WE DARE YOU NOT TO READ THIS GOOD ADVICE…
Kind of like the National Lampoon cover from the 1970s, “Buy this magazine or we will shoot this dog.”
The Author Rob is constantly amazed, or perhaps a little dismayed, at how highly educated, high earning people, even business people, can be so financially challenged. “Challenged” is a nice way of saying dumb. Personal financial planning is not differential calculus. It is not Organic Chemistry 600. Nor does it require a finance degree. Yet very smart people can be very ignorant, perhaps more so oblivious, to savings and investments for long-term financial goals and retirement.
The Author Rob recalls a guy he used to work with. A vice president in the actuarial department at a large health insurance company. He bought stocks based upon tips and hunches. Yet he had the math skills to rival the brightest quants. Phyisistis. Engineers. The Author Rob explained his fundamental analysis methodology, drawn from Better Investing magazine, some low priced newsletters (real paper with stamps and return addresses), loose-leaf volumes of Value Line, calculator, pencil and eraser.
He left the company after a short time and the Author does not know if he picked up any of the ideas shared with him.
FLINTSTONES, MEET THE FLINTSTONES…
In a column he wrote for stockharts.com, He discusses a married couple with advanced graduate degrees. He calls them Fred and Wilma.
Rose provides the following advice in his column:
Okay, so here are my ten basic rules for all the Fred and Wilmas out there — for the investment ostriches who prefer to bury their heads in the sand.
- Save first. Put aside a portion of each paycheck you receive. Force yourself to stretch. Then do a budget after you’ve stashed your savings.
- Learn to budget. Stay away from credit card debt. That’s not budgeting.
- Take a class. Read a book. Make an effort to learn about finances.
- Purge bad habits. Perhaps you shouldn’t buy new shoes every week!
- Create a plan. Put it in writing and get a professional to review your plan.
- Taxes matter. Understand the difference between a taxable account, a tax-deferred account and a tax-exempt account.
- Make it a hobby. Embrace your financial assets. Play with your portfolio. Have fun.
- Discipline. Automate your investing through all seasons and all types of markets. Compounding is indeed the eighth wonder of the world — use it to your benefit.
- Don’t procrastinate. Start now. There are always hundreds of excuses not to do so — ignore them all!
- Invest for your kids’ sake. Make sure you have enough for a long retirement so that you aren’t a financial burden to them. Better yet, teach them to be financially responsible so you can spend their inheritance.
Number Seven is especially important. When the Author Rob thinks back to his budget busting hobbies-Ducati Motorcyles, scuba diving, sports cars. But investing is one hobby that makes money and does not swallow it. An avocation that is fast becoming a vocation.
And Nine is perhaps the most important. It is never to late, but it cannot ever be to early. The compounding effect of money comes straight to earth from paradise.
WE DON’T LEAVE MONEY ON THE GROUND IN THE DESERT OF THE REAL!