All the financial advice you’ll ever need fits on a single index card

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Channel: PBS NewsHour

Views: 1,955,445

Rating: 4.7500782 out of 5

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Id: JdUKhgW1gOo

Length: 8min 26sec (506 seconds)

Published: Thu Apr 14 2016

Reddit Comments

[u/okaywithfailure]

I am such a big fan of his index card method. It demystifies savings and investment. Of course that is bad news for the overly bloated financial advice sector that thinks the government imposing a “best interest” standard on financial advisors is a civil rights violation.

This is his original advice from the index card:

1. Max your 401(k) or equivalent employee contribution.

2. Buy inexpensive, well-diversified mutual funds such as Vanguard Target 20xx funds.

3. Never buy or sell an individual security. The person on the other side of the table knows more than you do about this stuff.

4. Save 20% of your money.

5. Pay your credit card balance in full every month.

6. Maximize tax-advantaged savings vehicles like Roth, SEP and 529 accounts.

7. Pay attention to fees. Avoid actively managed funds.

8. Make financial advisors commit to the fiduciary standard.

9. Promote social insurance programs to help people when things go wrong.

Of course, you should only follow this advice to the best of your financial ability. Not everyone is going to be able to save 20%. That is why he ended up writing a short book to help people apply the advice to their particular circumstances. A big part of what financial investors get paid for is to keep their clients from freaking out and pulling their money out of safe investments to make stupid irrational investments. If you can manage your desire to “play the stock market” and just invest your money wisely and maturely, you won’t need a financial advisor.

Here are some of my own Poverty Finance Additions:

1. Avoid MLM’s like the plague they are. All get rich quick money schemes are actually scams.

2. Community college is almost always better than a for-profit college. They are also more respected. Government aid and grant assistance will usually cover your costs for Community College. Debt free education should be your priority above most other considerations.

3. Buy a cheap used car that has good repair and longevity bluebook ratings.

4. Birth Control is an investment in your future.

5. Every county has a social services department (maybe called something else) with angels called social workers who can help you manage almost any government assistance under the sun. Contact them when you are struggling to survive. There are assistance programs you may have never heard of that are available to you, from food assistance to relocation assistance.

6. VOTE. For the love of God, VOTE for candidates who believe in government, who believe that government is by the people and for the people, and who believe in the value of every individual person beyond their profitability.

[u/Ms_moonlight]

I think he was just on Freakonomics not too long ago -- what he said was pretty interesting.

[u/Erzsabet]

This is great. And not just because of what he put on the index card, but what it says about the rest of financial advice. I love it.

Wish they would do something like this for poverty finance. Or maybe we could.

Things like buying how to buy good quality items that will last over cheap items that have to be replaced, etc.

[u/napjerks]

"Ignore all the financial advice out there" is pretty damning of the financial industry and is only learned the hard way.

[u/tallducknhandsome]

Why isn’t there a reallyyyyy basic list like this. Number one: live below your means on permanent monthly bills.

[u/lifeisopinion]

This is great info. I have a few tips along these lines that have really helped me.

1. As he said cut costs whenever you can. It is insane to me how many people I see having financial issues but have 2 car payments and always have to buy the newest tv or computer. Just ask yourself if you really need it. I don't buy new things until the other one needs replaced.
2. On the subject of cars, basic mechanic skills go a looong ways. Buy a cheap car for 3k and just be prepared to do basic maintenance yourself. Tire changes, oil changes, brake changes etc... are incredibly easy and you can buy diy books from part stores that break it down step by step. Also tons of tutorials on youtube. If you spend 3 k on a car and get even a year out of it you are already ahead of where you would have been financially and odds are it will last much longer.
3. With the extra money you trim have your checking automatically deposit a certain amount into savings on pay day. You don't have to worry about the hassle this way and you won't be as inclined to make excuses and spend it. It is already gone so you won't miss it. When I first started this I didn't check my savings for a long time when I finally decided to look I had about 5k in it. It really saved my ass a couple times.
4. Like he said pay your CC in full. Same thing; auto pay. Set it to pay in full every month. If you have done everything right and used your CC responsibly you should never have to worry about it. Set personal limits to use and never go above 20% of your limit. Unless you are doing the strategy below then you can make an exception, just be responsible and cautious.
   1. Bonus: As a traveler I use this to exploit rewards programs for miles. You apply for a credit card that awards bonus miles if you spend a certain amount within a specified time. An example was my United Mileage Plus card. Their deal was spend 3000 in the first 3 months and you get 40,000 free miles. This is an economy flight anywhere in the world. I flew to Thailand for $30 dollars this way. Every purchase I made I put on my CC and never used my debit card so no money was being taken from my checking and then t just auto payed in full. It's effortless and has the added bonus of getting me from no credit to almost an 800 credit score in about two years.

That's about all I can think of. If I have anymore I will post them. What's nice about these are they are really easy and work well. I am really bad at procrastinating and doing errands. This basically takes care of itself so you can avoid those roadblocks.

[u/NonrestrictiveBroom]

The fatalism about picking stocks is somewhat discouraging

[u/Username_Check_Out]

I’ve never considered the upping insurance deductible thing. It makes total sense though.

[u/[deleted]]

this is a solid book. everyone should read it.