This document discusses market equilibrium and how markets work. It contains the following key points:
1) Markets integrate the combined knowledge of all participants, with trading aggregating vast amounts of dispersed information into security prices.
2) People trust market pricing every day to provide an accurate estimate of current value for goods like fish or stocks. A stock's price reflects all known information about a company.
3) Few mutual funds survive and beat their benchmarks over 10-year periods, highlighting the difficulty of consistently outperforming the market.
4) It is better to let the market work for you by harnessing its collective knowledge, rather than trying to outwit it and compete with all other investors.
Retirees often spend too much early in retirement and risk running out of money. While conventional wisdom says retirees spend 75% of what they did working, rising costs of healthcare, housing, education, and supporting family means retirees' expenses may not decrease as expected. Many also retire earlier than planned due to illness or because they can afford to. This misguided notion that spending will decrease leads to faulty retirement planning and savings. To better manage spending in retirement, people should realistically assess their spending habits and make plans to cut costs where possible through budgeting and spending less on unnecessary items.
This document discusses market equilibrium and how markets work. It contains the following key points:
1) Markets integrate the combined knowledge of all participants, with trading aggregating vast amounts of dispersed information into security prices.
2) People trust market pricing every day to provide an accurate estimate of current value for goods like fish or stocks. A stock's price reflects all known information about a company.
3) Few mutual funds survive and beat their benchmarks over 10-year periods, highlighting the difficulty of consistently outperforming the market.
4) It is better to let the market work for you by harnessing its collective knowledge, rather than trying to outwit it and compete with all other investors.
Retirees often spend too much early in retirement and risk running out of money. While conventional wisdom says retirees spend 75% of what they did working, rising costs of healthcare, housing, education, and supporting family means retirees' expenses may not decrease as expected. Many also retire earlier than planned due to illness or because they can afford to. This misguided notion that spending will decrease leads to faulty retirement planning and savings. To better manage spending in retirement, people should realistically assess their spending habits and make plans to cut costs where possible through budgeting and spending less on unnecessary items.
