Financial Changes We’ve Observed Over The Last 20ish Years

ByScout & The Squire
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We’re old and we’re not ashamed to admit it.  Both of us began our financial journeys back in the mid-2000s and discovered Financial Independence about a decade later.  So needless to say, we’ve seen a lot of things over the years and there have been many changes in the world of personal finance & investing, as well as changes within the FI community itself.

As old people tend to do, we thought it would be fun to reminisce and share some of our observations from the past couple decades. Hopefully this will be interesting to not only younger readers so they can learn how things were different years ago, but also for older readers since it may bring back some fond memories of yesteryear.

Scout

While compiling my list of observations I guess I never realized exactly how different the financial world is today compared to just a couple decades ago when I first got into it.  Here’s what I’ve noticed from my own perspective and what I’ve personally experienced over time.

  • The gain in popularity (aka mainstream acceptance) of index funds.  Index funds have existed since the 1970s, but it’s taken a while for them to really catch on.  When I first started investing in the early 2000s (through my company 401k), the industry was dominated by actively managed funds.  And for those who didn’t want to invest in a mutual fund, the “only other option” was individual stocks.  I didn’t realize it until now, but thinking about all of the books I read when I first learned about personal finance & investing, the majority were centered around how to pick individual stocks using various strategies.  Luckily, I did come across a handful of books about index funds and decided to follow that path.  At the time it was a no-brainer to invest with Vanguard since they were the index fund OGs and there honestly weren’t that many other options to choose from anyways (I think Fidelity had some index funds and perhaps Charles Schwab, but most fund companies only offered actively-managed funds).  Investing in index funds felt weird for a while since not many people were using them or really had even heard of them, so it’s been very interesting to see increased awareness & availability over the years.  Whereas a 401k may have been lucky to include even 1 index fund option 20 years ago, now most retirement accounts offer a plethora of choices while some even set them as the default option or perhaps the only option.  I have to admit that I initially felt like I was part of an exclusive club or that I had stumbled upon a secret many years ago and enjoyed that distinctiveness, but at the same time I’m glad that so many people have access to these wonderful investment vehicles.
  • Lower fees for investors.  I wouldn’t say that fees necessarily made it cost-prohibitive to invest when I was first getting started, but I have noticed fees drop significantly over the years which has made it a much more palatable experience.  Not only have trading costs come all the way down to $0 at many major brokerages, but mutual fund expense ratios have dropped as well with Fidelity even offering 4 funds with a 0% expense ratio, which is truly insane!  Note: Within my HSA I’ve been investing in both the Fidelity Total Market (FZROX) and Fidelity International (FZILX) zero funds for the past 7 years and I haven’t had any complaints (or any fees for that matter) at all.  Although I don’t invest in individual stocks much anymore, I did experiment with various stock picking strategies when I first caught the investing bug.  Most brokerages used to charge a commission well into the double-digits just to buy & sell stock, which is so crazy to think of today.  Back in the day I used a company called TradeKing (which was acquired by Ally long ago) since they only charged $4.95 per trade.  Even that fee seemed high to me, but I guess the positive was that it limited me from trading too often because I hated paying “such a high price”.  In the world of mutual funds, although I’ve always invested primarily in index funds which already had low fees, I did have some active funds that charged well over 1%.  Over the years it’s been interesting to see how fees across both passive & active funds have dropped as competition has increased in this space.  
  • A shift in investment management/financial advice fees.  Although I’ve primarily been a DIY investor throughout my financial journey (until working with a planner very recently), I’ve been aware of fees in this industry for a long time.  The traditional fee structure for working with a financial advisor was either paying commissions based on specific investment products sold or an Assets Under Management (AUM) model, where a recurring fee was charged based on a percentage of total assets managed.  While both of these old fee structures still exist, nowadays fee-only advice is much more common (i.e. hourly or a flat-rate per project).  Aside from my long-held personal views about many of those who work in the world of professional financial advice (which have admittedly changed over the years), the threat of high fees has always been one of the major reasons for me not wanting to seek help.
  • The rise of cryptocurrency.  I’ll admit right off the bat that I don’t invest in cryptocurrency and I have only a very high-level knowledge about it (but I’m open to learning more), yet I don’t have any desire at the moment to invest in it.  With that said, it’s been very interesting to see a completely new asset class get introduced and observe how it’s being adopted by investors.  Although Bitcoin seems to be the prominent cryptocurrency at the moment, in the past it seemed like there were many more competitors like Ethereum, Solana, & Cardano.  At one point it also seemed like everyone was trying to jump in and create their own coin with the most notable being Dogecoin.  Similar to the meme stock craze during the pandemic in 2020, it seems like many people are investing in Bitcoin just to get rich quick via the Greater Fool Theory, meaning that someone can make money from buying overvalued securities because there will usually be someone else (i.e. a greater fool) who is willing to pay an even higher price.  Conversely it appears that only the minority of crypto investors truly believe in the technology & uses behind it.  My personal view is that Bitcoin (and other crypto) is still so new (invented in 2009) and has such a short track record that it’s hard to gauge its proper place within an investment portfolio.
  • A move away from cash to other forms of payment.  Cash used to be king.  This was true for all of my childhood, but started to change when I became an adult.  Credit card usage became more prevalent as more stores accepted this form of payment and as many of them also stopped charging service fees (usually 3%) or required minimum purchase amounts (typically $5 or $10).  While most of my friends & family were still using cash, I transitioned to using credit cards rather quickly mostly due to convenience – instead of carrying around so many physical bills and a pocketful of coins, I could just keep 1 or 2 cards on me at all times.  It’s funny because I still remember a specific time about 15 years ago that I bought a very inexpensive item at the grocery store (probably ~$1) and my wife got embarrassed and actually apologized to the cashier because I was using a credit card.  Nowadays, nobody would even bat an eye over something like that, especially my wife.  In addition to credit cards, various forms of digital payments such as Venmo or Paypal and digital wallets (on smartphones & smartwatches) have become increasingly popular.  I’ll be the first to admit that while I understand the added convenience, I still use traditional physical credit cards – sometimes old habits are hard to break.
  • Creation of new fintech tools.  Back in the day the only tools available to individual investors were a good old pencil & paper or the almighty spreadsheet.  Yes, there was some software out there but it was either clunky or only available to professionals (usually due to its high price).  New fintech tools have come along with a considerable focus on budgeting, income & expense tracking, and future projections while some even allow account-linking to provide real-time financial snapshots.  The first wave of these tools included products such as YNAB, Mint, and Personal Capital which were all geared towards a slightly different audience, yet all blew traditional spreadsheets out of the water with their increased capability & functionality.  I’ve never really been a budgeter myself, so my fintech tool of choice has been Personal Capital (now Empower), which I link all my financial accounts to.  For me it’s been fun, interesting, and for the most part encouraging to log-in once a week to see an overview of my entire financial life all in one place.
  • Increased interest in behavioral finance.  Most classic research & theories about investing (including many famous books) hold the assumption that all investors are rational and act accordingly.  However, even from my own perspective of observing & interacting with other people, I know that so many of them act irrationally or based on emotions (myself included).  So it’s been very interesting to hear more & more discussion around behavioral finance recently in the past 10-15 years, which is the study of how psychological factors, emotions, and biases influence financial decision-making and impact market behavior.  I find this topic absolutely fascinating because it helps explain why some people react in seemingly illogical ways and how all of us see money differently.  I had always heard the phrase “personal finance is more personal than finance” and with the tenets of behavioral finance in mind, it seems more true now than ever.
  • Additional flavors of Financial Independence.  When I first stumbled across FI in 2018 there was only one path, which was to live a life of (sometimes extreme) frugality in order to save & invest as much as possible to get to FI as quickly as possible.  Simultaneously, the typical FI person was depicted as a middle-age, white male, software engineer.  (To be fair, this stereotype wasn’t completely unfounded; most of the popular early FI blogs were written by these people).  Over the years there have been so many new variations of FI introduced, with new ones seemingly introduced all the time such as Coast FI, Slow FI, Barista FI, Lean FI, Fat FI, etc.  It has been great to see all of these new flavors of FI because it makes the entire notion of Financial Independence more accessible and a lot less daunting – no longer does someone need to feel the pressure & urgency of rushing straight to full-FI, but people can live their own version of a FI-lifestyle (i.e. being smart with money while living with intention & choices).  In addition to new variants of FI, there has been increased exposure to many more types of people in the community from all different cultures & financial backgrounds.  This has been very inspiring to me and I’m sure many others because it just goes to show that Financial Independence is truly open & available to everyone.
  • More of a focus on FI instead of RE.  When I first learned about Financial Independence the prevalent acronym in use was F.I.R.E. which stood for Financial Independence, Retire Early.  Similar to the narrative of the middle-age white male who rushed to get to FI, the other half of the story was that his ultimate goal was to retire completely from all forms of work and just sit on the beach.  Unfortunately this is still how many people outside of the community view FI, but it hasn’t proven to be true in reality.  In the intervening years there are so many stories of people who achieved FI but then went on to do so many other things such as starting a career in a different field, traveling, or volunteering for causes they support.  Whatever the case may be, it’s rare to learn of any early retiree who just sits around all day.  Note: In parallel to this changing view of post-retirement life, the term “F.I.R.E.” has been largely replaced by just “FI” since the emphasis is now primarily on achieving Financial Independence in order to obtain more choices & more control over life, not just to retire & do nothing.
  • Greater number of FI events & gatherings.  At both the local-level and national/international-level, the number of FI events has exploded over the past handful of years.  My initial experience interacting with the FI community was strictly virtual via the multitude of podcasts that I listened to.  It felt like each podcast host & guest were talking to me and that we were all part of the same group.  The only downside of course was that each conversation was one-way with no mechanism to have any back & forth discussion.  Then one day through the ChooseFI podcast I found there were many groups meeting locally throughout the country.  With nothing close to me, I started a local group in my area in 2019 and since then it’s been great meeting with other people nearby to discuss money, particularly diving into issues or topics that are unique to members of our group.  In parallel, some other FI events have been growing nationally such as CampFI and the EconoMe conference.  Both of these are excellent because they’ve acted as a central-gathering spot for the broader FI community across the country with just another way to share ideas and meet like-minded individuals.  Very recently similar events have popped-up internationally, as well as expanded into other venues such as a FI cruise.  It’ll definitely be interesting to see the number of events continue to grow in the future, spreading the reach of the FI community.
The Squire

Although I’ve been learning about personal finance for a couple decades now, mostly from Scout and resources he has recommended, it took me several years to start investing. As I’ve continued to consume content, I’ve observed some changes, at least from my perspective.

  • Greater acceptance of sharing financial education. Maybe it’s just me, but when I was just starting out in my career 20 years ago, talking about personal finance with colleagues or family seemed to be discouraged. When someone brought up finances back then, it seemed that the conversation only involved which financial advisor someone was using or recommended. There were of course finance books, but there seemed to be very few that recommended the regular person making their own finance decisions. Although general concepts were mentioned, the actual ins and outs of how to plan for retirement, what to invest in, how to work through tax implications, and how to withdraw money once retired seemed to be left for the professionals. Over time, I feel like more inside information has been shared with the public, and more of a do-it-yourself attitude has been shared in general. The internet has made sharing information through blogs, videos, and podcasts so much easier for more people to access. I now hear people at work sharing their thoughts when it comes to budgeting applications, investment ideas, and podcast recommendations… along with advisors.
  • Case studies are cool! Yes, everybody is different. Personal Finance is personal. However, when there are people willing to share their numbers and others that understand how the math and tax implications work, it makes for really interesting content where people can finally start to understand how to go about retirement planning and considering all the factors in their own life. Case studies are not everybody’s cup of tea, but the ability to walk through a real-life situation with numbers, charts, and a plan, can be very interesting and applicable for those who are learning about or are interested in teaching others about personal finance. As more people are willing to share their financial journeys, more people are able to learn and make better decisions.
  • You don’t have to have a finance degree to explain aspects of personal finance. I feel like a couple decades ago people had a very hard time being taken seriously when giving financial advice, unless they were an actual advisor. Today, there are loads of people giving financial advice through every medium… and people listen. Like many other jobs, the subject of personal finance can be complicated, but the knowledge needed is available on the internet. This is not to say that anybody talking about finances knows what they’re talking about, or is considering every person’s circumstance. However, there are people who either are personal finance experts or are very passionate and have educated themselves on certain parts of the subject, and they truly want to share their knowledge with others. This is a game changer. Yes, it can be hard to know at times whether someone is as knowledgeable as they think they are. It can also be hard to know if someone is sharing the whole truth while trying to also sell something. However, there are a good number of people out there that really are trying to pass on their knowledge of finances, whether it is to pay it forward, to help others out of the goodness of their heart, and/or to make money for their time. These people have been able make different parts of finance more mainstream and accessible.
  • Blogs and podcasts provide a deeper understanding. I enjoy reading books about personal finance, but I don’t always have a lot of time to read. Listening to podcasts was a game changer for me. As much as I like to read books, which is how I started to learn more about finances, I just don’t always find time to read. As soon as Scout introduced me to podcasts, I realized how big of a deal these were. People who commute, like to exercise, and for people who don’t like to or have a hard time reading can learn from actual experts in their fields, including personal finance. This makes it so much more accessible. I’m also a very visual person, so blogs and books can give me a much more solid understanding of more complicated subjects. The other wonderful thing about blogs and podcasts is that they can go into so much more detail in a single post, or a series of posts or episodes. As the blogs and podcasts go into more depth, some of the resources they provide give answers to even more questions that the reader or listener has. Interviews add even more depth, and link the audience to insights, books, podcasts, etc. of the interviewees as well. The ease for almost anybody to be able to share their knowledge can seem overwhelming, but it allows for more available resources. The availability of blogs and podcasts have given more access to personal finance than ever before.
  • Financial enthusiasts are very welcoming. Although Financial Independence is fairly new, the general trend has been to be very encouraging and welcoming to outsiders. When people stumble upon Financial Independence or a new blog or website about finance, or attend their first meet-up, the group is very happy to welcome the new people as they are. The genuine niceness of the finance communities is very heartwarming and contagious. I think that even some of the most successful people in personal finance have made stupid financial decisions, and they seem willing to share some of their mistakes and that they are only human when they see others that are in similar situations. And yet, they know that they were able to bring about change in their lives that brought about more stability, understanding, and appreciation for what mattered in their lives. I think in general, these people are now happier and feel more purpose in their lives, and perhaps fulfill a sense of purpose by sharing their insights with others to help in their financial journeys.

Links/Resources

Reader Questions

  • Are you a long-time investor or have you been part of the FI community for a while?  If so, what changes have you noticed over the years?
  • Are you new to personal finance, investing, or to the FI community?  If so, does anything we’ve observed surprise you?

Leave your answers or comments below – or email us directly at info@epicfinancialjourney.com

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