Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

This 4×6 index card has all the financial advice you’ll ever need

m.washingtonpost.com

Post reply on HN
Print view View original

31–40 of 264 posts

Re: This 4×6 index card has all the financial advice you’ll ever need

#31

Post by kintamanimatt »

muzz wrote: post #8
joseph_cooney wrote: post #4

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

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

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 You also can't re-deposit withdrawn money without that further deposit subtracting from your annual deposit limit.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.

Re: This 4×6 index card has all the financial advice you’ll ever need

#32

Post by coldtea »

muzz wrote: post #13
JoshTriplett wrote: post #9

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 whethe…

The savings part sounds like advice from Mr. Money Mustache, there was discussion about his advice here before. "Never borrow money" would include never having a mortgage, which would be a huge lost opportunity for many. Not to mention borrowing money to invest in oneself, start a business, etc.

>would include never having a mortgage, which would be a huge lost opportunity for many

A lost opportunity? If you can afford a house easily buy one, if you cannot afford it a mortage is anything but a huge opportunity.

http://www.jamesaltucher.com/2011/03/why-i-am-never-going-to...

http://www.jamesaltucher.com/2011/05/why-i-would-rather-shoo...

Re: This 4×6 index card has all the financial advice you’ll ever need

#33

Post by jayp »

cperciva wrote: post #26
nostromo wrote: post #18

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…

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.

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.

Re: This 4×6 index card has all the financial advice you’ll ever need

#35

Post by coldtea »

baddox wrote: post #23
lisper wrote: post #5

Earlier quoted context omitted.

Seems like a no-brainer to me. The alternative is to have people panhandling on the streets. That's not pleasant -- on either side of the transaction. I'd rather live in a country where it wasn't necessary.

It's not a no-brainer to me. My brain desires more data on the economic efficacy of specific social programs, because even the broad implication that social programs reduce the number of people panhandling on the streets is not obvious to me.

It's obvious to us, who have watched both sides of the coin play out in different European countries for decades...

Re: This 4×6 index card has all the financial advice you’ll ever need

#36

Post by enraged_camel »

JoshTriplett wrote: post #9

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 whethe…

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.

Re: This 4×6 index card has all the financial advice you’ll ever need

#37

Post by 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.

Re: This 4×6 index card has all the financial advice you’ll ever need

#38

Post by JoshTriplett »

coldtea wrote: post #28
JoshTriplett wrote: post #9

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 whethe…

> Bump it to two-thirds and retire in 10 years. Expand it by 100 and you would be already retired before you would were even born! I guess the point of the advice is to be realistic. > The only more important factor is "never borrow money", and in particular "never carry a balance on a credit card". Well, lots of people have started companies or saved themselves from starvation by maxing a credit card.

The idea that >20% savings rates are not "realistic" is a serious mindset problem. Almost anyone on Hacker News with a paying job (i.e. not an early-stage no-funding startup) should easily be able to save much more than that. Sure, saving two-thirds of your income might be out of reach, and even the 20% advice is better than most sites that often say 5-10%, but consider carefully whether you can increase it and retire years earlier (or become effectively retired, in the sense that you no longer depend on having an income).

EDIT: "Almost anyone on Hacker News". Yes, 20% would be significantly harder on minimum wage.

Re: This 4×6 index card has all the financial advice you’ll ever need

#39

Post by Shengster »

enraged_camel wrote: post #36
JoshTriplett wrote: post #9

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 whethe…

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…

Good point, although I think he implicitly implies "index funds" in this case because later there's a bullet that says:

* Pay attention to fees. Avoid actively managed funds.

Re: This 4×6 index card has all the financial advice you’ll ever need

#40

Post by acdha »

baddox wrote: post #21
johnnyjustice wrote: post #3

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

I think it's too broad, because the economic efficacy of social programs probably varies wildly, especially when we're talking about government social programs.

> economic efficacy of social programs probably varies wildly, especially when we're talking about government social programs.

As opposed to literally everyone having to figure this out on their own? Say what you will about government programs, they're going to be more consistent than what you get pushing the problem out to millions of individual actors.

Post reply on HN