How to prepare your life for the Technological Singularity

If you believe that a technological singularity is coming in the 2030’s, is there anything you can do now to prepare? Yes, plenty:

Career:

As increasing automation replaces rote human labor with machines, work that requires creativity, adaptability, and self-direction is becoming more valuable.  Expert systems will augment and then replace technicians, and deep understanding and expertise will fall in importance relative to broad cross-functional heuristics.  Engineering and programming will increasingly be performed by creatives working with high-level design tools, while algorithms work out the technical details.  “Employment” itself will become obsolete, and most work will be performed by either temp workers waiting to be obsoleted by AI or entrepreneurs.

The majority of the legacy workforce will gradually discover that their technical expertise is irrelevant and spend the rest of their lives living on welfare and consuming media – probably playing nostalgic games in a holodeck or having virtual orgies. While many people would not have a problem with such a lifestyle, given that I don’t have a TV or a Netflix account, I would rather develop skills that require higher-level skills.   Rapid technological change, automation, and on-demand, on-site manufacturing will make highly specialized roles obsolete.  Future-proofed workers will need to develop a high-level understanding of research, creative, technology, and marketing, while algorithms work out the details.

Personal Finance:
There are two likely possibilities: either pre-singularity differences in material wealth will be nullified (because the AI’s eat us, or standardize our resource utilization), or they will be dramatically amplified, as the value of capital goods increases exponentially.

Rapid technological progress will make predicting successful companies and sector impossible as billion dollar startups rise and fall overnight. Therefore, a highly diversified, international (intergalactic?) portfolio may offer the safest returns. If existing property claims survive, they may be magnified a million fold or more, so $1000 may become a million, and even modest portfolios may be worth a few star systems.

Furthermore, technology-independent resources such as land and broad ETFs will be more stable than fixed capital assets such as cars, houses, currencies, precious metals, etc. How can we know what assets are still relevant when the economy transitions to new paradigm every night? That will require a degree of social adaptability:

Social Adaptability:
Rapid shifts in technology will enable rapid cultural evolution. New fashion trends will drive demand for new products and technological sectors, just as the invention of the smartphone created new markets and changes work and leisure in the last 10 years.
When most humans are freed up from the need to work, the economic and cultural focus will shift to leisure goods and new kinds of entrepreneurial activity (asteroid mining, undersea colonies, etc). It will be increasingly difficult and yet crucial to stay aware of the cultural trends.

Furthermore, constraints such as ethnicity, gender, sexuality, species, consciousness etc, will become increasingly fluid and amorphous. We’ll need to become tolerant of and respectful of lifestyle and identify choices that we cannot imagine today. Today’s culture wars over transgender people will seem laughable when it will be trivial to change one’s sex overnight, and then back again. We’ll be much more concerned with questions of identity and ethics raised by uploaded, cloned, and synthetic beings. Will our base-human bodies remain relevant in such a world?

Health:
As the singularity approaches, traditional medical treatment paradigms will be overtaken by new ones:
first: personalized medicine based on test automation and DNA profiles,
second: nanotechnology and synthetic biology (such as stem-cell) treatments, and finally,
third: large-scale bioengineering (growing organs and bodies ex-vivo) and/or mind uploading.
The focus will shift from medicine that treats problems to bioengineering existing and new humans in order to improve on nature.

These changes already face fierce resistance from our monopolistic social-political structures. It will up to you to take charge of your biological evolution.  For example, because the US government prohibits companies like 23andme from informing customers about the full health implications of their DNA, I exported the raw DNA data for my family and analyzed it using Promethease to get our risk profiles using the latest research. (I also a found a relative from my birth county in Ukraine.)
I spent a month in Thailand getting medical treatments which would have been prohibitively expensive in the USA. In 2010, rather than rely on the medical monopoly’s recommendations, we adopted a low-carb, Paleolithic-style diet and dramatically improved our health.

If you want to take advantage of radical new health innovations, you will need to perform your own research on radical opportunity for both repairing and augmenting your biology.

How to enable cross-posting videos with FEE on Facebook

Cross-posting videos allows sharing Facebook Videos between Pages without re-uploading a duplicate video.  

Why would you want to cross-post with FEE?

  • Your videos get more exposure on other Pages
  • You control the content and description of the video (unlike re-uploaded videos, cross-posted videos cannot be modified.)
  • Analytics/Insights are shared with both the author and the page cross-posting the video.
  • FEE has a $2 million grant to distribute great content, and we are very, very good at distribution!

Tutorial: How do I allow another Page to crosspost my Page’s videos?

Step 1: Click on the Settings for your Pages, then Crossposting.  Now add FEE:

Step 2: Go to “Publishing Tools” then “Video Library” then Edit for each video you want to share:
Step 3: Enable cross-posting for each video you want to share with other pages:
 

How (and why) to use retargeting in your Facebook ads

A key part of FEE’s advertising strategy is retargeting our customers across multiple channels. Retargeting, also known as remarketing or behavioral targeting, is the practice in online advertising of showing ads to people based on their previous online activity. Here is how we do it:

1. Define Custom Audience

FEE’s retargeting is based on three data sources:

  • Website visits to specific domains or web pages. For this example, we are tracking visits to http://www.feecon.org/ via a Facebook Pixel tracking cookie. Some of our website audience originates on other organizations’ websites and are anonymously shared with us.
  • Membership in email lists, including FEE Daily or audiences shared with us by partners. (Facebook allows audience sharing without sharing any individual email addresses.)
  • Online and offline transactions. If you purchase something from our store, register for an event, or make a donation, you’ll eventually be imported as a Custom Audience for retargeting.

Here is how we’ve defined the audience for all FEEcon.org visitors during the last 6 months:

https://business.facebook.com/ads/manager/campaign/adsets/?act=25217845&columns=[%22name%22%2C%22delivery%22%2C%22results%22%2C%22reach%22%2C%22cost_per_result%22%2C%22budget%22%2C%22spend%22%2C%22stop_time%22%2C%22schedule%22%2C%22relevance_score%3Ascore%22%2C%22actions%3Alink_click%22%2C%22actions%3Aoffsite_conversion.fb_pixel_purchase%22%2C%22call_to_action_clicks%22]&pid=p23&ids=6065093699400&business_id=670229536476628

2. Create Saved Audience

We’ve created a custom audience of FEEcon.org visitors, but we don’t necessarily want every visitor in the audience to see our ads. In this step, we’ll exclude people who have already registered for FEEcon, and set an age range so we can create different ad sets based on age.

Below, we’ve included all FEE.org visitors, and excluded everyone who’s already registered and does not match the specified age range.

3. Use Saved Audience in Ad Set

Now that we have the target audience defined, we can use it in ads sets. I suggest that you create audiences before you create ads. You don’t want to spent a lot of time creating an ad only to learn that Facebook (or Twitter, etc) either cannot target the audience, or that it is too small.

The strategy below is the same as a traditional essay outline:

  1. Show an ad that tells the customer what they’re going to see 
  2. Show them the product on the landing page (and capture them via a Call to Action)
  3. Retarget them with an ad reminding them about what they saw.
This screenshot shows the four audience that we’re targeting:
  1. Young professionals (the audience definition actually has 12+ “secret sauce” criteria)
  2. Young people who already visited our landing page
  3. Current FEE supporters who might be interested in FEEcon
  4. Current supporters who have already visited FEEcon.org 

Conclusion: Why retarget?

What are we trying to achieve with this strategy?  Two things:
First, retargeting optimizes the return of our ad spend. Given a target audience, only 5% might be interested in the product we are trying to sell. We want to identify that 5% and spend much more effort converting them than the 95% who are not interested. 
Second, retargeting allows for creating a conversion funnel. People who are seeing our product for the first time should get a different message than those who are already familiar with it. In the ad for the first time visitor, I can direct them to more information, while the retargeted audience is already familiar with the product and can be asked to purchase it or offered a discount (since I can also exclude people who have already bought tickets).

Facebook Audience Testing Case Study: Elijah McCoy Campaign

The goal of this project was to see if we could effectively market our content to an audience outside our core demographic in a data-driven manner. We picked this video as the test subject. The success of this experiment validated our strategy for the YEAR project.

1. Identify goals

Success metrics for this campaign included:

  • Engage non-core audience
  • Identify which of the target personas our list resonates with the most.

2. Brainstorm audience personas

We reviewed the video and discussed what kinds of audiences would engage with it.
We identified four audience candidates:

  1. FEE Donors
  2. Black Entrepreneurship Fans
  3. Inventors and Makers
  4. Mike Rowe Fans who like Entrepreneurship

We tested four additional placements to display the content:

  1. YouTube link from the FEE page
  2. FEE.org article on the FEE page
  3. Facebook add (content specified within ad)
  4. Facebook Video Upload

We excluded Donors from the additional placement test, this left us with creating 12 ad sets (4 placements x 3 audiences, each containing 1 ad).

3. Create saved audiences

Each audience was iterated, so the below represents the final combination of criteria. We identified a number of people, hobbies, and shows which our personas might have in their Facebook profiles, but only the below were available as targeting options:


4. Measure test results:

Placement
In terms of placement, we saw that ads with the YouTube link, FEE.org article, and in-ad content were not responding at all. The per-engagement maximum was set at 15 cents, and there were only 1-4 engagements out of 40+ reach. Cost per engagement was 3-14 cents. Once we changed format to Facebook-hosted video, reach and results immediately took off, at 1 cent per engagement.

Audience (Persona)
Out of the three audience we tested, the “Black Entrepreneurship” audience responded the strongest. Here are the video engagement stats for the first day:


Across all metrics, “Black Entrepreneurship” outperformed other audiences. Donors also performed well, as expected.
5. Boost winning ad set

Based on the first day, we decided to boost “Black Entrepreneurship” to $100 per day and “FEE Donors” to $30 per day. All other ad sets (and audiences) were stopped.

6: Measure results

Delivery Summary
  • $440 was spent boosting this video, with $38 used for the first day of calibration, and the rest directly on the selected audiences.  
  • A total of 322,000 people were reached. 178,000 of those were from direct paid reach, while the rest were organic. However, once advertising stopped, video views dropped for 30,000+ per day to well under 1,000. The majority of organic views originated from people who saw the ad.
  • After the ad campaign ended, organic views dropped rapidly from over 10,000 to a few hundred (see below). This video is not effective with our existing audience, and did not have a lot of organic momentum.
Return on Investment
  • There were a total of 111,000 video views, and 8,000 reactions. Each dollar thus generated 252 views and 18 likes.  
  • Cost per 1000 impressions was $1.50 for the “Black Entrepreneurship” audience and $8.03 for the donor audience.
  • The FEE Store link was clicked 301 times.  There were 28 Real Heroes sold during the ad period vs 26 for the several months prior, so the ad likely drove virtually all of those sales. Facebook matched 7 purchases via Offline Action tracking (each purchase may involve more than 1 book.) 



Open Questions
  • How many of the users who engaged with the ad will become frequent readers?  We’re not sure how to track this. (Google Analytics? Facebook Insights?)
  • How to measure the value of paid ad exposure? Book sales? Shares? Organic uplift? Are paid views as such worthwhile?
  • Given that our existing audience was not the most responsive to this video, and given that we were attempting to target groups outside of our core user base, is it possible that we need to reach a larger number of people with paid views in order to reach some unknown saturation point that will spark more organic growth? In other words, do we need to spend a lot more money before network effects will take over?
  • Once we’ve effectively identified an audience target through testing, would different means to reach those audiences be more effective than paid social media ads? For example, should we have planned an advertising strategy that included direct outreach to major audience influencers around Black Entrepreneurship, such as Daymond John?

Lessons Learned
  • Targeting segments effectively requires testing different audiences.
  • We can effectively boost content to new demographics and even get them to buy products, but converting them to returning visitors will require a new strategy.
  • We need a clear call to action for ads to measure effectiveness and extract value.


Five principles of effective marketing at FEE

Let’s talk about five principles that help the marketing team at the Foundation for Economic Education (FEE) communicate more effectively with our customers.

1. Clearly state the value proposition

Every message should clearly communicate the value our customer will gain from the product we are selling.

Let’s break that down:

Although FEE is a non-profit organization, we consider everything we do to be a product which can be sold to a customer just as much as multinational behemoths like Apple and McDonald’s

Every marketing conversation begins with a discussion of our audience:

  • Who are they?  What do they care about?
  • What do we have that they will value?

For example, when we segmented the market for FEEcon (our big conference this summer), we:

  • Split our customers into three groups: college students, young professionals, and older supporters of FEE.  
  • Brainstormed the values that each group gets from attending FEEcon.  From these values, we identified 4-5 value propositions for each group.

Here are the first two value propositions for FEE donors:

  • Personally witness how your investment in educating the next generation transforms their lives
  • Interact with the leaders of dozens of partner organizations and major philanthropists across the freedom movement

And for students:

  • Real skills for professional success and solid theoretical education
  • Networking opportunities: Engage with successful entrepreneurs and student leaders

These value propositions inform all the messaging that we create for this product, whether the medium is an article, email, or Facebook ad.

Consider this ad for students:

And this ad for young professionals:



And here is an ad for donors:

2. Present a single, clear call to action

The motto of FEE’s marketing process is “Always Be Closing.” Everything we do as marketers is designed to move our customer further toward closing the deal. Every message we make, be it a landing page, email, SMS, facebook ad, flier, whatever, asks the customer to take an action that moves them further down the conversion funnel. Each marketing communication has to have a large, prominent request to take a single action which will give the customer some sort of value.

This doesn’t mean that every marketing message has to ask for a deep commitment. We have a conversion funnel for each customer person which consists of a series of small messages. If we want students to apply for a three-day seminar, we first ask for their email so we can send them a free book or guide. The goal of each communication is to deepen awareness of our products and lower the barriers they have to the next step.

3. Make messaging personal 

The essence of our communications strategy is to make every message we send feel like it was written just for you by a real human being who cares about your concerns and is eagerly awaiting a reply, then use marketing automation to scale up that personal feel to thousands of people.

There are a few ways we do this:
A. Every email comes from a real human being. We don’t use any noreply@, support@ or sales@ emails. This includes transactional emails such as payments, registrations, reminders, etc.
B. Emails use a first person informal tone. We never say “we.” Messages take the tone of “I would really appreciate if you could do x.”
C. We sign all emails with our name just as we do with our personal mail.
D. We use plain text format whenever possible, especially if we expect a reply. When we use CRM tools to target messages, we export the names into Gmail or send a plain text message whenever we can. Marketing messages sent in plain text from Gmail avoid both the junk mail and the “Promotions” folder.
E. We make messages short and to the point. Because we can speak directly to the recipients values, we can offer something that we know they’ll care about and don’t have to waste space addressing everyone.
F. We talk like a normal conversion. We experiment with short, informal, lower-case subject lines such as “quick question:” or “you’re missing out.”

Marketing email from our CRM tool sent via Gmail

4:  Focus messages on specific customer personas

It’s easy to say that every message should push the customer down the sales funnel. The hard part is to track who each customer is, and where they are in their journey.

At FEE, we use HubSpot to split our users into a lifecycle stage funnel (lead, subscriber, opportunity, customer) and a customer persona (college student, parent, interested donor, casual reader, etc).  HubSpot tracks every visitor’s web and email interactions, and dozens of workflows use specific triggers, e.g., visiting the donate page recently, to classify people into personas based on recent behavior.

This allows us to tailor messages to the specific customer profile and offer them a product that we think they are most likely to be interested in. This minimizes our unsubscribe rates and keeps followers interested in our content.

Additionally, we make heavy use of retargeting for our advertising. We show Facebook and Twitter ads based on specific pages people visit.  If you’ve visited FEEcon.org recently, you’ll start seeing more FEEcon ads in your Facebook feed until you register, which will switch you from our “promotion” (please register) to the “nurture” campaign (please share this with your friends). If you’re not on our daily email list, you’ll see a lead form in your feed, otherwise, you might see donor messaging if you’re a heavy user of the site.

Partial snapshot of personas and lifecycle


5: Experiment to identify the best strategy, then automate it

We don’t plan a grand marketing strategy for each product.  The fact is, we have no idea what kind of message will resonate with our audience. Our marketing strategy is basically this:

A. Define audience
B. Define value proposition
C. Experiment with campaigns based on A and B at a small scale until we find something that works
D. Scale up C.

We build workflows which capture the most effective strategies and automate them for each customer journey. We use HubSpot to build one or more workflow for each product which contain a series of calls to action, triggers, messages and rules. First we capture leads with a CTA on a website or ad, then we enroll customers in a workflow and nurture them until they convert (buy the product, register for an event, donate to us). This enrolls them in a new workflow which is designed to deepen their commitment and cross-sell other products, starting the process over again.

Why you (probably) don’t need life insurance: how to self-insure your family

I’m not categorically opposed to life (and most other kinds of) insurance, but if you follow good financial practices, you’re better off self-insuring.  Self-insurance is essentially the idea that you assume a risk instead of paying an insurance company for the service, either by not taking out the policy at all, or selecting a high-deductible. This requires financial discipline and planning to keep sufficient savings to pay for emergencies.

Here are my thoughts on why insurance doesn’t make sense in most cases. I’ll focus on life insurance, but it applies to many others.

When (term) life insurance makes sense:

I’ll begin with an example where life insurance makes the most sense:
The Smith family has a single income of $100K/year, two small children, and Mrs. Smith has limited means to replace the lost income if Mr. Smith dies. They have $5K in the bank. In this case, term life insurance is a very good idea, for reasons which I hope are obvious: if Mr. Smith dies, the quality of life for Mrs. Smith and kids will be significantly diminished.

Complicating factors:

If Mr. Smith has a well-paying job, it probably comes with some disability/death benefits. Mrs. Smith will also get his social security benefits. It will be a fraction of their former earnings, but a non-trivial portion of a typical families expenses are work-related. Mrs. Smith will also qualify for several government programs (WIC, school lunch, etc). Possibly they have relatives who might help. While life insurance payouts are not taxable, it may affect your ability to receive other benefits, so the calculation is not as simple as it may seem.

There are probably tens of millions of American families in this general situation. Yet only 44% of households have life insurance, and many don’t have enough. Why? Because if you only have $5K in the bank (most Americans have very little savings and millennials have a negative savings rate), you probably have bad financial habits, and limited means to have another monthly expense.

When (term) life insurance doesn’t make sense:

If you are single, there is no point in life insurance. Buying life insurance, in this case, is equivalent to your beneficiary (let’s say girlfriend or parents) playing the lottery on your life. While the odds are probably better than the government lottery (your chance of dying in the next year in your 20’s or 30’s are about 1/2000, whereas the chance of winning millions in a lottery are 1/185 million), it’s a lot less somber.

If you’re married and both spouses have similar earning capacity (even if both are not currently working), again, there is little point — your quality of life will not change dramatically if your partner dies.

If you are married with dependents, have very different earning capacity, but have sufficient savings to recover earning capacity, again life insurance is not needed. Unless you have six kids, you only need enough savings to rebuild your ability to support your family.

If you’re too poor to build sufficient savings to recover from the death of a spouse, you’re probably poor enough that a single income will not dramatically affect the quality of life, and can’t afford life insurance anyway.

If you have sufficient earnings to afford insurance but are too financially irresponsible to save for disaster, then you may need insurance, but you’re probably not reading this, and may not have the budget to pay for insurance.

Three bad assumptions financial advisors make

Financial advisors (especially non-fiduciary advisors trying to sell you something) will typically make three flawed assumptions:
1: a single, non-working parent should never need to work again
2: your quality of life after your partner dies should remain the same
3: your savings rate is fixed

Here is why these assumptions are wrong:
1 is flawed because most adults do have the ability to develop marketable skills.
2 is flawed because insurance is only intended to protect you against catastrophes, not pay for your boat and summer cottage. You only need enough cushion to recover from a budget crunch, not profit from your partner’s death
3 instead of trying to patch over bad money habits with insurance (and especially whole life insurance), advisors should help you save more and build additional income streams through your investments. Instead of overmedicating to cover up the symptoms of an unhealthy money habit, good financial advice should help you adopt good financial practices that would make the medicine with dangerous side effects (more on this below) unnecessary.


Self-Insure your Family Instead

Here is the financial strategy which I recommend (scenario based on demographic averages):

While you are single (age 16 to your mid 20’s):

Max out your savings rate at about 50%. This should give you a cushion of $100K going into your marriage — hopefully, both partners have something to contribute to your net worth.

Marriage – before kids:

In the first few years of marriage, you should maintain dual incomes and build your nest egg at least until you decide to have children. If you have kids around age 30, you should have a solid 8-10 years of savings — enough to build a portfolio of $300K.

Marriage – post-kids (when you need a backup plan):

Let’s say the mom decides to be a full-time parent. By your mid 30’s, if you have multiple kids, your savings rate will drop to 20-30%, but 20 years of savings and compound interest should give you a net worth of at least half a million. This, combined the social security and work benefits becomes your insurance policy. Buying additional life insurance is thus unnecessary because each spouse has enough cushion to preserve most of their quality of life and/or recover earning capacity.


Addendum: Whole life insurance (also applies to Infinite Banking)

Once upon a time, when a diversified, well-balanced, tax-smart, age-appropriate, and personalized investment portfolio was not available to most people, whole life insurance made a lot of sense. It still makes sense for people who
1: are compulsive spenders who can’t keep any savings or investments and
2: don’t have a tax-advantaged savings options available or
3: need to hide assets from someone

For everyone else, investing their money in the market makes a lot more sense. You can invest up to $55K per year in tax-advantaged or tax-deferred investments. A properly diversified portfolio will return about 12% (pre tax, pre-inflation).
Ask an insurance salesperson for the yield for whole life insurance. They’ve intentionally made the product so complicated (with lots of hidden fees) that they won’t be able to compare it to the yield of traditional investments.
What the insurance company is doing behind the scenes to make a profit on your money is locking it in various ultra-safe (aka low yield) bonds and giving you a fraction of the return. Those bonds return a maximum of about 5%, and you get a portion of that. You’d do much better separating your insurance and investment needs, especially since a young professional should have a high-risk stock-based portfolio.

If an advisor scares you with the uncertainty of stock markets,  remember that there is No Free Lunch.  Guaranteed returns mean low returns.  Less risk means less profits.  Take your risks while you are young and retire rich.  See my post for simple, low-cost investment options.

Four income streams that young professionals should develop

“According the IRS, the average millionaire in the United States has at least five different sources of income.” –James Altucher

Whether you’re making minimum wage or pulling down $250K per year, if your day job is your only source of income, you should start working on developing additional income sources. The biggest reason to do so is to start transitioning from working for your money, to making your money work for you: you need passive income sources which build wealth with minimal effort.

While you might never want to retire, financial security (not being financially stressed by losing your job) is something you can achieve in your 20’s, and financial independence (not needing to work a regular job at all ) is possible in your 30’s or 40’s.

Here are the four income streams you need to build:

1: Your day job. This seems obvious, but keep in mind that you don’t need to quit your day job to pursue your passion – you can use it to fund your passion if/until it becomes your day job.

2: Your investment portfolio. Even if you make minimum wage, you can save $25 every month and invest it in Stash Invest. If you invest $500 per month, you can be millionaire in under 30 years. If you invest $1666, you can do it in 15 years (at 10% return).  Build an aggressive but diversified portfolio with minimal fees by using a robo-trader. 

3: Your side gig. You may love your job and make great money, but it’s always smart to find something to do on the side. Side projects in your current field often allow you to be in charge of a small project and use the latest technology or techniques that are too risky or difficult to approve with your boss. I’ve used this trick to qualify for jobs that I couldn’t dream of otherwise. If you don’t like your job — here is your chance to develop a new skill! If you can’t think of anything else, try driving for Uber, put up a room on AirBnB or sell something on Etsy. If you can’t think of anything, volunteer for a cause to help you develop useful skills.  Most people find that their lifestyle grows with their income, so it is difficult to achieve a high savings rate from your day job – side gigs are a great way to generate income that goes directly into your savings.

4: Asset-derived income. This is money you earn from buying things that grow in value or generate money. For most people, this is real estate, including their own home (don’t buy one until you read this), or better yet, properties they can rent out. However, you should also consider diversifying into gold, cryptocurrency (such as Bitcoin), or other assets which you believe will appreciate in value. You should choose assets that you will hold for years if not decades because you believe in their fundamental value, and not because you’re betting on short-term trends.  For entrepreneurs, this also includes ownership in businesses which produces income from dividends.

 

The myth of rising house prices

One the biggest myths about buying a home is that it is an investment. An investment is an asset which tends to go up in market value over time. But consider what would happen if this were actually true: if home values increased faster than inflation, pretty soon no one could afford a home! In fact, home values for the most part barely keep up with inflation.

The math is complicated by a number of factors: the size of homes keeps getting larger, so comparing the average home price now versus 30 years ago does not mean that any specific home will be worth more. We pay a greater portion of our income for homes than before because we pay for more home — this is a change in personal tastes, not home values.

According to the Case-Schiller Index, the price of existing homes increased by 3.4% annually from 1987 to 2009, on average. The general rate of inflation during this time was 2.9%. The increase in cost of housing slightly outpaces income growth – mostly because of government policies intended to increase home ownership!

Of course some markets are hotter than others — but if gambling is your thing, you would get lower overhead from the stock market, or even the horse races! The CAGR adjusted yearly return of the stock market for the same period is 6.27% – versus .5% for the average home.

Here’s why buying a home is a terrible idea for young professionals

Here’s the main reason why I don’t think young professionals should buy a home:

If I get fired or quit my job tomorrow, it won’t be a big deal. I’m confident that of the seven billion people on this planet, there is a person or group somewhere who will find my skills valuable enough to pay me enough to support my family. It may take me some days, months or years, and take me to Kentucky, Seattle, Shanghai, or Kathmandu, but I have no loans, debts, or any other ongoing financial commitments, so my savings will last long enough until I find the best opportunity for me.

Knowing this is very powerful: it means I can take risks and opportunities that others can’t. I can propose a risky new project to my boss, even if there is a big risk that it will blow up in my face and I’ll be laughed out in disgrace. I can propose a big new role for me, even if I’m not sure whether I’ll be able to do it. I can browse open jobs on LinkedIn and seriously consider taking them even if it means dropping everything and flying across the world. I can really negotiate my rates knowing that there are plenty of other options for me.

Now consider Kathy: a 30 something with a mortgage and auto loan. In between her mortgage, insurance, taxes, HOA fees, cable contract, etc, most of Kathy’s after-tax income goes to pay for fixed costs. She can’t get out of these commitments without months of effort and a big loss.

Will Kathy make that risky proposal to her boss? Will she surf around for better jobs in Seattle? Will she be able to tell her boss that his idea stinks or drive a hard bargain when negotiating a raise? How can she, when losing her job risks not being able to pay off her house and car? She would have to scramble to find a new job before her savings run out — and she will be limited to an area within commuting distance of her house. Besides, she has her children to think about — she has to be a responsible caregiver.

Besides mortgage worries, there is the constant risk of repairs — if her roof leaks or her fridge breaks — can she pay for unexpected emergencies? Can she take time off work for the plumber or kitchen remodel during a critical project launch at the office?

A mortgage can be paralyzing for anyone who still has their prime career years ahead of them. You may as well admit “this is as far as I will go up in the world.”

Even if you have the cash to purchase a home outright, there are still many costs to consider. First, there are the ongoing costs: property taxes, HOA fees, lawn maintenance contracts, repairs and more to worry about. More importantly, paying a large fraction of your net worth to purchase a home outright is a poor financial decision: it invests a huge portion of your net work in an illiquid and risky asset. Historically, a diversified stock portfolio is both safer and gives a higher return than a home. Even if you have cash to spare, it’s still wiser to pay the minimum downpayment and invest the rest.

When we rent, it is clear that the money is a cost spent on a service. What’s not clear is that paying a mortgage is also a form of paying rent on a service — with the addition of a high-risk, highly-leveraged real estate investment, huge transaction costs, and major restrictions on your lifestyle and career options.

The myth of America as a “Judeo-Christian” nation

The term “Judeo-Christian” was invented in the 1940’s as a response to the rise of Nazism and anti-Semitism in America.
As a historical fact, the idea that America is a Judeo-Christian nation is nonsense. In many ways, America represents a rejection of Judeo-Christian values.

At the time of the United States’ founding, the vast majority of Christians and Jews lived in outside America – and they held very different moral values than Americans. Everything that defines America – the belief in the inalienable rights of the individual, the importance of property rights and free markets, equality before the law, and the separation of religion and state was unheard of in both Christendom, and the pre-modern Jewish communities. The United States were formed as a rejection of both incessant religious conflict and economic meddling in the European kingdoms.

The ironic reason that most Americans today believe that Judeo-Christian values represent some kind of universal Western ideal is that Americans (inspired by European philosophers) exported anti-Christian enlightenment liberalism to the rest of the world, and converted Christians, Jews, and everyone else to their worldview.