Jonathan Clements, a former personal finance columnist at The Wall Street Journal, died on Sept. 21 at the age of 62.CAROLINE GUTMAN/The New York Times News Service
Jonathan Clements was a journalist who prided himself on writing about the same ideas over and over. His aim wasn’t to be sensational. It was to remind readers of what really mattered.
He accomplished his goal. When he died on Sept. 21, at 62, the former Wall Street Journal columnist, Citigroup executive and founder of the Humbledollar.com website left behind a vast legacy of columns and books on personal finance. He also left behind the memory of his quiet dignity during the final months of his life.
Mr. Clements had gone to see a doctor about some balance problems he had been having. He thought he had an ear infection. Instead, he learned he was suffering from a rare form of cancer and had about a year to live.
It was a cruel twist of fate for a non-smoker who had always exercised and watched his diet. It was even crueller for someone who had lived frugally, invested wisely and amassed a comfortable nest egg to fund a long retirement. Mr. Clements was suddenly confronted by the realization that he would never get to spend most of his money.
Was he bitter? Not nearly as much as you might think. When not exhausted by chemotherapy, he went on living his life pretty much as he always had. That meant spending time with his wife, his two adult kids and his grandchildren. It also meant writing for his Humble Dollar blog – although now the topic was often his impending demise.
He tried to splurge a bit, mainly on travel, but a lifetime of careful spending meant there were limits. Yes, he decided, he would finally upgrade from economy class and pay an extra thousand dollars for a flatbed seat on a flight from his home in Philadelphia to London. But a bit later, when booking a flight to Paris, he looked at doing the same thing and discovered it would cost $3,300. The tightwad in him rebelled. He could easily afford the upgrade, but it was just too much, and he had to say no.
That was a classic Clements story. He delighted in sharing his life with readers and exploring the odd ways our minds work when it comes to money.
His insights will be sorely missed, but his writing continues to provide a ray of light for any of us who feel overwhelmed by money matters. Everyone will have their own favourite pieces of his wisdom. Here are three that stand out to me:
Rob Carrick: Eight lessons learned in 27 years of covering personal finance and investing
Keep it simple
Mr. Clements was a great simplifier. His constant message was that smart financial planning isn’t about finding some rare and brilliant investing opportunity. It’s about doing a few straightforward things, over and over.
For him, the key points were to live a bit below your means, to use debt sparingly and to invest using low-cost index funds.
His affection for index funds verged on an obsession, he admitted. These funds, which passively track broad market benchmarks, were not highly regarded when he started writing his Wall Street Journal column in the mid-1990s. Most of the media showered its love on active managers, who tried to outguess the market and pick winning stocks.
Mr. Clements begged to differ. He wrote column after column touting the virtues of indexing – to the point where his editors begged him to find another topic.
But his advocacy of index funds was prescient. It has since become conventional wisdom. Investors who hold market-hugging index funds consistently beat the vast majority of actively managed money.
Gauge your risk
Mr. Clements wrote about his great-great-grandfather, tobacco merchant George Cope. When he died in 1888, Mr. Cope was one of England’s richest men. He left a vast fortune to his daughter.
None of that money reached Mr. Clements’ middle-class generation. He saw the decline of the family’s wealth as evidence that success often contains the seeds of its own destruction. Among other things, it can breed both complacency and overconfidence.
He recommended checking in regularly on your own level of complacency. One good question to ask, especially during times – like now – when the market is ripping upward, is how you would respond to a 35-per-cent plunge in the stock portion of your portfolio. That is the typical decline in a serious bear market.
If you would simply shrug and carry on, your asset allocation is probably fine. But if you find the thought of a 35-per-cent decline too much to bear, maybe it’s time to dial back your exposure to stocks.
The three paths to early retirement: entrepreneurship, investing or optimizing
Know what money can do
Mr. Clements was fond of saying that money can’t buy happiness, but it can prevent unhappiness. It’s a surprisingly profound insight.
Amassing even a modest nest egg gives you freedom to say no to things you don’t want to do. For that reason, Mr. Clements advised young people to focus on building a solid financial base in their twenties and thirties. A habit of saving, combined with the compounding growth of a globally diversified, indexed stock-and-bond portfolio, can free you from drudgery later in life.
In Mr. Clements’ case, it allowed him to quit his job as a Citigroup educator in his early fifties and devote himself to building his blog and public speaking. He made only a fraction of what he had earned as a full-time employee, but that was fine. The real benefit of having amassed a bit of money, he said, was how it allowed you not to worry about money.
Personal finances are important, he acknowledged, but past a certain point what makes us happy isn’t money. It’s spending time with people we love and doing work that we feel is important. His life was testimony to that.
