Reminds me of <a href="https://web.archive.org/web/20171023045242/http://www.samefacts.com/2013/04/everything-else/advice-to-alex-m/" rel="nofollow">https://web.archive.org/web/20171023045242/http://www.samefa...</a><p>"What <i>is</i> this simple free best personal finance advice that fits on a 3×5 card? "<p>* Max your 401k (or equivalent)<p>* Buy low fee, diversified whole market funds<p>* Never buy or sell individual stocks<p>* Save 20% of your money<p>* Pay your credit card balance in full every month<p>* Maximize tax-advantaged savings vehicles like Roth, SEP & 529<p>* Pay attention to fees and avoid active management<p>* Make financial advisors commit to a fiduciary standard (or fee-only!)<p>* Promote social insurance programs to help people when things go wrong
This kind of simple list reminds me of a simple gym workout or simple cardio.<p>For 95% of Americans, doing any kind of exercise is better than what they're doing (or nothing), and similarly, for 95% of Americans, a simple proscription like this that is easy to follow will be better than whatever they're doing currently.<p>Complexity can lead to paralysis and inaction, and any positive action, even if technically imperfect, is better.
Maybe I am missing something but how can this advice work for 95% of people? Maxing out the 401k and IRA would take $25,000 a year [0]. The median personal income in the US is only about $30,000 a year [1].<p>[0] <a href="https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19000-for-2019-ira-limit-increases-to-6000" rel="nofollow">https://www.irs.gov/newsroom/401k-contribution-limit-increas...</a><p>[1] <a href="https://en.m.wikipedia.org/wiki/Personal_income_in_the_United_States" rel="nofollow">https://en.m.wikipedia.org/wiki/Personal_income_in_the_Unite...</a>
"Pay off your credit card balance"<p>Most Americans will never be able to get past this one. If you can, you already know how to spend less than you earn and are way ahead of the game.<p>This advice is sort of like telling a society of overweight people to "eat less calories than you burn". True, but not very helpful.
I might quibble with one of the points:<p>> Put six months’ expenses in a money market account.<p>This is presumably supposed to be the "oh crap" emergency fund ... i.e., for major, unexpected expenses which can't or shouldn't be covered by credit card.<p>Putting this in a money market account can make it just a little bit too inconvenient to withdraw for emergencies, and it's subject to market fluctuations.<p>My equivalent account currently has several hundred less dollars than I've paid in to it. I know it'll be better later on, but if I needed it right now, that would be a loss I'd hate to take.<p>You can now get 2.25% APY on savings accounts at legit banks (example: <a href="https://www.mymoneyblog.com/cit-bank-savings-builder-account-review.html" rel="nofollow">https://www.mymoneyblog.com/cit-bank-savings-builder-account...</a>). Two and a quarter sucks way worse than a healthy market, but it's about on pace with inflation and it's a lot better than a crappy market. It's also a lot more liquid: if I needed the cash right now, I could do it with a bank-to-bank transfer and I should have the funds in my checking account pretty quickly. If I wanted to liquidate my market account, there's a couple-day waiting period while things are sold and transferred around.<p>I've found it helpful to break things down into:<p>- cash-on-hand: what I could walk into any business and spend right now;<p>- emergency fund: a modest stash that I could access in about one business day;<p>- near-term investments: market accounts and the like;<p>- long-term investments: IRA.<p>But as other folks have pointed out, if you're saving anything at all then you're doing better than most Americans.
The 70/30 split on stocks to bonds is a little suspect. Traditionally what you want to do is start your career with high (probably 100%) stock allocation and slowly move towards more more bond allocation with time. There’s no right single number there so maybe that’s where 70/30 came from, but yeah, don’t do that for your entire career.
I read a really interesting thread recently, can't find it but the gist of it was Index Funds appreciating isn't guaranteed (as they're pitched) and localizing at a country level is a mistake for the future w/giant "emerging" economies in China / India.<p>The counter "example"used was the Nikkei index which peaked in ~1990 and still hasn't recovered:<p><a href="https://www.macrotrends.net/2593/nikkei-225-index-historical-chart-data" rel="nofollow">https://www.macrotrends.net/2593/nikkei-225-index-historical...</a><p>The argument was to leverage index funds as a component of portfolio along with real estate, etc.<p>Would be curious the HN view.
As a first commenter, I think I can say this is at least decent advice. Especially around paying off debts (he specifically mentions credit card debit, but it applies to most forms, Imo).
Ignoring the other stuff around Scott Adams, I think this is decent for most, but of course depends on the individual.
I would add investing in precious metals to that list. Especially silver and gold right now. Its been extremely undervalued, and steadily moving sideways. When this stock market tanks even more then it has the last few weeks, we are going to see metals sky rocket like it has in the past. Gold and silver are an indispensable long-term inflation hedge. Look at jpmorgan, they were shorting silver for how long, now they are going long buying almost 2million ozs a day, i think they are up to over 750million ozs. All the central banks are buying up as much as they can get there hands on, so id say its a safe move to use a % of your savings and buy physical silver and gold. Im staying away from the paper precious metals investments, because if we do have a financial melt down, at least i know ill have some of my savings in my physical possession. ;]