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Ask HN: Good resources to become financially literate

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Re: Ask HN: Good resources to become financially literate

#71

Post by pjc50 »

reisse wrote: post #62
psanford wrote: post #48

Matt 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.

I suppose another piece of financial knowledge is "check whether figures are in real or nominal units (i.e. inflation adjusted or not) and apply adjustment".

This has been greatly simplified by inflation being low for a very long period until the recent transient bump.

Re: Ask HN: Good resources to become financially literate

#72

Post by bombcar »

esskay wrote: post #6
FredPret wrote: post #4

1. An app called YNAB (You Need A Budget). They use the envelope system of budgeting and they have group classes you can join. Absolutely transformative. 2. Rich Dad Poor Dad

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.

https://johntreed.com/blogs/john-t-reed-s-real-estate-invest... is pretty authoritative.

> Rich Dad, Poor Dad is one of the dumbest financial advice books I have ever read. It contains many factual errors and numerous extremely unlikely accounts of events that supposedly occurred.

> Kiyosaki is a salesman and a motivational speaker. He has no financial expertise and won’t disclose his supposed real estate or other investment success.

> Rich Dad, Poor Dad contains much wrong advice, much bad advice, some dangerous advice, and virtually no good advice.

Re: Ask HN: Good resources to become financially literate

#73

Post by atlgator »

mattbrewsbytes wrote: post #37
esskay wrote: post #6

Earlier 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…

You can do a cash out refinance of residential property too. Use that tax-free cash toward another house, and so on. It's called the "BRRR method."

Re: Ask HN: Good resources to become financially literate

#74

Post by bombcar »

_yb2s wrote: post #58

This blog has clear information on how to be deliberate with money, and retire early on a fixed income. I also find his writing funny and enjoyable to read. https://www.mrmoneymustache.com/

The "deliberate with money" is really the whole key. Once your income is greater than your expenses, you can work out many things to do with the surplus, but getting out of the "I will just buy this now because I need a bit of joy" is huge.

One go-to I used for awhile was hamburgers - does the price of this thing please me more than the equivalent number of good burgers would?

Re: Ask HN: Good resources to become financially literate

#75

Post by onion2k »

mejutoco wrote: post #46
onion2k wrote: post #21

Earlier quoted context omitted.

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…

> and a mix of investments I don't think OP means 300k cash, but (cash + mix of investments) = 300k. For all we know it could be 10k cash and the rest investments.

For all we know it could be 10k cash and the rest investments.

Could be, but regardless, it's very unlikely that his investments are beating inflation at the moment so the point still stands. By holding on to the money its value is shrinking.

Re: Ask HN: Good resources to become financially literate

#76

Post by bachmitre »

rr888 wrote: post #52

Paycheck to paycheck is vague though. If that includes having a secure job putting money into a 401k and paying down a mortgage maybe its a perfectly good strategy. If you aren't doing those things then you need to change.

100% agree, i've got that, but how can I make most of my 401K and mortgage (e.g. through Roth IRA or refinancing? I saw some mention of both, so will have to read up on that).

Re: Ask HN: Good resources to become financially literate

#77

Post by wtk »

wruza wrote: post #38
wtk wrote: post #7

To me it seems like a lot of people enjoy having things more than being free and not having to worry about getting paid. Also 'spend less than you earn'. As simple as that - yet people struggle to follow this. It also boggled my mind to find that someone with masters degree believed they had money - despite it being cash withdrawn from a credit card. When challenged why do they not pay back their credit card - I hear…

I don’t understand. Cashing out a CC, paying fees, avoiding being out of money and having $ on the account - these statements mixed together make no sense to me.

Sorry, I mixed up one thing: Paid for things with credit card. Got paid salary on current account but not paying back credit card out of fear of having 0 on current account. Paying fees while the money on current account just sits there, making that person believe to not be broke. Ridiculous

Re: Ask HN: Good resources to become financially literate

#78

Post by ukd1 »

HEmanZ wrote: post #41

Advice 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) is important - don't forget to have some fun along the way. buying some things that are fun you want but don't need is, imho, good for you.

Re: Ask HN: Good resources to become financially literate

#79

Post by bachmitre »

jjice wrote: post #3

/r/personalfinance has some solid stuff in their sidebar/wiki. I'm big into Financial Independence as a concept and community, so I'm partial towards that. Some recommended reading (some which you may like and some you may not): - /r/financialindependence sidebar/wiki - https://www.mrmoneymustache.com/ - Bit more radical on the frugality side but a personal favorite - https://www.madfientist.com/ - Podcast and blog.…

Thanks, this is a good list to start. I will check those out!

Re: Ask HN: Good resources to become financially literate

#80

Post by sbaiddn »

I've figured out the following concepts. This is what worked for me:

- learn accounting especially cash flow accounting. Not at Deloitte partner level, the basics aren't hard, high school level understanding is enough.

Doesn't matter how "rich" you are are on paper; bad cash flow makes you insolvent and then the banks starts grabbing assets.

- Net Present Value and how future cash streams are discounted.

Very theoretical. Very important to understand

- compound interest.

This is of dubious utility for investments (who can guarantee a return? Who knows tomorrow's interest rate? And the inflation rate) but fundamentally important to understand how nasty high interest rate loans are

- learn about the market portfolio and the basics of risk.

The market port. is built on dubious assumptions (a risk free non zero return asset, market efficiency, etc) but really drives home the importance of diversification and having a safe asset as a fulcrum

- Save at least 10% of your income (when you're very young). Better 30-40%.

Make sure its not all cash. But make sure you have >4 months cash on hand, or a roof repair which ever is greater.

My goal is to avoid insolvency while putting as much aside as I can. I invest in rental properties primarily because that's what I like to own (we have two), but I have a 401k to match my employer contribution (obviously).

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