Heading Into the Home Stretch: 2021 Trends So Far

Although, on its surface, 2021 hasn’t been as crazy as the preceding year, it’s still been a fascinating (and sometimes freaky) time to study the markets and the economy at large.

Sure, 2020 brought all the big drama to the headlines – but it was in 2021 that we started to really unpack the long-term implications of Covid and all its attendant craziness.

(More Reasons) Why it Sucks to be Rich

In part one of this two-part blogging extravaganza, we took a pretty deep dive into some of the financial and legal hassles that America’s richest citizens have to deal with, and that can make it difficult for them to give away or hand down their wealth as they would like. In this post, however, I’d like to dig into “rich person problems” that you are a bit more likely to bump into yourself. 

After all, if you’re reading a finance blog, you’re probably at least hoping to have a lot of money someday, even if you don’t just yet. So you should have some idea of the issues (and their potential solutions) that can affect people who, while pretty well-off, haven’t been building up a huge fortune over decades or had one handed down to them. While part 1 was about multi-millionaire problems, here we’ll get into more “upper middle-class” problems. 

Why it Sucks to be Rich

Mackenzie Scott, the multi-billionaire businesswoman and philanthropist formerly known as Jeff Bezos’ wife, has made a real stir lately with her lavish donations to a wide variety of charitable causes. Over the past year she’s given an astounding $8.5 billion to hundreds and hundreds of nonprofits – and left us normal folks wistfully imagining what we would do with such oodles of cash. 

Man, we think, it must feel good to be able to single-handedly save the whales, feed all the homeless of Manhattan, and fund every cancer study under the sun (not that that’s exactly what Ms. Scott has done, to my knowledge). Then we proceed to feel bad about ourselves, etcetera etcetera.

But if it’s any consolation, let me tell you that giving away large volumes of wealth is by no means easy or even necessarily helpful, regardless of the warm fuzzies that may come from doing so.

The Basics of Estate Planning

For the many of us who still feel far from established in terms of career, wealth and/or family, the concept of an “estate” might seem pretty abstract and irrelevant. I find it automatically conjures the image of a grand country mansion, like something out of Downton Abbey or Gone With The Wind. It sounds wealthy, maybe a little old-fashioned, and definitely complicated. 

“Estate planning,” by association, can seem similarly esoteric. That’s special rich-person business, right? 

Actually no, not at all. An estate is, quite simply, the sum total of a person’s stuff, and an estate plan determines what happens to all that stuff after they die. Unless you’re either a hermit or the unconverted Ebenezer Scrooge, you almost certainly have a) stuff, and b) people you care about who could benefit from that stuff when you no longer need it.

Are we in a real estate bubble?

A house down the street from me recently went on sale with an asking price of $500,000. Which is crazy. It’s a nice neighborhood, but hardly opulent, apart from one or two places boasting sports cars and gated driveways. And the house going for a half-million is not one of those. In fact it’s arguably the plainest one on the block. 

Whether it will actually go for that price is of course debatable. But it’s definitely possible, and the fact that the owner would even try asking for that price speaks volumes about the current housing market. It’s a refrain being heard nationwide right now, especially in my hometown: home prices are crazy. And along with that refrain comes a certain menacing buzzword, casting its shadow over many a hopeful-but-harried homebuyer: bubble. 

Market-Proofing Your Retirement Portfolio (Mostly)

I’ve said it before and I’ll say it again – risk is inevitable. Even if you’re not into the day-trading lottery or putting all your savings in crypto, the possibility of gaining something always comes with the scary possibility of losing something too. Come to think of it, playing it safe has its own risks too (like, say, losing to inflation). It's true for finance and it's true for life.

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