Golden Rules of Financial Safety (1999) • Hacker News Board

Re: Golden Rules of Financial Safety (1999)

#71

Post by kbutler » Mon, Oct 30, 2017, 5:31 PM UTC

wiredfool wrote: post #14

metalliqaz wrote: post #5

Advice: Just do dollar cost averaging in an index ETF. Question: Why? Answer: This article.

What advantages do index ETFs have over a comparable index mutual fund against the same benchmark? Or, to ask another way, is there any reason to prefer anything other than Vanguard's Index500 vs anything else attempting to replicate the SP 500? (I call out the Vanguard fund because the fees are very low, .14% iirc.)

Vanguard also provides equivalent ETFs - VOO has expense ratio .04%, vs VFINX .14% - basically the ETF is like the admiral class shares ($10k+ investment). https://advisors.vanguard.com/VGApp/iip/site/advisor/investm...

Mutual funds: recurring investment of any dollar amount (fractional shares). Minimum initial investment required. Trade once per day, beware loads, fees, and expense ratios

ETFs: buy or sell one or more whole shares, trade throughout the day, beware trading commissions and expense ratios.

Re: Golden Rules of Financial Safety (1999)

#72

Post by snikeris » Mon, Oct 30, 2017, 5:32 PM UTC

sulam wrote: post #56

Most of these look great. I am somewhat skeptical of Rule #8 about not giving anyone signature authority. Maybe he means this in a narrow sense that I don't understand, but when you have your money being managed for you, trades are being made on your behalf, you aren't doing them yourself. This is true from robo-advising all the way up to private banking and family funds.

He would argue against having your money managed for you. He wouldn't be against working with an advisor, but he'd want the advisor to explain things to you so that you can execute on your own behalf.

Re: Golden Rules of Financial Safety (1999)

#73

Post by tanderson92 » Mon, Oct 30, 2017, 5:33 PM UTC

PatientTrades wrote: post #4

> Rule #1: Your career provides your wealth. I mainly disagree with the first rule. Your career should not provide your wealth. Your career should keep your bills paid, provide security for the future, and allow you to live a comfortable life. Investments in financial endeavors like real estate, businesses, stocks, etc, education, and family is what provides wealth. Update: Not sure why this post is getting downvoted…

Many people are downvoting you but you're right. Browne is implying that your investment returns will not outpace your career earnings. This may not be true at all, with compound interest over a lifetime.

Re: Golden Rules of Financial Safety (1999)

#74

Post by Stratoscope » Mon, Oct 30, 2017, 5:33 PM UTC

PatientTrades wrote: post #46

dsr_ wrote: post #29

Earlier quoted context omitted.

Where does the money for those things come from, if not your career?

> Where does the money for those things come from, if not your career? The money to fund wealth building ventures comes from having a stable career. However, the act of having a career does not build wealth as the rule implies.

Harry wasn't saying that if you have a career, it will build your wealth, as if this were some automatic thing.

He was saying that the initial source of the funds that you use to build your wealth will come from your career.

Unless of course you're lucky enough to inherit those funds, but if that's the case, you already know it.

Re: Golden Rules of Financial Safety (1999)

#75

Post by germanier » Mon, Oct 30, 2017, 5:33 PM UTC

simplerufus wrote: post #9

#13 - Keep some money overseas How exactly is this possible? I am a german citizen and resident, and after hours of reaearch a few months ago i couldn’t find ONE bank in the world I could open a bank account with. I always have to be at least a resident. Did anybody figure this out? My partner is from Canada and I would love to park some money there, but I couldn’t figure out a way to do so.

Within the EU you should be able to open a bank account without large problems. Either they offer that already or you can request a basic account if you don't have an account yet in their country (which is not always great, it pays to shop around). Sometimes it takes a bit of work and pressure. I opened a Dutch account right from my smartphone within minutes. Other people I know are customers at an Irish bank (even though they officially state that you need Irish residence) because it enables them to use Apple Pay in Germany.

Most Chinese banks will open an account even on an 24-hour transit stamp (it usually helps to speak some Mandarin). Hong Kong is another possibility and will probably get you better service. Same with Vietnam, Pakistan, and lot of others countries. Some US banks will open an account for non-residents as well.

Re: Golden Rules of Financial Safety (1999)

#76

Post by bboreham » Mon, Oct 30, 2017, 5:34 PM UTC

pattle wrote: post #55

chillydawg wrote: post #20

Earlier quoted context omitted.

...or it might go to 0? Bitcoin is many things, but it certainly is not a savings account.

True it could, but theoretically the price should always go up. Plus there's risk in anything. I'd have thought that placing money in a foreign country is also pretty risky if you're not a citizen

No. No, no, no, no, no.

The price you can sell an asset for is whatever someone is willing to pay, on that day. If sentiment turns and everyone is selling bitcoin, the price will most definitely not be going up.

Re: Golden Rules of Financial Safety (1999)

#77

Post by tome » Mon, Oct 30, 2017, 5:34 PM UTC

brndnmtthws wrote: post #52

25% cash is ludicrous and irresponsible. Cash has historically been a terrible 'investment', especially since most central banks have maintained a policy of creating annual inflation. Warren Buffett has some interesting things to say about this: https://20somethingfinance.com/warren-buffett-is-moving-100-... and http://www.barrons.com/articles/buffett-bonds-terrible-in-co... for example.

Cash earns interest so it's not as terrible an "investment" as you make out, but its real strength comes from being able to buy into crashes.

Re: Golden Rules of Financial Safety (1999)

#78

Post by tome » Mon, Oct 30, 2017, 5:35 PM UTC

tanderson92 wrote: post #61

swendoog wrote: post #57

Earlier quoted context omitted.

Possibly holding cash is useful for when you need to quickly capitalize on a drop in the market?

One can do that with treasuries or T-bills which historically have earned a real return. In a crisis one often finds that treasuries are negatively correlated with equities which can be a boon.

T-bills are what Harry Browne means by "cash".

Re: Golden Rules of Financial Safety (1999)

#79

Post by Heraclite » Mon, Oct 30, 2017, 5:36 PM UTC

I'm a complete financial idiot. As in, I only have money on a government-guaranteed fund in my bank.

Where do I start to know more about this? I dont want it to stress me out though, Im not so risk adverse when it comes to my finance. I spend very little, but I want to learn more about investing.

Any advice? More specifically for people living in EU?

Re: Golden Rules of Financial Safety (1999)

#80

Post by snikeris » Mon, Oct 30, 2017, 5:41 PM UTC

SilasX wrote: post #69

snikeris wrote: post #59

Earlier quoted context omitted.

I think this article may clear some things up for you: https://portfoliocharts.com/2017/05/12/understanding-cash-wi... Harry's 25% cash isn't dollar bills, it's treasury bills, which have held up to inflation.

Or you could apply the deep understanding you gained from the article to untangle the misconception you believe the parent was harboring, rather than ask everyone, on faith, to spend fifteen minutes figuring it out for themselves, when they might not even get the insight you want them to. >Harry's 25% cash isn't dollar bills, it's treasury bills, which have held up to inflation. Short-term ones haven't for last ~10 y…

The argument of the OP almost exactly fits this lead in to the article:

> I hear some version of this argument all the time: The opportunity cost for holding cash is too high. It earns virtually nothing, and you’re guaranteed to lose money to inflation. Just get over your fear and buy stocks!