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

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

#61

Post by staccatomeasure »

cperciva wrote: post #52
notdrunkatall wrote: post #34

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

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?

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.

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

#63

Post by sologoub »

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…

It's not quite that simple. What you need is a savings rate that is far above society's average in order to be ahead by that much. For US, that's relatively easy, but for many cash-heavy economies it is not. If your country propensity to save is 90%, getting to 99% isn't all that groundbreaking.

The other thing missing is to take calculated risks for higher returns. For example, if you see housing starting to recover, picking up a distressed rental is smart. Provided you know what you are doing.

I recall a while back someone posted here about picking up semi-abandoned apps that were generating some cash flow, sprucing them up and letting the revenue drip in. Again, this works if you know what you are doing, but won't work for average Joe.

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

#64

Post by cmbaus »

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…

Vanguard mutual index funds are very cheap. I'd recommend them.

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

#65

Post by [deleted] »

humanrebar wrote: post #7
johnnyjustice wrote: post #3

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

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.

[deleted]

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

#66

Post by akjj »

mrb wrote: post #58
zedpm wrote: post #37

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/y…

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.

Even without an employer match, the 401k has the advantage that interest is not taxed. This makes a big difference over the course of a career.

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

#67

Post by cmbaus »

cmbaus wrote: post #62

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

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.

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

#69

Post by dnautics »

mrb wrote: post #58
zedpm wrote: post #37

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/y…

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.

you could be even worse off, if the income is taxed later at a higher rate.

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

#70

Post by harterrt »

mrb wrote: post #58
zedpm wrote: post #37

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/y…

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.

That's not true if your tax rate changes over time, which it probably will. Specifically, when you withdraw during retirement it is likely you will not be earning much and your tax rate will be much lower than when you were working full time.
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