Investing

Many people are bad investors largely because they aren’t skeptical enough: They react emotionally and they don’t understand compound interest, said Barry Ritholtz, chairman and chief investment officer of Ritholtz Wealth Management.
Famous investors like Warren Buffett and Peter Lynch who consistently beat the market are rare, Ritholtz said.

Barry Ritholtz
Barry Ritholtz

Barry Ritholtz had a hard time writing his first book, “Bailout Nation.”
Drafted in the midst of the 2008 financial crisis, the biggest challenge, he said, was that a different company “would blow up” every week.

It felt as if the writing “was never over,” said Ritholtz, the chairman and chief investment officer of Ritholtz Wealth Management, an investment advisory firm that manages more than $5 billion of assets.
By comparison, the new book was a “joy” to write, largely due to the benefit hindsight, said Ritholtz, who is also a prolific blogger and creator of the long-running finance podcast “Masters in Business.”
The book, “How Not to Invest: The Ideas, Numbers, and Behaviors That Destroy Wealth — And How to Avoid Them,” published March 18, is a history lesson of sorts.
More from Personal Finance:Why the father of ‘life planning’ says you’re managing money the wrong wayIt’s not always ‘a sexy thing’ to be a millionaire, former NFL linebacker saysTake a look inside a $1.1 million ‘zero emissions’ home
Ritholtz looks back at anecdotes across pop culture and finance — touching on Hollywood titans like Steven Spielberg, music sensations like The Beatles, and corporate pariahs like Elizabeth Holmes of Theranos — to illustrate the disconnect between how much people think they know and what they actually know. (Ritholtz’ point being, The Beatles and films like “Raiders of the Lost Ark” were initially panned; Holmes, initially lauded, is now serving jail time.)

“It’s a huge advantage to say, ‘I know how the game ended,'” Ritholtz said. “What the analysts were saying in the second, third, fourth inning, they didn’t know what they’re talking about.”
CNBC spoke to Ritholtz about why people are often bad investors, why famous investors like Warren Buffett are “mutants,” and why financial advice about buying $5 lattes is the cliché that just won’t die.
This interview has been edited and condensed for clarity.

How to be ‘miles ahead of your peer investors’

Greg Iacurci: Your No. 1 tip to being a better investor is to avoid mistakes — or, as you write, “make fewer unforced errors.” What are some of the most damaging unforced errors you often see?
Barry Ritholtz: Let’s take one from three broad categories: Bad ideas, bad numbers and bad behaviors.
Bad ideas are simply, wherever you look, people want to tell you what to do with your money. It’s a fire hose of stuff. Everybody is selling you some bulls*** or another. And we really need to be a little more skeptical.
On the numbers side, the biggest [mistake] is simply: We fail to understand how powerful compounding is. A lot of the dumb things we do get in the way of that compounding. Cash is not a store of value. It’s a medium of exchange, and you shouldn’t hold on to cash for very long. It should always be in motion, meaning you should be paying for your rent or mortgage with it, paying your bills and your taxes, whatever recreational stuff you want to do, whatever philanthropy you want to do and whatever investing you want to do. But money shouldn’t just sit around.

Compounding is exponential. When I ask people, “If I’d invested $1,000 in 1917 in the stock market, what’s it worth today?” You look at what the market’s returned — 8% to 10%, with dividends reinvested — $1,000 a century later is worth $32 million. And people simply can’t believe it. Ten percent [reinvested dividends] means the money doubles every 7.2 years.
The biggest [behavioral error] is simply, we make emotional decisions. That immediate emotional response never has a good outcome in the financial markets. It is exactly why people chase stocks and funds up and buy high, and why they get scared and panic out and sell low.
If you just avoid those three things, you’re miles ahead of your peer investors.

Not all plays are ‘Hamilton’

GI: Going back to something you mentioned about how relentless bad financial advice is, what are some memorably bad pieces of financial advice or investment opportunities you’ve come across?
BR: I get a lot of weird things — plays, restaurants. You should know, most plays are not “Hamilton” and most restaurants are not Nobu. These are really, really difficult investments. Those are all the winners. You’re not seeing the other million products in the same space that didn’t make it.
I think we have this really distorted viewpoint of the world that allows us to believe that finding a giant winner is much easier than it really is. And that is because you don’t see the endless fails, the restaurants that implode, the plays that close after opening night. All these little investment opportunities that come along, and the people selling [them], the advice they’re giving, they’re always weird and quirky. A great restaurant is a really good business, but most restaurants are terrible businesses, and that’s a hard thing for people to recognize.

The financial ‘cliché that refuses to die’

GI: There’s this great part in the book where you talk about the $5 coffee: The thought being, if you invest that money instead of buying coffee, you’ll basically be a millionaire. You write that it’s the “cliché that refuses to die.” Why do you think it’s detrimental for people to think this way?
BR: $5, really? I don’t want to come across as a completely detached one percenter, but if a $5 latte is the difference between you having a comfortable retirement or not, you’ve done something very, very wrong.

Let’s say you do put $5 away. If you saved $5 every day and invested it, it adds up to something. But when you look out 20, 30, 40, years, the other side of the spending equation is, what’s my income going to be? How much am I going to earn? If you’re going to show me $5 compounding over 30 years, you also have to show me where my income is going to be. If I’m looking at this as a 30-year-old, what’s my income going to be at 60? How will my portfolio, my 401(k) — and if I have kids, my 529 [college savings] plan — how will that have compounded over the same time? If you’re only looking at the $5 latte but ignoring everything else — and that’s before we even get to inflation — it looks like a chunk of money but it really isn’t.
The big philosophical problem that I’ve found is most of the spending scolds don’t understand what the purpose of money is.
GI: What is the purpose of money?
BR: Money is a tool. First, lack of money certainly creates stress. You can worry about paying the bills, and if you have a kid, how am I going to pay for their health care? Not having sufficient money to pay the rent, buy food, pay for health care, is certainly stressful. The first thing money does is it chases away the lack-of-money blues.

Everybody is selling you some bulls*** or another. And we really need to be a little more skeptical.

Barry Ritholtz

Money [also] creates optionality. It gives you choices. It gives you freedom. It allows you to not do many of the things you don’t want to do. And it allows you to buy time with friends and family experiences and to create memories.
It’s the ability to spend your time how you want, with who you want, doing whatever work you want, or no work at all, if you eventually get to that point.
GI: What should people do to make investing as simple as possible and have good outcomes?
BR: [Vanguard Group founder] Jack Bogle figured this out 50 years ago. If you want to find the needle in the haystack — if you want to find the Apples, Amazons, Microsofts, Nvidias, J.P. Morgans, United Healthcares and Berkshires [of the world] — don’t look for the needle in the haystack. Just buy the whole haystack. (Editor’s note: The “haystack” here refers to buying an index fund that tracks the broad stock market rather than trying to pick winners.)
You make the core part of your portfolio a broad index, and then you put whatever you want around it.
So, start out with a basic index, be very tax-aware of what you do, and then back to the behavioral stuff: Don’t interfere with the market’s ability to compound.
The crazy thing about Warren Buffett: His wealth has doubled over the past seven years. Think about how insane that is. He’s 94, like half of his wealth came about from zero to [his late eighties], and the other half came about in the last seven years. That’s the miracle of compounding. More

The Social Security Administration is revising policy changes expected to require more people to visit its offices following complaints from customers, Congress, advocates and others, the agency said.
Effective April 14, people who cannot use an online Social Security account will be required to verify their identities in person.
Notably, the agency is now making it so the in-person requirements do not apply to disability insurance, Medicare and Supplemental Security Income applications.

A Social Security Administration (SSA) office in Washington, DC, March 26, 2025. 
Saul Loeb | Afp | Getty Images

The Social Security Administration is adjusting the timeline and terms of its new identity proofing policies after receiving fierce criticism from advocates and beneficiaries.
The agency on March 18 announced new requirements that would require more people to visit a Social Security office to claim benefits or change their direct deposit information if they are unable to put those changes through online.

With those changes, the Social Security Administration was also putting through stronger identity proofing procedures with the aim of curbing benefit fraud.
The change was slated to go into effect on March 31 — an expedited two-week timeline, which experts said was unprecedented. The agency announced on Wednesday it will move that effectiveness date to April 14.
More from Personal Finance:Judge slams Social Security chief for agency shutdown ‘threats’Tax season is prime time for scams. How to protect yourselfTrump signs executive order aimed at shutting down Dept. of Education
“I just have never seen anything like it,” Bill Sweeney, senior vice president of government affairs at the AARP, a nonprofit organization representing Americans ages 50 and up, told CNBC.com last week of the change. The AARP first found out about the policy changes when they were publicly announced on March 18, rather than the typical protocol of being given the opportunity to weigh in ahead of time.
“This isn’t how this agency, or I’m not sure any government agency, rolls out new policies that affect 180 million people who pay into Social Security and rely on this program,” Sweeney said.

The AARP was pushing for the Social Security Administration to reverse the announced changes and work in a more “orderly, transparent and clear change management process,” Sweeney said.

New updates to identity proofing policy

On Wednesday, the Social Security Administration said it is adjusting the policy in response to “customers, Congress, advocates and others.” One of those adjustments is moving the date the new policy goes into effect to April 14.
Importantly, the agency has also adjusted the policy so that certain vulnerable individuals — those applying for Social Security disability insurance (SSDI), Medicare or Supplemental Security Income (SSI) who are not able to use the agency’s personal online accounts — will still be able to complete their claims entirely over the phone.
When applying for retirement, survivor or spousal/children’s benefits, individuals should first attempt to do so through their online “my Social Security account,” and if unable to do so online, they must visit a Social Security office to prove their identity and review their application.

To change their direct deposit information, Social Security beneficiaries should first attempt to do so through their online account. If online changes are not possible, they can visit a local Social Security office or call the agency at 1-800-772-1213 to schedule an in-person appointment.
The Social Security Administration said it recommends individuals call to schedule an in-person appointment for applications for retirement, survivors or spousal or children’s benefits where individuals are unable to apply online.
The AARP, in a statement from chief advocacy and engagement officer Nancy LeaMond, said the updates are a “good first step” to respond to concerns about the new policy.
“Merely delaying the implementation of this change is not enough, though,” LeaMond said. “SSA should take a deliberate approach to its proposed changes to customer service that seeks public input, follows a clear communication plan and allows a reasonable timeframe for compliance.”

Callers to 800 number face long wait times

The swift policy changes come as the Social Security Administration’s new leadership has come under scrutiny for its cooperation with the Trump administration’s Department of Government Efficiency, which the White House has tasked with slashing federal spending by cutting “waste, fraud and abuse” across government agencies.
The Social Security Administration’s acting commissioner, Lee Dudek, assumed the role in February after reportedly publicly disclosing he had been placed on administrative leave for cooperating with DOGE. Last week, Dudek threatened to shut down the agency in response to a federal judge’s temporary restraining order that prevents DOGE affiliates from accessing sensitive Social Security data. He has since reversed his stance.
As the agency’s leadership has been in flux, many observers say they have noticed longer 800 number wait times. Because DOGE has a running list of Social Security offices it plans to close, it will be more difficult to visit an agency office in person, experts say.
“The customer service situation at Social Security has really declined in the past month or so,” AARP’s Sweeney said.
The 800 wait times have “skyrocketed” since November, when they were at a low of about 11 minutes, Sweeney said.
The average time to answer a call is 21.2 minutes, according to Social Security Administration data, while nearly half of calls are not getting answered.

Yet callers have reported experiencing much longer wait times. In an effort to bolster transparency, Dudek plans to increase the “level of detail shared with the public to provide an honest and transparent view of wait times,” the Social Security Administration said on March 24.
As the agency transitions to the new identity proofing policy, some people who need its services feel like they are in limbo.
Lisa Cutler, communications director at the Alliance for Retired Americans, recently tried to contact the Social Security Administration on behalf of an elderly family to process an address change. She spent about an hour trying to get through on the agency’s 800 number before she gave up.
Cutler now estimates it would take a full afternoon to successfully get through to the agency. To make the process more complicated, the family member would have to be present to answer personal security questions.
Under Social Security’s new identity proofing policies, Cutler may instead have to set up an online account on her 87-year-old relative’s behalf. If the change can’t be processed that way, they would need bring the wheelchair-bound relative to a local Social Security office, which would require medical transportation.
The changes have felt like a “Silicon Valley go fast and break things” approach, Cutler said.
“But the problem is you’re dealing with a system that is meant to serve some of the most vulnerable people in our country,” Cutler said. More

The U.S. Department of Education announced it is re-opening the online applications for income-driven repayment plans, programs used by millions of federal student loan borrowers to repay their debt.
The Trump administration took down the applications for several IDR plans earlier this year, prompting criticism from consumer advocates and borrowers.

A person walks on campus at Muhlenberg College in Allentown, Pennsylvania, U.S. March 26, 2025. 
Hannah Beier | Reuters

The U.S. Department of Education announced it is re-opening the online applications for income-driven repayment plans, the programs used by millions of federal student loan borrowers to repay their debt.
The IDR plans now available, according to the Trump administration, are: Income-Based Repayment, Pay As You Earn and Income-Contingent Repayment.

The Trump administration took down the online applications for IDR plans earlier this year, prompting criticism from consumer advocates and borrowers.
At the time, the Education Department cited a February court order as its reason for pulling the applications. That was a decision from an appeals court in February blocking the Biden administration’s new IDR plan, known as SAVE, or Saving on a Valuable Education.
However, the American Federation of Teachers sued the Trump administration this month, arguing that it interpreted the ruling from the 8th U.S. Circuit Court of Appeals too broadly by pausing the applications for other IDR plans beyond SAVE.
More from Personal Finance:Stock volatility poses an ‘opportunity’How tariffs fuel higher pricesThe ‘danger zone’ for retirees when stocks dip
Congress created income-driven repayment plans back in the 1990s to make student loan borrowers’ bills more affordable. The plans cap borrowers’ monthly payments at a share of their discretionary income and cancel any remaining debt after a certain period, typically 20 years or 25 years.

Borrowers enroll in the plans not just for lower payments, but also to seek loan forgiveness under a number of different options.
More than 12 million people were enrolled in IDR plans as of September 2024, according to higher education expert Mark Kantrowitz. More

Around 9.7 million student loan borrowers became past due on their bills after the Covid-era payment pause expired, according to a new estimate by the Federal Reserve Bank of New York.

People walk on the campus of the University of Southern California (USC) on March 21, 2024 in Los Angeles, California. 
Mario Tama | Getty Images

Around 9.7 million student loan borrowers became past due on their bills after the Covid-era payment pause expired, according to a new estimate by the Federal Reserve Bank of New York.
After the Covid-era pause on federal student loan payments lapsed in September 2023, the Biden administration offered borrowers a 12-month “on-ramp” to repayment. During that time, borrowers were shielded from most of the consequences of falling behind on their payments. That relief period concluded on Sept. 30, 2024.

By the end of the off-ramp period, the New York Fed estimates that the volume of past-due federal student loans hit 15.6%, with more than $250 billion in delinquent debt.
“According to these numbers, it is reasonable to expect student loan delinquency to surpass pre-pandemic levels when new delinquencies hit credit reports,” the Fed’s report says.
A new student loan delinquency can cause a borrower’s credit score to drop more than 150 points, the Fed warns. More

In a recent announcement, President Donald Trump said he wanted to “immediately” transfer the country’s $1.6 trillion student loan portfolio to the Small Business Administration.
Experts questioned the president’s authority to make such a move, and consumer advocates warned of the potential consequences.
In the meantime, there are steps borrowers can take to protect themselves.

People walk past the headquarters of the U.S. Small Business Administration in the Southwest Federal Center area on March 24, 2025 in Washington, DC. 
Chip Somodevilla | Getty Images

President Donald Trump said last week that federal student loans would “immediately” be moved out of the U.S. Department of Education and will be managed by the Small Business Administration.
“They’ll be serviced much better than it has in the past,” Trump said of the debt. “It’s been a mess.”

Consumer advocates expressed worries that the mass transfer of accounts to the SBA could trigger errors, or compromise borrowers’ privacy. They also raised concerns about how a change in agency might affect protections, and programs such as Public Service Loan Forgiveness.
While details on the president’s decision remain thin, here’s what we know as of now.

It’s not clear Trump can move student loans

Trump said Friday that the SBA is “all set” to manage the country’s $1.6 trillion outstanding federal student loan debt. More than 40 million Americans hold student loans.
However, experts questioned the president’s authority to move student loans out of the U.S. Department of Education.
Financial aid expert Mark Kantrowitz pointed out that The Higher Education Act of 1965 is “very clear” that the Education Department’s Federal Student Aid office is “responsible for student loans.”

“It will require an act of Congress,” Kantrowitz said, to move the loans to the SBA.
Similarly, the president alone can’t abolish the Education Department. Only Congress can do so. Still, Trump signed an executive order earlier this month aimed at dismantling the agency.
More from Personal Finance:Stock volatility poses an ‘opportunity’How tariffs fuel higher pricesThe ‘danger zone’ for retirees when stocks dip
It’s likely the president’s student loan transfer effort will face legal challenges, along with his other moves to reduce the Education Department, said Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center.
“Borrowers don’t know what to do” for now, Yu said. “There’s a lot of uncertainty.”

‘Every transition has gone very poorly for borrowers’

In the past, when federal student loan borrowers’ accounts were transferred from one servicing company to another, they experienced credit report errors or had their information lost, Yu said.
“Every transition has gone very poorly for borrowers,” she said. “These are very sensitive records and many of these loans go back decades.”
It is also worrisome that staff at the SBA with no prior federal student loan experience would be tasked with managing a complicated lending system with many different programs on which borrowers rely, including income-driven repayment plans, Yu said.

Adding to consumer advocates and borrowers’ concern about Trump’s proposed transfer was his administration’s announcement earlier this month that the SBA’s workforce would be reduced by 43% — leaving fewer people to manage this new responsibility.

Steps you can take now

One important thing for borrowers keep in mind: The terms and conditions of your federal student loans cannot change even if the agency overseeing them does, experts say. Your rights were guaranteed when you signed the master promissory note at the time your loans were originated.
In anticipation of the transfer to the SBA, borrowers should gather the latest information on their student loan balance now, and keep an updated record of it, Yu said.
At Studentaid.gov, you should be able to access data on your student loan balance and payment progress. If you don’t know which company services your student debt, you can find that information on that site, as well.

Borrowers should also request from their loan servicer a complete payment history of their student loans if their debt has been transferred between companies in the past, Yu said. All this documentation will come in handy if your loan balance or payment history is reported inaccurately in the future.
Those who are pursuing Public Service Loan Forgiveness should certify their work history with the Education Department now, to make sure all eligible periods of employment are confirmed.
PSLF offers debt erasure for certain public servants after 10 years of payments, and borrowers have already long complained of inaccurate payment counts.

Don’t miss these insights from CNBC PRO More

President Donald Trump’s nominee to lead the Social Security Administration, Fiserv CEO Frank Bisignano, was grilled by senators on Tuesday about the extent to which he has been involved with the Department of Government Efficiency.
Sen. Ron Wyden, D-Oregon, introduced a whistleblower statement from a “senior Social Security Administration employee who recently left the agency,” who said Bisignano had been briefed on “key SSA operations, personnel and management decisions.”
In his testimony, Bisignano affirmed that he will work to protect Americans’ personally identifiable information following concerns that such data had been exposed by DOGE.

Frank Bisignano testifies before the Senate Finance Committee on his nomination to be Commissioner of the Social Security Administration, on Capitol Hill in Washington, DC, March 25, 2025. 
Saul Loeb | AFP | Getty Images

President Donald Trump’s nominee to lead the Social Security Administration, Frank Bisignano, faced senators’ questions on Tuesday as to how involved he has been with recent changes at the agency under the Department of Government Efficiency.
The unofficial government entity known as DOGE has been tasked by the White House to root out waste, fraud and abuse in the federal government, including at the Social Security Administration, which provides benefit payments to millions of Americans each month.

More from Personal Finance:Judge slams Social Security chief for agency shutdown ‘threats’Tax season is prime time for scams. How to protect yourselfTrump signs executive order aimed at shutting down Dept. of Education
Following changes put in place by DOGE, including staff cuts and plans to close field offices, the Social Security Administration’s phone lines often go unanswered, the website is crashing and “seniors are getting lost in the system,” said Sen. Ron Wyden, D-Oregon, ranking member of the Senate Finance Committee.
The hearing, Wyden said, provides Bisignano, who is CEO of financial payments technology company Fiserv, to “tell the American people whose side he is on” — either the side of American workers or DOGE “bureaucracy.”
Fiserv processes 250 million payments per day valued at about $2.5 trillion, Bisignano said Tuesday. The Social Security Administration handles approximately 74 million payments per month, he said.
If confirmed, Bisignano will be responsible for the leading Social Security Administration, which has a “critical mission and numerous operational and customer service challenges,” said Senate Finance Committee Chairman Mike Crapo, R-Idaho.

“I’m confident you’re up to the task,” Crapo told Bisignano at the hearing.

Whistleblower says nominee will be ‘bad for the agency’

At the hearing, Wyden introduced a statement from an unidentified “very high level official” at the Social Security Administration who said Bisignano insisted on approving several key DOGE hires at the agency and getting frequent briefings.
“This whistleblower has said that this is a nominee who will be bad for the agency, and has cited specifics,” said Wyden, who represented the unnamed person as “somebody who’s told the truth” in their career.
In response, Bisignano said he has never talked with Lee Dudek, who is currently the acting commissioner of the Social Security Administration. Bisignano said he knows Michael Russo, who is currently chief information officer at the Social Security Administration, through previous roles.
“I don’t know him as a DOGE person; I know him as a CIO,” Bisignano said.

When pressed by Wyden to confirm he would “lock DOGE out” of Social Security databases, Bisignano said he did not know what the term “lock DOGE out” specifically means.
“I’m going to do whatever is required to protect the information that is private information,” Bisignano said.
On March 20, federal judge Ellen Lipton Hollander issued a temporary restraining order that barred DOGE from accessing personally identifiable information at the Social Security Administration. She also told DOGE affiliates to delete any such info currently in their possession.
That includes Social Security numbers, medical provider information, medical and mental health treatment records, employer and employee payment records, employee earnings, addresses, bank records and tax information.
In a February CNBC interview, Bisignano said he “100%” plans to work with DOGE to identify potential waste, fraud and abuse at the agency.
“I am fundamentally a DOGE person,” Bisignano said during his CNBC appearance.
When asked to clarify that comment at the Tuesday Senate hearing, Bisignano said he has prioritized efficiency before there was such a word as DOGE.
Bisignano also said he would not knowingly allow personally identifiable information to be viewed by unauthorized personnel.

Whistleblower worries agency actions will ‘harm seniors’

In the written statement, the undisclosed whistleblower, who identifies as a “senior Social Security Administration employee who recently left the agency,” said they are concerned that recent actions at the agency will negatively impact millions of Americans.
Bisignano frequently spoke with senior SSA executives and was personally briefed on “key SSA operations, personnel and management decisions,” the whistleblower alleges.
As an unconfirmed nominee, Bisignano requested that senior agency executives not hire anyone without his approval, the whistleblower alleges.

Bisignano personally appointed Russo and has spoken to him frequently about the agency’s operations, the whistleblower alleges in their statement. He also was directly involved in the onboarding of attorney Mark Steffenson, Scott Coulter and DOGE engineer Akash Bobba, the whistleblower writes.
Bisignano was also aware of concerns regarding broad data access for DOGE employees that had been requested and that it did not follow privacy laws, disclosure policies and internal agency controls, the whistleblower states.
The whistleblower included a list of 19 individuals, including Dudek, Russo and former acting commissioner Michelle King, who they said can verify their statements.
“Frank Bisignano is not in the [Social Security] agency and is not involved in any decision making at the agency,” Arjun Mody, a Trump transition official, said via email.
The Social Security Administration did not immediately respond to CNBC’s request for comment. More

During your early retirement years, “sequence of returns risk” could harm your portfolio when withdrawals coincide with a market dip.
One solution, the bucketing strategy, divides your portfolio based on the timeline for spending the money, including a cash bucket for short-term expenses.
When the stock market drops, you can use the cash bucket to cover living expenses and preserve your nest egg, experts say.

Johner Images | Johner Images Royalty-free | Getty Images

Protect from ‘sequence of returns risk’

Stock market dips can be most harmful to portfolios during the first five years of retirement, which is the “danger zone,” according to Arnott.

If you withdraw money when asset values have fallen, there are fewer funds available to capture growth when the market rebounds, she said. 
The phenomenon of poorly timed withdrawals paired with stock market losses is known as “sequence of returns risk,” and it could boost your chances of outliving retirement savings, Arnott said. 

Negative returns cause more damage to portfolios early in retirement than later, according to a 2024 report from Fidelity Investments.
However, if you don’t tap your nest egg when the market is down, “you’re clearly going to change the dynamics, and you have a better chance of recovering,” said David Peterson, head of advanced wealth solutions at Fidelity.

The ‘cash bucket’ can shield your portfolio 

Judy Brown, a certified financial planner, said the bucketing approach keeps clients “in their seat during market volatility” and offers the chance to discuss goals. Brown, who is also a certified public accountant, works at C&H Group in the Washington, D.C. and Baltimore area.
The bucket strategy divides a portfolio into short-, medium- and long-term spending goals, which requires maintenance from year to year to ensure the strategy remains effective and aligned with changing financial needs.
Typically, the first bucket should be “highly liquid,” like cash, and include one to two years of living expenses after subtracting guaranteed yearly income, such as Social Security or pension payments, recommends Christine Benz, director of personal finance and retirement planning for Morningstar.

“If you’re always spending from a cash bucket, then you don’t have to worry as much about making withdrawals when the market is down,” Arnott said.
The second bucket, which covers the next five years of spending, could be in short- to intermediate-term bonds or bond funds, and income distributions can replenish spending from the cash bucket, she said.   
After that, you’re investing long-term in the third bucket, focused on growth with primarily stock allocations, depending on risk tolerance and goals.   More

For the first time, the share of parents financially supporting a child older than 18 reached 50%, according to a new report.
Parents now spend about $1,474 a month, on average, on their adult children — a three-year high.  

Maskot | Digitalvision | Getty Images

To get by these days, more young adults turn to a likely source for help: their parents.
For the first time, 50% of parents with a child older than 18 provide them with at least some financial support, according to a new report by Savings.com. That’s up from 47% last year and 45% in 2023.

From buying food to paying for a cellphone plan or covering health and auto insurance or even rent, these parents are shelling out about $1,474 a month, on average, the report found — a three-year high.
“Adulting is expensive,” the report notes.
More from Personal Finance:What financial advisors tell investors about market turmoilConsumer outlook sinks as recession fears take holdDon’t hide cash at home — here’s what you’re risking
Many experts contend it’s harder today for young adults to make it on their own.
In addition to soaring everyday expenses and housing costs, millennials and Generation Z face other financial challenges their parents did not at that age.

Not only are their wages lower than their parents’ earnings when they were in their 20s and 30s, after adjusting for inflation, but they are also carrying larger student loan balances, many reports show.

But by other measures, young adults are doing well.
Compared with their parents at this age, Gen Zers are more likely to have a college degree and work full time. Plus, many millennials have more saved for retirement than they did just a few years ago, after reaping the benefits of positive market conditions.   
Yet, roughly 1 in 3 adults ages 18 to 34 in the U.S. live in their parents’ home, according to U.S. Census Bureau data.
“Housing is a big issue and parents are helping more and more with rent and home purchases,” said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida.

60% of parents risk their own financial security

In addition to the monthly expense, supporting grown children can come with a long-term cost. 
More than 60% of parents said they have sacrificed their own financial security for the sake of their kids, also a jump from previous years, Savings.com found. The site polled more than 1,000 parents of adult children in February.
Further, about 18% of parents supporting adult children said those financial contributions could continue indefinitely.
“They don’t see an end in sight,” said Beth Klongpayabal, the study’s lead data analyst.
As a general rule, you should set aside money for your own retirement and emergency fund first, McClanahan said. She also suggests parents set parameters to help ensure children are using the money they gift wisely.
“We are careful to make sure parents don’t gift so much to put themselves in peril,” said McClanahan, who also is a member of CNBC’s Advisor Council.

Don’t miss these insights from CNBC PRO More