
Scott Adams’ Financial Advice (2014) - arikr
https://www.mattcutts.com/blog/scott-adams-financial-advice/
======
nattaylor
Reminds me of
[https://web.archive.org/web/20171023045242/http://www.samefa...](https://web.archive.org/web/20171023045242/http://www.samefacts.com/2013/04/everything-
else/advice-to-alex-m/)

"What _is_ this simple free best personal finance advice that fits on a 3×5
card? "

* Max your 401k (or equivalent)

* Buy low fee, diversified whole market funds

* Never buy or sell individual stocks

* Save 20% of your money

* Pay your credit card balance in full every month

* Maximize tax-advantaged savings vehicles like Roth, SEP & 529

* Pay attention to fees and avoid active management

* Make financial advisors commit to a fiduciary standard (or fee-only!)

* Promote social insurance programs to help people when things go wrong

~~~
taneq
Translation: Earn at least 30% more than all your expenses combined, after
tax.

~~~
war1025
Curious where you got the 30% from out of that? Where does the extra 10% come
from on top of the "Save 20%" bit?

~~~
taneq
If you're saving 20% of your earnings, then that's 25% of the remaining 80%
(which is assumed to be expenses). I estimated another 5% for the
miscellaneous other stuff like buying shares, maxing 401(k), paying financial
advisers etc. If all of that was meant to come out of the original "save 20%"
then call it 25% (of expenses) rather than 30%.

~~~
war1025
Ah. You're just flipping around what the percentages are based off. Makes
sense I suppose. Neat.

------
hkmurakami
This kind of simple list reminds me of a simple gym workout or simple cardio.

For 95% of Americans, doing any kind of exercise is better than what they're
doing (or nothing), and similarly, for 95% of Americans, a simple proscription
like this that is easy to follow will be better than whatever they're doing
currently.

Complexity can lead to paralysis and inaction, and any positive action, even
if technically imperfect, is better.

------
sseagull
Maybe I am missing something but how can this advice work for 95% of people?
Maxing out the 401k and IRA would take $25,000 a year [0]. The median personal
income in the US is only about $30,000 a year [1].

[0] [https://www.irs.gov/newsroom/401k-contribution-limit-
increas...](https://www.irs.gov/newsroom/401k-contribution-limit-increases-
to-19000-for-2019-ira-limit-increases-to-6000)

[1]
[https://en.m.wikipedia.org/wiki/Personal_income_in_the_Unite...](https://en.m.wikipedia.org/wiki/Personal_income_in_the_United_States)

~~~
HarryHirsch
It doesn't. Depending on where you look, 40 - 80 % of Americans live paycheck-
to-paycheck. (The Guardian says it's 80 %:
[https://www.theguardian.com/commentisfree/2018/jul/29/us-
eco...](https://www.theguardian.com/commentisfree/2018/jul/29/us-economy-
workers-paycheck-robert-reich))

Matt Cutt is just talking because he doesn't know any better, tech is booming,
and he became wealthy because he joined a very successful company early on.

------
njarboe
"Pay off your credit card balance"

Most Americans will never be able to get past this one. If you can, you
already know how to spend less than you earn and are way ahead of the game.

This advice is sort of like telling a society of overweight people to "eat
less calories than you burn". True, but not very helpful.

~~~
smsm42
I am fascinated at how credit cards are both quite a good deal and a very bad
deal at the same time. If you use them right - which is mostly pay off each
month - you can get nice sign-up bonuses (up to $600 is not unheard of if
you're lucky), you can get 1.5-2% back on every purchase and 5-6% on selected
categories, and if you're careful, you can also take zero APR longer-term
loans with some credit cards (provided you pay them off properly) which helps
structure unexpected spending like major appliance breaking down.

On the other hand, you get unbelievably bad deal with 20+% APR if you don't
use them right, and on top of that various fines for not paying on time, so if
you get the wrong end of the deal, you can pay 2x-3x of the original amount.

One of many things on the credit market which makes your life much easier if
only you can prove you don't really _need_ their service.

------
thaumaturgy
I might quibble with one of the points:

> Put six months’ expenses in a money market account.

This is presumably supposed to be the "oh crap" emergency fund ... i.e., for
major, unexpected expenses which can't or shouldn't be covered by credit card.

Putting this in a money market account can make it just a little bit too
inconvenient to withdraw for emergencies, and it's subject to market
fluctuations.

My equivalent account currently has several hundred less dollars than I've
paid in to it. I know it'll be better later on, but if I needed it right now,
that would be a loss I'd hate to take.

You can now get 2.25% APY on savings accounts at legit banks (example:
[https://www.mymoneyblog.com/cit-bank-savings-builder-
account...](https://www.mymoneyblog.com/cit-bank-savings-builder-account-
review.html)). Two and a quarter sucks way worse than a healthy market, but
it's about on pace with inflation and it's a lot better than a crappy market.
It's also a lot more liquid: if I needed the cash right now, I could do it
with a bank-to-bank transfer and I should have the funds in my checking
account pretty quickly. If I wanted to liquidate my market account, there's a
couple-day waiting period while things are sold and transferred around.

I've found it helpful to break things down into:

\- cash-on-hand: what I could walk into any business and spend right now;

\- emergency fund: a modest stash that I could access in about one business
day;

\- near-term investments: market accounts and the like;

\- long-term investments: IRA.

But as other folks have pointed out, if you're saving anything at all then
you're doing better than most Americans.

~~~
kelnos
Money market account != money market fund. For example, I have a MM account
over at Capital One. It's FDIC insured. The only material difference (from the
customer's perspective) between it and their traditional savings account is
that you only get the 2% rate once you've met the minimum balance (otherwise
the rate is lower than for the savings account). Transfers from the MM account
to my checking account work in exactly the same way (and are just as fast) as
savings to checking, even down to the 6-withdrawals-per-month limit.

Agreed that there are other options with higher rates and are considered
regular savings accounts, but for most people the distinction doesn't matter.
For me, the hassle of switching banks wasn't worth a quarter percent. YMMV.

------
awinder
The 70/30 split on stocks to bonds is a little suspect. Traditionally what you
want to do is start your career with high (probably 100%) stock allocation and
slowly move towards more more bond allocation with time. There’s no right
single number there so maybe that’s where 70/30 came from, but yeah, don’t do
that for your entire career.

~~~
fredophile
A 70/30 or 60/40 split with regular rebalancing can smooth out market
fluctuations. When stocks do well this pulls money out and locks in the gains
at a time when psychologically you want to let it rise. When stocks are doing
badly this also forces you to buy at a discount when you might be inclined to
keep the money on the sidelines out of fear of future losses.

------
aresant
I read a really interesting thread recently, can't find it but the gist of it
was Index Funds appreciating isn't guaranteed (as they're pitched) and
localizing at a country level is a mistake for the future w/giant "emerging"
economies in China / India.

The counter "example"used was the Nikkei index which peaked in ~1990 and still
hasn't recovered:

[https://www.macrotrends.net/2593/nikkei-225-index-
historical...](https://www.macrotrends.net/2593/nikkei-225-index-historical-
chart-data)

The argument was to leverage index funds as a component of portfolio along
with real estate, etc.

Would be curious the HN view.

~~~
sgustard
An index fund by definition just tracks an indicator. You don't have leave the
USA to see a long-term decline; the Nasdaq is currently below its Feb 2000
peak. All index-fund investing advice includes diversification across several
asset clases. (Insert plug for
[https://research.wealthfront.com/whitepapers/investment-
meth...](https://research.wealthfront.com/whitepapers/investment-methodology))

~~~
rfinney
Nasdaq composite was 4698 in Feb 2000. Currently it is 6584. ( see here :
[https://finance.yahoo.com/quote/%5EIXIC/history?period1=9467...](https://finance.yahoo.com/quote/%5EIXIC/history?period1=946702800&period2=1546059600&interval=1mo&filter=history&frequency=1mo)
)

~~~
sgustard
You're correct, but its inflation-adjusted Feb 2000 peak was 6970.

Source: [https://www.macrotrends.net/1320/nasdaq-historical-
chart](https://www.macrotrends.net/1320/nasdaq-historical-chart)

------
derblitzmann
As a first commenter, I think I can say this is at least decent advice.
Especially around paying off debts (he specifically mentions credit card
debit, but it applies to most forms, Imo). Ignoring the other stuff around
Scott Adams, I think this is decent for most, but of course depends on the
individual.

~~~
Cyclone_
What other stuff around Scott Adams, and what's the relevance to this?

~~~
lazyasciiart
He's a lunatic narcissist with questionable critical thinking skills
[http://comicsalliance.com/scott-adams-plannedchaos-
sockpuppe...](http://comicsalliance.com/scott-adams-plannedchaos-sockpuppet/)

~~~
war1025
I believe his response to that was that people were purposely misinterpreting
what he said. I haven't looked into it in detail for a while, but last time I
did, it seemed like a perfectly reasonable defense.

~~~
lazyasciiart
How do you misinterpret him going around the internet anonymously praising
himself?

------
RickJWagner
Great advice. (Not so easy to stick with all of it, but it is very sound
advice.)

------
mey
Please add 2014 to the title

------
txt
I would add investing in precious metals to that list. Especially silver and
gold right now. Its been extremely undervalued, and steadily moving sideways.
When this stock market tanks even more then it has the last few weeks, we are
going to see metals sky rocket like it has in the past. Gold and silver are an
indispensable long-term inflation hedge. Look at jpmorgan, they were shorting
silver for how long, now they are going long buying almost 2million ozs a day,
i think they are up to over 750million ozs. All the central banks are buying
up as much as they can get there hands on, so id say its a safe move to use a
% of your savings and buy physical silver and gold. Im staying away from the
paper precious metals investments, because if we do have a financial melt
down, at least i know ill have some of my savings in my physical possession.
;]

~~~
duskwuff
No, that's very poor advice. Precious metals are comparable to individual
stocks -- by making a purchase, you are not "investing"; you are
_speculating_. There is no guarantee of long-term gains.

