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

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

#131

Post by sokoloff » Tue, Sep 17, 2013, 1:52 AM UTC

carsongross wrote: post #109

mrb wrote: post #58

Earlier quoted context omitted.

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: the capital gains you accumulate are pre-tax, so your entire investment is taxed once, upon withdrawal, as income. With up-front taxation you still end up paying additional capital gains taxes at the end of the day on your total capital gain. There are conceivable situations where you end up paying more in taxes, if your retirement income tax rate is higher than your current income tax rate plus your…

401(k)s are also generally protected from creditors in bankruptcy cases and from being subject to seizure from an adverse lawsuit settlement.

Hopefully few people will come to need such protections, but that's an additional way to keep it "truly your money".

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

#132

Post by staccatomeasure » Tue, Sep 17, 2013, 1:54 AM UTC

jellicle wrote: post #80

There are a couple of good parts about this post. The first is the HN comments, which are an unintentional fountain of hilarity. But the second is the assumptions. 50% of the US population can't afford to put even a dollar into any sort of investment security. Of the 50% of the public that does own some sort of security, most of them are in the three-figures range. This index card, without realizing it at all, has ta…

It says it has all the financial advice you could ever need, not all the advice you need right now.

Poor people: save money and pay off credit card debts. Middle Income And Above: do that + other rules.

And saying poor people couldn't save even a dollar is nonsense. Poor people are not 100% optimal in their spending and financial matters - often quite the opposite. Furthermore, poverty is often something people grow out of (the poor skew young), and this has some good advice for doing that faster.

Stop making a useful article out to be some elitist hogwash.

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

#133

Post by jamesaguilar » Tue, Sep 17, 2013, 1:57 AM UTC

jellicle wrote: post #80

There are a couple of good parts about this post. The first is the HN comments, which are an unintentional fountain of hilarity. But the second is the assumptions. 50% of the US population can't afford to put even a dollar into any sort of investment security. Of the 50% of the public that does own some sort of security, most of them are in the three-figures range. This index card, without realizing it at all, has ta…

The last line of the card is for those who aren't. Otherwise, they need to grow their income, because nothing you do is going to fix the problem if you are making 15k per year.

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

#134

Post by sokoloff » Tue, Sep 17, 2013, 1:59 AM UTC

chris_mahan wrote: post #104

ajross wrote: post #72

Earlier quoted context omitted.

Professional traders have been known to put in the time to learn about this stuff too. Don't fool yourself. You might make some good bets. You might make some bad ones. You're not going to systematically outperform a market as an individual investor by anything but luck (or plausibly by chasing a "hunch" based on good intuition and evidence that the professionals missed -- but don't fool yourself, that's luck too).

I have consistently outperformed the market since 2007, when I started investing (I refer to the market as the DOW). Just because the average salary in the United States is $57,000 (random-ish number) does not mean that's what I have to settle for because it's the average. If I put in the time, work smart, work hard, and keep learning, then the expectation is that I can beat the average income. Likewise, I can beat t…

Have you outperformed on a risk-adjusted basis (ie: delivered alpha)?

Or simply beat on an outright basis?

That time period, aggressive buying of nearly anything beat the DOW-30 (as my portfolio handily beat the DOW30 as well, since I'm full risk-on at this point in my life). I know I crushed the DOW, but I'm much less convinced that I delivered alpha.

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

#135

Post by superuser2 » Tue, Sep 17, 2013, 1:59 AM UTC

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…

Never borrow money? You've just completely eliminated car ownership for a good chunk of the middle class, and homeownership for pretty much everyone but the very rich. That's probably a defensible position, but it's definitely not normal financial advice.

If putting $7,000 away for retirement right now nets you more by retirement age than the lifetime cost of a car loan, you should take the loan.

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

#136

Post by Dylan16807 » Tue, Sep 17, 2013, 2:00 AM UTC

timr wrote: post #100

Afforess wrote: post #97

Earlier quoted context omitted.

4% return is conservative. 7% is actually the historical average. So my 4% left plenty of room for bad years. RETIRING in San Francisco would be a massive mistake. If you are retired why the hell are you living in a uber-expensive city. Location matters less when you don't have a job. Move up to Oregon. Also if you decide to have children, that is a conscious decision you made to dump your millions down the toilet. I…

"4% return is conservative. 7% is actually the historical average. So my 4% left plenty of room for bad years." It's only "conservative" if you don't understand variance. The risk isn't in the value of the average. The risk is in the variation around that average. Like I said: if you invested 66% of your net income in the stock market in 1999, you'd be a long way from retirement today. And if you're tempted to keep a…

S&P 500 is higher now than it was then. Sure variance can hurt, but investment made from 1994 through 2004 would be doing fine right now.

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

#137

Post by kjs3 » Tue, Sep 17, 2013, 2:01 AM UTC

wdr1 wrote: post #125

jellicle wrote: post #80

There are a couple of good parts about this post. The first is the HN comments, which are an unintentional fountain of hilarity. But the second is the assumptions. 50% of the US population can't afford to put even a dollar into any sort of investment security. Of the 50% of the public that does own some sort of security, most of them are in the three-figures range. This index card, without realizing it at all, has ta…

Honestly, when it did become so evil to give honest, practical advice to the middle class? The wealthy have been sufficiently vilified that we now have to crucify those not born into money, bu starting to do okay? This was a very reasonable & practical post with good advice for those starting to come into money. Why is that so bad? That type of advice can't be dispensed without a holistic social program? That's total…

Get over yourself. What is total bullshit is entitled twats like you mentally rewriting the article so it's not "all the financial advice you’ll ever need" as claimed but "all the financial advice you’ll ever need if you're in the minority and an up and coming middle class wage earner who has sufficient disposable income to act on the advice".

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

#138

Post by kjs3 » Tue, Sep 17, 2013, 2:03 AM UTC

jamesaguilar wrote: post #133

jellicle wrote: post #80

There are a couple of good parts about this post. The first is the HN comments, which are an unintentional fountain of hilarity. But the second is the assumptions. 50% of the US population can't afford to put even a dollar into any sort of investment security. Of the 50% of the public that does own some sort of security, most of them are in the three-figures range. This index card, without realizing it at all, has ta…

The last line of the card is for those who aren't. Otherwise, they need to grow their income, because nothing you do is going to fix the problem if you are making 15k per year.

"they need to grow their income"

Hey lazy poor people, work harder. Got it.

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

#139

Post by sokoloff » Tue, Sep 17, 2013, 2:04 AM UTC

derekp7 wrote: post #112

steve-howard wrote: post #92

Earlier quoted context omitted.

You're not too wrong; you can borrow against a 401(k) (<50% of the balance, no more than $50k total). Most financial advice says to stay away, though.

That is one thing I don't understand, is the advice to not borrow against your 401k. Lets say you have a 3-year auto loan, that is 7% interest. If you convert that to a 401k loan at 4%, that is a savings right there. Oh, but that money you borrowed isn't getting any investment returns in our 401k (I hear people say). But it is -- it is getting a 4% return (what you are paying back in interest). And considering that a…

The money that you take out of the 401k is no longer protected against creditors. (Someone borrowing from a 401k seems more likely than the average 401k holder to be at risk for bankruptcy.)

Some plans do not permit net-new contributions while a loan is outstanding. Even when plans permit it, the fact that you're borrowing on Thursday might not have you in a situation to make payroll deductions on that Friday. (This is situational, of course. If you're in dire straits overall, you might still not be making contributions.)

I'd consider borrowing from a 401k to buy a house, or to pay off credit card debts that were 15% or worse and that's it, full stop. Refinancing 7% debt at 4% seems not worth it, especially if you're taking money out of equities to do it.

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

#140

Post by superuser2 » Tue, Sep 17, 2013, 2:05 AM UTC

coldtea wrote: post #32

muzz wrote: post #13

Earlier quoted context omitted.

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...

Opportunity cost.

$250,000 invested now could be substantially more by retirement than the cost of the mortgage over its lifetime.