
This 4×6 index card has all the financial advice you’ll ever need - bcn
http://m.washingtonpost.com/blogs/wonkblog/wp/2013/09/16/this-4x6-index-card-has-all-the-financial-advice-youll-ever-need/
======
jellicle
There are a couple of good parts about this post. The first is the HN
comments, which are an unintentional fountain of hilarity. But the second is
the assumptions.

50% of the US population can't afford to put even a dollar into any sort of
investment security. Of the 50% of the public that does own some sort of
security, most of them are in the three-figures range. This index card,
without realizing it at all, has targeted itself towards the top 10% of the
population: people who have jobs with 401Ks, people for whom Roth IRAs will be
useful.

In other words, if you are well into being one of the richest people in the
richest country in the world, here you go - save 20% of your income, and so
on. And you'll be fine!

So I'm just curious: suppose you aren't?

~~~
mechanical_fish
The percentage of US workers with access to a retirement-benefits plan is 71%.
57% of all US workers participate in such a plan.

(Source: U.S. Bureau of Labor Statistics, 2009 National Compensation Survey,
[http://www.bls.gov/ncs/ebs/benefits/2009/ebbl0044.pdf](http://www.bls.gov/ncs/ebs/benefits/2009/ebbl0044.pdf))

In Table 2, it says that even 15% of the lowest income decile - people making
less than 90% of workers - find a way to participate in a retirement plan.

Here's a more detailed writeup from the Bureau:
[http://www.bls.gov/opub/cwc/cm20100520ar01p1.htm](http://www.bls.gov/opub/cwc/cm20100520ar01p1.htm)

Meanwhile, the "top 10%" of households earn $135k per year or more, while the
median income is around $50k.

(Source: [http://www.economist.com/blogs/dailychart/2011/09/us-
househo...](http://www.economist.com/blogs/dailychart/2011/09/us-household-
income))

Anyone making over $60k per year could (in theory; this is a highly abstract
argument at this level, of course!) save 20% of their income without dropping
below the median household income of $50k; households making over $60k per
year appear to constitute 32% to 40% of the population, if I read this Census
Bureau chart correctly:
[https://www.census.gov/compendia/statab/2012/tables/12s0690....](https://www.census.gov/compendia/statab/2012/tables/12s0690.pdf)

None of which says anything about the effectiveness of 401k plans, or anything
else. But if you're going to handwave about numbers it's nice to hit the right
order of magnitude.

~~~
lutusp
> Anyone making over $60k per year could [...] save 20% of their income
> without dropping below the median household income of $50k.

20% of 60k is 12k, 60k - 12k = 48k. So no, the claim isn't true for the most
trivial of reasons.

~~~
pathy
Nitpicking, 48k is close enough for the point to still be valid.

You are technically correct though.

~~~
lutusp
> 48k is close enough ...

Mathematics is the one discipline where "close enough" isn't close enough. :)

~~~
pathy
Technically correct again but in this case it really is close enough :).

------
JoshTriplett
Almost all of this is excellent advice, except for one point: "save 20% of
your money". That's a bare minimum, which will let you retire after about 37
years of working. Bump it to 35% and you'll retire after 25 years. Bump it to
50% and retire in 17. Bump it to two-thirds and retire in 10 years.

That's one of the most important factors in your personal finances: not how
much you make off your investments, not whether you max your 401k, but _how
much of your income you save and how much you spend_. The only more important
factor is "never borrow money", and in particular "never carry a balance on a
credit card".

~~~
enraged_camel
One of the recommendations is actually wrong, and in fact outright harmful.

"Buy inexpensive, well-diversified _mutual funds_ such as Vanguard Target 20xx
funds."

Yeah, no. Mutual funds, even those by Vanguard, have high expense ratios, and
there is absolutely no evidence that they outperform their equivalent index
funds. Jack Bogle, founder and retired CEO of Vanguard, himself recommends
index funds over mutual funds for this reason.

~~~
ankzap
Vanguard Target funds are nothing but a collection of passively managed index
funds. The ER is slightly higher than doing it a la carte, but it re-balances
without having to worry about it.

~~~
cowsandmilk
it is only higher if you qualify for admiral shares in all the funds contained
in the target fund. With the current case of most target funds having a 2%
holding in International Bonds, you would need to have $500,000 invested to
make it cheaper to buy the individual funds.

------
lpolovets
Scott Adams, the creator of Dilbert, has a similarly good set of advice:

\- Make a will.

\- Pay off your credit cards.

\- Get term life insurance if you have a family to support.

\- Fund your 401(k) to the maximum.

\- Fund your IRA to the maximum.

\- Buy a house if you want to live in a house and you can afford it.

\- Put six months’ expenses in a money market fund.

\- Take whatever money is left over and invest 70% in a stock index fund and
30% in a bond fund through any discount broker and never touch it until
retirement.

\- If any of this confuses you, or you have something special going on
(retirement, college planning, tax issues) ( hire a fee-based financial
planner, not one who charges a percentage of your portfolio.

(source:
[https://retirementplans.vanguard.com/VGApp/pe/PubVgiNews?Art...](https://retirementplans.vanguard.com/VGApp/pe/PubVgiNews?ArticleName=DilbertGuidetoPersonalFinance))

~~~
cmbaus
Typically fee based advisors charge a percentage of assets under management.
The is opposed to traditional brokers who charge trade commissions. There are
few who aren't paid based on AUM.

------
humanrebar
I consider it to be a huge oversight that they left off building an emergency
fund.

Before buying a house, buying individual securities, or maxing any retirement
contributions, you need enough liquidity in your investments to get you
through an illness or layoff that leaves you without income for a year.

It amazes me how otherwise intelligent peers of mine will be paying extra on
mortgages, student loans, and retirement funds with less than $5k in the bank.

~~~
ajross
That sounds wrong. An unexpected year-long unemployment isn't unheard of, but
for an already-employed investing professional (i.e. not a recent entrant/re-
entrant to the employment market who wouldn't be able to take this advice
anyway) it's really quite rare. Certainly it's not true that most people
"need" to do that, as it won't happen to them.

This sounds like the kind of failure mode better addressed by solutions like
insurance instead of upfront savings.

~~~
humanrebar
In broad strokes, the more specialized your skill, the harder it will be to
find a job that meets your salary expectations. Sometimes this will mean
moving to a new city or being unemployed for over a year. Sometimes this will
mean taking a pay cut, which means you'll need some cash to break a lease or
otherwise see you through downsizing your lifestyle.

Also keep in mind that it's huge to have 6 months of expenses easily available
while evaluating job offers. You're much more likely to settle when you have
to worry about paying your mortgage next month.

~~~
ajross
Both of these replies are speaking to the social issues. Yes, people can lose
their jobs, and it does happen. My point was quantitative: it happens _rarely_
, and so addressing it with individual savings is a poor choice for the same
reason that we don't pay for catastrophic health care out of savings.
"Insurance" is a better social tool, as it requires far less capital be tied
down.

And that insurance is readily available in the market, if the duck on my
television is telling me the truth.

------
0003
>Never buy or sell an individual security. The person on the othr side of the
table knows more than you do about this stuff.

The person on the other side is c++.

------
nostromo
Am I alone in wondering if the advice about broad index funds is no longer
good?

We're still below the s&p inflation adjusted high from ~2000 -- almost 14
years later. When will the gains finally arrive?

I worry that there is some systemic problem in our economy that has leaders
playing whack-a-crisis every five or ten years that erases years of gains.

I've read John Bogle and _I want to believe_. But a few years ago I took some
money out of index funds and placed it in a rental property and so far I've
seen very predicable returns with no loss in principle, and it makes me wonder
if I should keep bothering with index funds at all.

~~~
cperciva
_We 're still below the s&p inflation adjusted high from ~2000 -- almost 14
years later._

Only if you're looking at the _price_ index. The _total return_ index --
including dividend payouts -- peaked at 2108 in September 2000, and is now at
3027. After inflation that's a gain of 6%, for a real return of slightly under
0.5% per year... but hey, at least it's positive.

~~~
jayp
It's barely positive if you compare the two points. However, if you have
investing regularly via your 401k (etc), you also bought in during the low
periods. So, your gain would be much more than just minimal positive.

------
chris_mahan
I trade in individual securities, but I put in the time to learn about the
companies, the industry, and so on. Also, having taking econ, accounting,
finance, and statistics in college helps.

~~~
ajross
Professional traders have been known to put in the time to learn about this
stuff too. Don't fool yourself. You might make some good bets. You might make
some bad ones. You're not going to systematically outperform a market as an
individual investor by anything but luck (or plausibly by chasing a "hunch"
based on good intuition and evidence that the professionals missed -- but
don't fool yourself, that's luck too).

~~~
chris_mahan
I have consistently outperformed the market since 2007, when I started
investing (I refer to the market as the DOW).

Just because the average salary in the United States is $57,000 (random-ish
number) does not mean that's what I have to settle for because it's the
average. If I put in the time, work smart, work hard, and keep learning, then
the expectation is that I can beat the average income. Likewise, I can beat
the average market by putting in more time, more effort, more learning, than
the average investor.

I tried forex for 2 years, and did poorly, so I stopped, and learned my
lesson.

I bet on Ford at 1.60. I bet on Tesla at 16, and 24. (not heavily mind you,
just 2.5% of my portfolio). I research the companies, the management. I not
only go to the annual report, but I also read books by the founders, read
about their manufacturing (are they using lean like Toyota or lean like GE?).
I went after Ford based on Mullally's performance at Boeing. I went after
Boeing based on the 787's promises. (It's doing very well.) I read Deming.

I lost $900 in American Airlines, and $300 in Washington Mutual. I did lose
$6K on a $10K mutual fund that went south in 2007-2008. It looked like it
would recover, but then wasn't following the market up. I've made a lot less
money with mutual funds that with stocks.

Granted, I've been riding a pretty nice wave since the drops of fall 2007 and
mid 2008, but I don't blindly pick a stock and buy in. I'm very careful where
I put the money, and will do 2-4 weeks of research on a single company.

I also research their competition, and business trends in general. This means
I don't watch TV, don't watch sports, and will do one movie per month with my
son. Instead, I read. A lot.

I do max my 401k because of company matching, but I'm not holding my breath on
returns. There's an event horizon where it's better not to match and buy
securities directly, because of the 1% or so fees. (You start out with twice
as much, but you get less annual yield.) You don't pay taxes till you sell,
and you can sell at a time of your choosing.

I don't day-trade, I don't even month-trade. I generally invest for 7-15
years.

Finally, I invest only my own money, and that is a very strong motivator for
spending the time to do it right. (Small caps do slightly better than large
caps--more risk, more return. Diversify.)

~~~
sokoloff
Have you outperformed on a risk-adjusted basis (ie: delivered alpha)?

Or simply beat on an outright basis?

That time period, aggressive buying of nearly anything beat the DOW-30 (as my
portfolio handily beat the DOW30 as well, since I'm full risk-on at this point
in my life). I know I crushed the DOW, but I'm much less convinced that I
delivered alpha.

~~~
chris_mahan
I got better than anything else I could have invested in. That's what matters
to me.

~~~
ajross
You did that over a period that was a decidedly bull market, though.
Presumably sokoloff's question was intended to point out that very similar
strategies (trying to pick "winners") is likely to _underperform_ the market
in bear conditions, sometimes very badly.

I knew a lot of people who thought they were hot stuff day traders back in
1998 too. Spoiler: they weren't.

~~~
chris_mahan
I went in in August 2007, when the DOW was at 14700 or so. I watched my
portfolio dip from $27K to $18K. Everyone I knew was going cash. I didn't. I
trimmed the sails, turned into the wind, and learned. There's no better
learning that reading everything you can about the market when the market is
doing back-to-back triple-digit drops in the 8000's, with your money in the
game. I sold some pigs, bought some as they were going down. The best pickings
were on the floor, BK at the corner, and people had written them off. I got
lucky that I was buying when everyone was scared, but I didn't buy because the
stock was low, I bought because I knew the companies had customers, long term
contracts, good manufacturing know-how, good management, and made products
their customers wanted. At that point, I reinvested another $25K in
securities, from when the DOW was around 7500, and gold was shooting up, to
about 10,000. After that, it was all growth, reinvestment of dividends, etc. I
pulled $10K out in December 2012 (down payment on car), and had $61K in the
portfolio after. This week, not really doing anything, it's at $99K. Yes, it's
a wave, but like in surfing, you gotta be in the water to catch it. I have
holdings in about 60 companies. My last trade was selling $1600 of Honda stock
and buying $500 of Fedex and $600 of Toro, both adding to existing positions.

------
zedpm
Seems like good advice, though a great many Americans are at a disadvantage
because their employer doesn't offer a 401k. Even with no employer match, a
401k allows an individual to save much more money in a tax-advantaged account
($17,500 for a 401k vs. $5500 for an IRA). If you're a W-2 employee but your
employer doesn't offer a 401k then you're pretty much stuck paying higher tax
rates on any savings beyond $5500/year.

~~~
mrb
With no employer match, a 401k has ZERO tax advantages. Because it merely
delays when your income is taxed: after withdrawing it from the 401k.
Mathematically you end up with the same capital whether your pay income taxes
today and invest post-tax money, or whether you invest in a pre-tax 401k and
pay taxes later.

~~~
carsongross
That's not true: the capital gains you accumulate are pre-tax, so your entire
investment is taxed once, upon withdrawal, as income. With up-front taxation
you still end up paying additional capital gains taxes at the end of the day
on your total capital gain.

There are conceivable situations where you end up paying more in taxes, if
your retirement income tax rate is higher than your current income tax rate
plus your capital gains rate multiplied by the ratio of capital gains to the
total capital.

I've spreadsheeted it out and using a 30 year timeline and what I most would
consider an extremely conservative rate of return, you end up with about 15%
total advantage. This can go up to 20 to 25% if you assume more aggressive
returns.

Despite that, I hate the fact that your money is locked up and there is a
severe penalty if you pull it out (except in a few situations, and even then
the amount you can pull is limited.)

Is it worth 15% of your money for it to be truly _your_ money? It is to me,
but that's a subjective call.

~~~
dragonwriter
> With up-front taxation you still end up paying additional capital gains
> taxes at the end of the day on your total capital gain.

Not true if it is a Roth IRA, which is post-tax contribution but tax free on
withdrawal.

~~~
carsongross
Of course.

A Roth IRA almost always makes sense, which is why they are so limited.

~~~
dragonwriter
> A Roth IRA almost always makes sense, which is why they are so limited.

A Roth IRA makes sense in two circumstances:

1) You have maxed out contributions to tax-deferred retirement accounts, such
that the only options for additional retirement savings are Roth IRA or
regular investments with no special tax benefits (i.e., post-tax contribution
and capital gains tax on withdrawals.), or

2) you expect to be at a retirement-savings-excluded income esuch that the
average tax on withdrawals from your retirement savings would, if taxed as
income, be greater than the taxes you pay on current-year income. (Otherwise,
your better off with a tax-deferred vehicle than a Roth IRA.)

------
Jugurtha
Seeing the comments here about people is interesting. Whether it's in the
comments or in reality, _most_ people aren't conscious they _are_ poor.

Poverty isn't a privilege reserved to those who live under bridges, or take
showers once in a while.

Driving to work and back every day, stuck in traffic, getting home exhausted
and not wanting to do anything _is_ poverty.

It's amazing how many guys I know who start working and consider it a success
and start spending cash, get a car on credit, get a mortgage and what not.
They actually think that having an expensive car makes them rich, yet can't
even afford a part of that car breaking. It's a disaster for them.

So, if you have to slave for a pittance (or not, you're slaving anyway). If
you can't afford to be ill with some weird disease and getting properly
treated for it without waiting _social security_. If you can't afford a good
life for your children. If you can't buy something (a car, a house) without a
loan and it still doesn't represent a good portion of your assets..

If you can't do that, you're poor. Poor in money, and most probably poor in
time, too.

------
ww520
I don't know how good the advise is to max out 401K and other retirement
account. Some of the 401K accounts have very limited choice of investment. For
example, you can't do real estate investment.

If you know what you are doing, you might want to retain the money outside and
do the investment yourself on investment that are not available in a typical
401K account.

~~~
eatmyshorts
Look at the costs associated with each of your 401K investment options.
Usually, most plans include at least one that is not actively managed, and
their management costs tend to be significantly lower. Additionally, but
avoiding actively managed funds, you also avoid the "chasing the tail"
syndrome that leads to almost all active managers under-performing index funds
over time. Layer in the tax benefits of 401K accounts, and I think the advice
to max out 401K and other tax-shielded investments, and to look for
"inexpensive, well-diversified funds" is very good advice. If followed
correctly (few do, from the sounds of the replies to this article), I think
you'll find that the advice is sound.

------
kondro
I would have an opinion but Australian law prevents me from having one without
providing a statement of advice.

~~~
kintamanimatt
I doubt anybody could construe a general opinion that's not tailored for a
specific individual's situation as financial advice, if that's what you're
getting at. Maybe it's different in Oz.

~~~
kondro
You'd be surprised. Our law assumes quite a large amount of potential
uneducation and general stupidity when it comes to an unsophisticated investor
interpreting financial advice.

~~~
reginaldjcooper
You can't even post a, "this is not advice but here's what I am doing..."?
That seems overly strict.

------
anovikov
What about non-US people? U.S. index funds are off limits to us, and European
ones are hard to trust, and normally require a lot of difficult paperwork to
get in unless you are a citizen of a particular country, and operate off a
very localized, and very small equities market (say Austrian, however healthy
Austrian economy is i find it hard to bet my retirement savings on it,
especially given neither my income nor my expenses have anything to do with
it). And yes, fees of those funds are way higher than Vanguard's, due to their
small size.

With income in 7-figure range, one can buy commercial real estate, which gives
decent returns and is a good replacement for exchange-traded equities. But
what about others?

------
johnnyjustice
What does HN think about the last statement? -Promote social programs for when
things go wrong

~~~
humanrebar
Sounds like political advice more than financial advice.

In a similar vein, I would advise people to support charities that help the
less fortunate like food banks, but I wouldn't consider that financial advice.

~~~
muzz
he clearly qualifies it for "when things go wrong", so the suggestion is more
like some kind of insurance in case that happens

~~~
humanrebar
They have insurance for that. Why isn't that suggested then?

No, someone thought they'd be cute and throw a political jab in there.

~~~
vkou
That is a form of social insurance.

~~~
humanrebar
Social insurance is a misnomer in this context. I was referring to short- and
long-term disability insurance, which will cover you for many disaster
scenarios.

------
joseph_cooney
...If you happen to live in the United States, and the tax laws there don't
change.

~~~
muzz
well yes, but it should be too hard to replace "401k" with whatever tax-
advantaged retirement program is available

~~~
kintamanimatt
Edit: Misinterpreted what a 401(k) is. I thought it was a tax-free savings
account that you can borrow against, rather than a form of pension plan. The
UK does have something somewhat similar: a personal pension scheme. The rest
of this comment is wrong, but I'll leave it here for giggles.

\--

They don't really always exist. As far as I'm aware there isn't really the
British equivalent of a 401k, for example. Brits have ISAs but they're just
tax free savings accounts with an interest rate generally well below
inflation. Cash ISAs also come with the restriction that you can only deposit
a very low amount into them per year -- this year it's £5,760. You also can't
re-deposit withdrawn money without that further deposit subtracting from your
annual deposit limit.

The trouble with putting large amounts of money in a savings account is that
it generally comes with interest rates that (even before tax) are less than
inflation. Savings accounts are great for socking away money to cover
temporary shortfalls in income, but not much else.

~~~
steve-howard
You're not too wrong; you can borrow against a 401(k) (<50% of the balance, no
more than $50k total). Most financial advice says to stay away, though.

~~~
derekp7
That is one thing I don't understand, is the advice to not borrow against your
401k. Lets say you have a 3-year auto loan, that is 7% interest. If you
convert that to a 401k loan at 4%, that is a savings right there.

Oh, but that money you borrowed isn't getting any investment returns in our
401k (I hear people say). But it is -- it is getting a 4% return (what you are
paying back in interest). And considering that a well balanced fund is going
to have some amount in a lower fixed-interest investment, that isn't much of a
problem (just rebalance the fund when you take your loan out, then rebalance
again as it gets paid off).

The ONLY downside I see, is that you have to pay it back all at once if you
lose your job, or face a 10% penalty (plus tax) on the loan balance.

~~~
sokoloff
The money that you take out of the 401k is no longer protected against
creditors. (Someone borrowing from a 401k seems more likely than the average
401k holder to be at risk for bankruptcy.)

Some plans do not permit net-new contributions while a loan is outstanding.
Even when plans permit it, the fact that you're borrowing on Thursday might
not have you in a situation to make payroll deductions on that Friday. (This
is situational, of course. If you're in dire straits overall, you might still
not be making contributions.)

I'd consider borrowing from a 401k to buy a house, or to pay off credit card
debts that were 15% or worse and that's it, full stop. Refinancing 7% debt at
4% seems not worth it, especially if you're taking money out of equities to do
it.

~~~
derekp7
Ah, I see -- it is a problem borrowing from 401k if you pay it back out of
your existing contributions. Makes sense -- I've just never thought of it that
way. To me, it only makes sense if you are substituting it for a regular loan,
and not touching the contributions overall. In other words, if you are in a
good financial situation to take out a regular loan, then a 401k loan could
make sense also.

------
jjoe
First advice: max your 401k. That's selfish.

That's what Wall Street wants you to do. Reality is whomever manages the funds
has only one short-term goal in mind: year end bonus. It's very common for
traders to move on shortly after bonuses are given out leaving "cooked" books
for the next trader to deal with. The plan is always to never get caught
holding the short term strategy book.

I find the typical trader archetype to be repugnant. There's so much of it
that goes against technical-minded people with even the tiniest sense of
ethics. If you're financially disciplined you're better off investing
elsewhere.

------
ChrisAntaki
This might be blunt, but I found this advice to be misleading. Many lost large
percentages of their 401ks in the ~2000 and ~2008 crashes.

Crashes historically happen at least once every decade.

------
kamaal
As some one who takes great meticulous care in planning and investing
regularly, both for the long term and super long term(retirement savings), I
can pitch in and offer some advice here.

First advice I would give is, totally avoid using credit cards. It might sound
impractical, but I've found some workarounds for it. Which is to use my debit
card as a credit card. Go frugal for a few days and save some money in the
savings account, then use that money as credit to yourself. The worst thing
about any kind of debt/loan is the interest part. Lesser interest you pay the
better, except in situation where you are making an investment with the
loan(like buying a property of a home) and the value of the investment is
growing faster, when the at the same time inflation is decreasing your loan's
net value.

Second advice I can give you is to buy your own home and avoid paying rent. If
you look at the whole thing having your own home is vastly more profitable
than renting some one else's home on a long term.

Then there are a few assorted advices I would like to give, especially to
people in India(My country), But I believe it applies equally to else where
to. Buy gold in small quantities regularly. Gold is protected from inflation,
and is the near standard of economic growth around the world. And value of
growth(over long term) always grows. Once you have sufficient gold- sell it
and, learn to buy real estate in city outskirts. You will see in any growing
city, sooner or later outskirts merge into main city areas and then real
estate prices shoot up. Take loans to do this, if and only if the loan is
small and as I said before, inflation affects your loan faster than, the rate
at which its value grows.

Make the mandatory 1 lac per year(if you can't make as much as you can), tax
savings investments on things like endowment insurances which serve as both
life insurance and long term investments.

Its good if you could rotate money by building a home which you could rent
out. It will serve as a steady source of income later and after retirement.

Lastly at the risk of attracting downvotes, please don't invest in stocks and
show pointless heroics if you don't understand that business. Far more people
have burnt their hard savings hoping for magical miracles to happen and make
them millionaire while dealing in stocks. In short if you know how to do it,
do it. Else keep out for your own good.

~~~
ChrisNorstrom
My friend... That sounds like some really BAD advice. Gold (even Warren Buffet
warns against), Real-Estate (which is extremely risky, limits your job and
movement flexibility), No Credit Cards (so you plan on having no credit
history?), I don't even know where to begin. That's some terrible advice.

~~~
kamaal
I am NOT suggesting you buy tons of gold or hundreds of properties. That's
what Warren Buffet advices against, because in problems like sub prime crisis,
the more you own the more you lose. That is a totally different scenario.

But I've seen millionaires being made and money being transferred through
three generations in a family, only because some one invested in properties
and bought enough gold when it was cheap and easy to buy, and later find it
multiply. And people there hardly do enough work except for building more
wealth through rents they get.

May be controlling a lot real estate is dangerous from a super super long term
perspective. But by then, your great great grand daughters bones would have
turned to dust and it wouldn't bother you least bit.

Gold, real estate, and kids. Nothing really beats these investments in a true
sense.

------
ckeck
Correction: Don't have a credit card bill to begin with.

Let the excuses and reasons for them fly, think whatever...fact is they are
not necessary. While some smaller percentage of people can be responsible, for
many it just invites problems. Don't get one in the first place.

------
peterjancelis
Doing a startup is inconsistent with the advice give here.

~~~
superuser2
Because doing a startup is not financially advisable to _most people_ without
a financial cushion. It may be fun, it may be thrilling, and it may work out
better than your wildest dreams, but good financial advice for the general
public it is not.

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gremlinsinc
this is nothing new... this is stuff straight out of the automatic millionaire
by David Bach..wanna get rich? First step is pay yourself and get out of
debt... then build up some solid investments.. real estate is a good way to
build assets and wealth flipping or rentals..rentals for long term obviously.

Or do what 80% of us reading hn plan on doing ...build something awesome and
get bought out for 10 mill.

~~~
sopooneo
I never understood why real estate would be such a good investment. If one
house is good, why not 100 as part of an REIT?

~~~
twelve40
It's different than REIT, not necessarily universally "good". One obvious
difference is with a house you get a collateral for a huge low-cost leverage,
that in some cases might be easier to settle if things go South (e.g.
shortsale). Another one is rent you save/collect from someone else.

~~~
sopooneo
To me, rent just seems like a form of dividend payment, which is of course not
unique to property ownership.

~~~
gremlinsinc
I know someone who bought a 4 plex here in Dayton for $50k in cash, and earns
500 per unit ie 2k per month or 24k per year. Paid for the investment in 2
years, and is now earning 24k per year residual and bought another property
for 78k.

Renting is a good investment if you can handle sourcing tenants and
outsourcing or handling maintenance issues.

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cmbaus
If you follow that advice, you don't need a financial advisor.

~~~
cmbaus
Even if a financial advisor meets the fiduciary standard, he or she may still
not be looking out for your best interest. I'd say become educated, and bypass
the advisor altogether.

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peter_l_downs
Seems about right to me.

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dnautics
self-contradictory: "Make financial advisor commit to a fiduciary standard"

~~~
eatmyshorts
A Registered Investment Advisor (RIA) is required by FINRA to commit to a
higher fiduciary standard than a broker (the more commonly used investment
advisor). I think that's what he's referring to. Of course, most RIAs don't
cater to anything but high-wealth individuals. Things are changing, though, as
the Internet is enabling a number of RIAs to cater to those with lower levels
of investment funds.

~~~
dnautics
I meant that the card was giving advice and the card hadn't committed to a
fiduciary standard.

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notdrunkatall
Except for the 'never buy a security' bit, I fully agree.

~~~
cperciva
Do you think you can beat the market?

Are you a professional stock market trader?

If you answered yes to the first question but no to the second, why?

~~~
briancaw2
I think with good domain knowledge and basic knowledge of economics and
finance your average Joe can do better than the market. There's a lot of low
hanging fruit in the stock market that a small investor in particular can grab
because their size allows a certain level of under-the-radar activity.

~~~
jellicle
> I think with good domain knowledge and basic knowledge of economics and
> finance your average Joe can do better than the market.

There's a word for people like you: suckers.

~~~
joonix
I think you're a sucker for thinking the "professional" trader/analyst/bot on
the other side is some kind of deity. Incompetence is endemic in almost every
profession and finance is certainly not immune. The stupidity of so many big
analysts is almost hilarious sometimes, I've made big predictions that counter
the prevailing wisdom of 99% of people and I'm a total amateur. Like parent
said, there's always low-hanging fruit out there.

