SECURE Act, Gift Giving, and Simplification

As you are completing your last minute Christmas shopping, I want to share an article that I found interesting, but first, I want to quickly highlight, without going into detail, one of the largest pieces of retirement legislation in years.

This legislation is known as the Setting Every Community Up for Retirement Enhancement (SECURE) Act.  It passed both the House and the Senate last week and was signed into law by President Trump on Friday.  While there are a number of provisions, I want to particularly note that the Roth Conversions we recommended many clients make this year will become even more desireable under the new legislation as means of reducing tax liabilities.  I won’t go into the details here, but if you have questions about how this affects you, please don’t hesitate to reach out to our office.

Why you Should wrap Gifts Poorly

Human psychology and human behavior is fascinating, and understanding these can often provide an advantage that isn’t immediately intutitive.  This is one reason I find behavioral finance particularly interesting and leverage the latest research as I work with clients and manage client portfolios.  It’s also why I love books like “Think Like a Freak” by Levitt and Dubner, and as a parent, I really enjoyed chapter five, “Think Like a Child”.  (Hint: this would be a great last minute gift for the book lover on your list!).

So, how can you leverage human psychology to improve your gift giving?  An article I read this week, “The science of gift wrapping explains why sloppy is better”, summarizes a recent study entitled “Presentation Matters: The Effect of Wrapping Neatness on Gift Attitudes”, which found that the more neatly wrapped a gift is, the higher the expectations of the gift inside.

The practical takeaway is that having an immaculately wrapped gift tends to be counterproductive, elevating expectations beyond whatever the gift inside can deliver! By contrast, gifts that are not as well wrapped tend to reduce expectations, such that whatever is inside tends to be better received (whether it was actually a gift they wanted or not). In other words, the neatness of gift wrapping itself appears to be used as a cue for how good the gift itself is anticipated to be… and neat wrapping sets the bar dangerously high in many/most circumstances, while it’s the sloppily-wrapped gift that is more likely to lead to a pleasant surprise!

From the paper or box to the ribbons and bows, gift-wrapping supplies have grown to become a multi-billion-dollar industry in an effort to make the gift look as presentable as possible. However, this research suggests that simpler wrappings are actually more effective.

Finishing The Year Strong

Speaking of simplification, in the quote below, Apple’s founder points out a fascinating paradox. It’s easy to overthink things. It’s much harder to simplify our thinking and avoid distractions that keep us from important insights.

“Simple can be harder than complex. You have to work hard to get your thinking clean to make it simple. But, it’s worth it in the end because once you get there, you can move mountains.” — Steve Jobs

This is especially true when we’re looking at ourselves and our (all-too-human) mistakes or setbacks. We tend to dwell on those and overthink them.

Don’t fall into that trap.

As you finish out the year, take a moment to celebrate your successes and accomplishments. If you need some tips or additional encouragement, check out this month’s Visual Insights Newsletter for insights on how to think about the year’s setbacks in a new, simpler light and discover how to finish 2019 strong.

When you consider the lowlights of 2019, focus on what you did and the progress that came from the situation. You’ll gain so much more from this perspective than from finding fault or feeling guilty.

Have a great Christmas!

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