danger Of Dualism

My friend, Carl Richards, introduced me to an amazing quote from Oliver Wendell Holmes that explains oversimplification best:

“For the simplicity on this side of complexity, I wouldn't give you a fig. But for the simplicity on the other side of complexity, for that I would give you anything I have.”

Now, I don’t know that I’d give anything I have, but you get the idea. And Carl’s drawing (used with permission), says it beautifully:

One of the chief methods of oversimplification is seen in our addiction to duality. This or that. One or the other. My way or the highway. Or, in the words of the Clash, “Should I stay or should I go now?”

• Should I budget or not?
• Should I pay off my credit card debt or save up emergency reserves?
• Should I buy this expensive insurance policy or not?
• Should I save in my tax-deductible 401(k) or my after-tax Roth IRA?
• Should I get a divorce or stay in a miserable marriage?
• Should I stay in a dead-end job or should I quit?

The definitive duality inherent in each of these questions can be hopelessly limiting—and the starkness of the options too often leads to inaction or suboptimal outcomes. Let’s look at the last duality listed above that anyone gainfully employed will face at some point:

Should I stay in a dead-end job or should I quit?

The natural response that most people have is, “I don’t have a choice! I need an income!” But are these really the only two options? A short brainstorming session reveals a “choice wheel” that includes far more options than the duality above:

Do you see? This decision isn’t a duality at all. The more options we have, the more freedom we feel, and this leads to better decision making. We could apply an approach like this to any decision in personal finance, or life, for that matter.

• Financial advisor note: I discussed using the choice wheel with clients and several other techniques in this Kitces.com post discussing “a coach approach” to financial planning.

But there’s one more thing I want you to consider as it relates to duality:

How you frame the question or options will inform your decision-making process. The truth is that several of the dualities listed above aren’t so much questions as they are “quegesstions”—suggestions disguised as questions.

Yes, even how you frame a question is important. Of course, no one gets excited about a “dead-end job” or a “miserable marriage,” so take care not to stack the deck with hyperbole even before you begin drafting your choice wheel.

But above all, please remember that each time you feel backed into a dualistic decision-making corner, you likely have several more options at your disposal than you may think, or that have been presented to you.

Quote O' The Week

Lisa Kemmerer

Weekly Market Update

I hope you like that drop in the roller coaster feeling:

• - 4.55% .SPX (500 U.S. large companies)
• - 5.53% IWD (U.S. large value companies)
• - 8.00% IWM (U.S. small companies)
• - 8.24% IWN (U.S. small value companies)
• - 3.45% EFV (International value companies)
• - 3.14% SCZ (International small companies)
• + 1.57% VGIT (U.S. intermediate-term Treasury bonds

SVB

It wasn't a great week for the markets. First, a stronger-than-expected job market signaled to traders that the Fed might be forced to continue to raise interest rates. Yes, you read that right: Good news, in this case, was bad news.

But the news got worse when it became clear that Silicon Valley Bank--one of the biggest lenders to U.S. tech companies--was in serious trouble, trouble that has since led to their very real demise.

After a virtual run on the bank, the FDIC stepped in to provide depositors with some protection. And this is a great opportunity to remind you of the limits of FDIC insurance for your savings at banks:

Each depositer receives $250,000 of FDIC protection per person, per account type. That means that if my wife and I had a joint bank account, we'd each get $250,000 of protection; but then we could each have individual accounts, CD accounts, and even IRAs, with up to $250,000 of protection.

This allows depositors to stack their FDIC coverage in order to expand their protection. But it's also a good reminder that if you have more than $250,000 in any of these individual account types, you may not be fully protected in the case of a bank default.

• For more on the SVB debacle, check out this concise article from Morning Brew: "So Long, Silicon Valley Bank."

Although your morning was an hour shorter today, I hope you make the most of your remaining weekend!

Best,

Tim

Tim Maurer, CFP®, RLP®

Thanks so much for being part of the FLiP community!

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Oh, and BTW, The information in this article is for educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. That should really come from your financial advisor. Also, my opinions may--or may not--be shared by my employer.