Freakonomics recently did an episode about popular financial literature vs what academics say:
https://freakonomics.com/podcast/are-personal-finance-gurus-...
Ask HN: Good resources to become financially literate
61–70 of 102 posts
Re: Ask HN: Good resources to become financially literate
#62Matt Levine's most important lesson of "financial literacy," that is never taught in any "financial literacy" classes: > If I offer you a 20% annual risk-free return, am I lying? The answer is yes, of course.
It slightly misses the point that actual threshold depends on inflation. 20% annual return on an insured bank deposits is absolutely normal for currencies with 25% annual inflation.
Re: Ask HN: Good resources to become financially literate
#63Earlier quoted context omitted.
You should at least provide some motivation to do that.
If you are living paycheck to paycheck. You can not afford to lose your job, or not have one while you are looking for another one. This economy should make you immediately do anything and everything in your power to quickly amass at least 3 months of living expenses. This will give you that safety net necessary to be able to find a new gig if the need arises. You will be amazed at how much stress it can take off you…
Ok, but is there also a rational component to this advice?
Re: Ask HN: Good resources to become financially literate
#64If you're paycheck to paycheck, the first thing to do is cut spending.
Generally the biggest expense (after housing) is food and the easiest to replace is entertainment. Don't eat out and cancel all your non-utility subscriptions/recurring charges.
Re: Ask HN: Good resources to become financially literate
#65Earlier quoted context omitted.
Rich Dad Poor Dad should always be mentioned with the caviet that: A) 99% of the book is fabricated B) It's based on methods which are significantly harder to do in this day and age The biggest takeaway from the book is the mental shift to assets and liabilities. But the anecdotal stories are pretty poor and, as I said, fabricated.
I didn't read that book but watched a seminar via YT from the author. It talked about real estate investment and I found it eye opening from how/where profits came about. The example I remember (I have no idea if these are feasible numbers, just pulling numbers out of thin air for an example) goes something like this: 1. Buy 50 unit apartment complex for $10mln. Get investors to pay $4mln, loans for $6mln. Cash flow…
For sure, it's legit. However, it's a full time job requiring a specific set of skill, training, knowledge and non-trivial upfront capital. It's not something one is looking for when they ask for financial advice, more so when they are living pay check to pay check.
Re: Ask HN: Good resources to become financially literate
#66* r/personalfinance sidebar and flowchart (US specific)
* Modeling retirement/early-retirement using a 3% withdrawal rate (ERE analysis)
* The book Your Money or Your Life (updated edition) (good for getting out of paycheck-to-paycheck thinking)
* Applying "default dead" vs. "default alive" to yourself/your household (#5 https://www.ycombinator.com/blog/how-not-to-fail/)
* Buffet/Munger writings on "margin of safety"
* Knowing your monthly burn rate and using it to calculate how much time you have saved (vs money)
Re: Ask HN: Good resources to become financially literate
#67"The Richest Man in Babylon"
→ https://archive.org/details/RichestManInBabylon_650
> The Richest Man in Babylon is a 1926 book by George S. Clason that dispenses financial advice through a collection of parables set 4,097 years ago in ancient Babylon. The book remains in print almost a century after the parables were originally published, and is regarded as a classic of personal financial advice.
> The parables are told by a fictional Babylonian character called Arkad, a poor scribe who became the "richest man in Babylon". Included in Arkad's advice are the "Seven Cures" (or how to generate money and wealth), and the "Five Laws of Gold" (or how to protect and invest wealth). A core part of Arkad's advice is around "paying yourself first", "living within your means", "investing in what you know", the importance of "long-term saving", and "home ownership".[1][2][3]
> The content is from a series of pamphlets distributed by U.S. banks and insurance companies in 1920–24; the pamphlets were bound together and published as a book in 1926.[4][5] The book is often referred to as a classic of personal financial advice,[1][2] and appears in modern recommended reading lists on personal financial advice and wealth management,[6][7][8] which has kept the book in print almost 90 years after its first edition with over 2 million copies sold.[9][10]
Re: Ask HN: Good resources to become financially literate
#68Advice here seems generally good. I did start learning about finance and investing very young, and my views have changed a lot as I’ve gotten older. So take this advice as stuff after you learn investing basics. 1) financial independence is great, but you could also die tomorrow. Make sure you understand what your most important values and priorities are, and don’t put them off in favor of more future wealth. 2) heal…
> 1) financial independence is great, but you could also die tomorrow. Make sure you understand what your most important values and priorities are, and don’t put them off in favor of more future wealth.
So much this. Raised by grandparents here. They have some strong regret how they didn't do certain things when they were young. I've seen it up-close for too long. They're kind of in a "part of your life was a lie" realization as they never challenged their beliefs.
I decided to become a digital nomad and am meeting cool people while sharpening my dating skills (my dating life is quite fun atm, took 6 months to get there - I got rusty after my relationship), while seeing cool cultures and learning languages. Truthfully, work is a welcome break (I work 4 days) to just mellow down the craziness, haha. I'm a normal looking guy, I put a lot of effort towards dating skills (20 hours per week at least, it's a second part-time job really, a fun humbling one, so many rejections, lol, ego dissolution can be achieved through psilocybin or through dating, lol).
So not even death, you might regret how you've lived it. I know I won't regret this. I am living paycheck to paycheck atm, but I have fairly good savings since this is the first time that I'm traveling this much.
Re: Ask HN: Good resources to become financially literate
#691. Spend less than you earn. 2. Learn about investing and develop an investing mindset. Investing can mean stock, but also a personal skill like cooking or a small business, a thing you can rent out, whatever. 3. Repeat. My friends live paycheck-to-paycheck and I got $300k stashed in cash and a mix of investments. I'm not living for the money, but this world is full of costly stuff you definitely do not need - and it…
I got $300k stashed in cash and a mix of investments Why? I can understand if you're saving to buy a house outright for cash, or to invest in a startup that needs a chunk of capex at the beginning, or something, but just sitting on a pile of depreciating cash assets is silly in an economic market where retail inflation is running at ~10%. If you're literally just holding cash because you can't think of anything fun t…
You seem to completely ignore the "and a mix of investments" part?
Re: Ask HN: Good resources to become financially literate
#70A Random Walk Down Wall Street is a real classic. First published in 1973, updated several times and still relevant today. Gives you a great idea of what investment is, how you should think about it, how the markets are structured and some practical advice that works for 90%+ of people.
https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street