Hey Jude, Don't Make it Bad

Occasionally we can pluck something from rock ‘n’ roll history and learn a financial lesson from it. Today we’ll be looking at Hey Jude, released by the Beatles in 1968. But what does this song have to do with your financial planning? Stick around and find out…

1) “Hey Jude” is the Beatles longest-running single.

Not only is it the Beatles longest single, but at the time of its release, it was the longest song ever released as a single…by any artist. 7 minutes and 11 seconds, if you’re keeping score at home.

And the fact that it was so long made it very important and influential. No song of its length had ever gotten significant radio airplay before, but when it’s 1968 and the Beatles release a new single, you don’t really have much choice if you’re a radio station. You sorta have to play it.

And as the song got more and more airplay, stations started to realize that listeners would actually stick around to listen to a longer song if they liked it (or the artist) enough. So in many ways, Hey Jude paved the way for other longer songs that would be released in the coming years like American Pie and Layla.
Now, if Hey Jude was over and done in three minutes, it wouldn’t have quite the same feel. Not a lot of time for naaaah-naaaaah-naaaaah-na-na-na-naaaaaah down the stretch if we’re trying to wrap it up too quickly. And sometimes in the financial world, a certain strategy or approach might take a little bit longer to come to fruition.

One example would be the stock market in general. If you invest money in a well-diversified stock-based portfolio and leave it alone for 20 years, there’s almost no scenario where you don’t end up making money over the course of those two decades. But there’s no guarantee that you’ll make money in the first year. In fact, you could see your investment get cut in half that first year. But if you let the song finish, you’re going to make your money back, and then some.

The problem, of course, is the people who believe strongly in this principle, but they don’t have 20 years on their side. If you’re 58 years old and you’re planning to retire in the next 5-7 years, you might not have time for the song to finish because you’re going to need some of your savings to start creating income for you relatively soon.

So if you have time to let the song play to the end, that’s great. If not, you need to find a shorter song that gets the job done for you.

2) “Hey Jude” was once accidentally offensive to Jews.

For a while, the Beatles owned a retail store on Baker Street in London called the Apple Boutique, which they just happened to be closing right around the time that Hey Jude was released. On the shuttered building, an employee scrawled the words "Revolution" and "Hey Jude" to promote the new single (Revolution was the song on Side B).

Well, as it turns out, “Jude” is the German word for “Jew.” And without proper context, this marketing message was seen by Jewish folks in the area as hateful graffiti.

And in the very same way, there are things in the financial world that require the proper context before they can be evaluated properly.

Here’s a prime example. A couple of years ago, I met with a couple who was already retired and they had an extremely low income. So low, in fact, that they hadn’t paid taxes in several years. After their Social Security benefits, they only had about $8,000 each year that they were withdrawing from IRAs, and this meant that they’d been in a zero percent tax bracket (with room to spare) for the last three years.

When I took a look at their investments, I discovered that every penny in their brokerage account was invested in municipal bonds. Or, as they’re sometimes called, “tax-free bonds.”

Municipal bonds pay a lower rate of interest than corporate bonds, but the trade-off is that you don’t have to pay federal taxes on the interest that you earn. But in their case, they could have had corporate bonds that paid the higher interest rate, and they still would have paid no taxes because their income was so low.

But some broker had come along and said, “Hey, what do you think about buying these tax free bonds?” and they’d said, “Tax free? That sounds fantastic!”

But to them, the tax free component was meaningless. They would have been better off with taxable bonds that paid them a higher income. But because the broker didn’t bother to look at their overall plan in the proper context, the words “tax free” were basically just graffiti that was littering their financial plan.

3) John Lennon thought the song was about him, instead of his son.

Paul McCartney wrote Hey Jude in an effort to comfort John Lennon’s 5-year-old son, Julian, while John and his first wife Cynthia were going through a divorce. But when Paul first played the song for John, the narcissist Lennon thought it was about him. He thought the lyrics “you were made to go out and get her” was Paul encouraging him to leave his wife and go after Yoko. John completely failed to grasp the notion that the song was written for his son, not for him.

And sometimes in the financial world, we run across advisors who think that your retirement plan is all about them.

About a year ago, I had a client who needed $50,000 to help out one of her kids that had run into a medical issue. Most of her accounts were invested with us, but she did have one other account (with roughly $100,000 in it) that she’d kept invested elsewhere.

She seemed stunned when I suggested to her that the $50,000 would best be generated by selling some of the assets in one of our portfolios and I told her I’d get a check processed and sent her way soon.

She looked at me quizzically, because she’d just assumed that I’d tell her to take the $50,000 from the account that I wasn’t managing.

“Won’t that hurt your business if I’m withdrawing money from my account here?” she asked me.

God love her for her concern, but I had to inform her that, first of all, I’d have a pretty terrible business model if I couldn’t sustain people taking money out of their own accounts. Second of all, IT’S NOT MY MONEY, IT’S YOUR MONEY!

But it occurred to me later that she probably only had that mindset because somewhere along the way, she’d worked with an “advisor” who was much more concerned about his own financial wellbeing than hers.

So the next time you’re listening to Hey Jude, keep these lessons in mind. Take a sad song and make it better.