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In a couple of weeks I’ll turn 85. As far as my financial acumen goes, I owe a lot to my Dad. Back in the 40’s he was already investing in the Market and he also did his own taxes as well as those of our neighbors where I grew up in the Bronx. He and my Mom managed to actually save some money even though he never made the big bucks. The secret was to live within your means and to spend your money wisely
With those lessons in mind, I started investing early on and I did my own taxes. I was aided by reading Kiplinger magazine and other financial journals as a help to decide where to invest without the expense of an advisor. When my job started to offer a deferred compensation plan I also invested through that.
People, you don’t need degrees in finance to do this stuff.
I really appreciate your Kiplinger Magazine reference. It was my “go to” for all things financial
Here in my 55+ community, I am president of the investment club. Every member has to put money in, and we discuss stocks and vote on which to buy. I usually give a presentation on some aspect of the stock market and investing.
What I find most surprising is how little some people know about the basics of investment and taxation. And the members are self-selected – they want to learn!
It’s not surprising that ‘financial advisors’ who are little more than self-interested salesmen do so well.
So true, Ormode. If one is ignorant about a subject such as finance, how can they properly vet an advisor (salesman). The same is true for other things as well.
Peter – great post about lessons learned, regardless of the source.
Well said. Growing up, we never had much but my folks knew how to stretch a dollar. Learning to value those dollars was a life lesson that carried over into me doing my own investing and my own taxes. As a young married couple we saved even though it hurt and started investing early. Might a financial advisor helped to get somewhat better returns? – maybe. But we’ve done just fine. Have we made a few rookie mistakes? – yup. But that learning made us more inquisitive and questioning along the way.
“Might a financial advisor helped to get somewhat better returns? – maybe.”
If an AUM based financial advisor who does not use index funds and instead buys and sells individual stocks, probably not.
I have never used an AUM advisor as I feel that with the fees they would probably not beat my returns after expenses.
I always smile or maybe smirk when the consumer is always warned that “past results are no indication of future results”. Yet, the only numbers Financial Advisors can use to prove to us that they are worth their fees are past results 😎
It’s a lot of common sense but it helps to have someone to look up to.
Peter, great article, and I strongly echo your sentiment that personal finance should be kept as simple as possible.
Here in the HD community, there can be deep discussion about the relative merits of various investment types, ways to increase tax efficiency etc. But most people aren’t interested in that level of detail, and will never spend the time or effort to educate themselves.
To quote and agree with Dick, “the secret is to live within your means and to spend your money wisely and of course to always save first.”
Here in Australia this is kept pretty simple with our compulsory superannuation scheme which requires that 12% of everyone’s wage is put into retirement savings. If you can manage to buy and pay off your own home during your working years, then a comfortable retirement from your superannuation is a pretty safe bet.
Peter, I am only 82, but I agree the secret is to live within your means and to spend your money wisely and of course to always save first.
However, a lot of people today say that is no longer possible, that folks our age had things easier than young people today.
What do you think?
I believe the older generations were more willing to sacrifice and do without in order to save. We didn’t “need” a huge TV. We had a 9” black and white TV I bought with my own money in high school, didn’t replace it until I was out of graduate school and married two years. We never had fancy vehicles until we were in our sixties and our retirement was secure. As I have written I bought a new stripped down two wheel drive Toyota Tacoma I bought foe $13K and drove for 18 years. I had to load cinder blocks into the bed every time it snowed. We don’t purchase the latest phone every time one was released. Heck even today I get laughed at because I have a six year old iPhone XJR. I believe half of those years have been with the phone been paid off. But since I have an iPad to read and perform internet tasks the iPhone is only used for making calls and taking pictures which don’t need to be the sharpest possible.
I agree. My first car was the least expensive I could find. A VW Beatle for $1895 NEW. Our first house was only what we could afford on my salary. Built in 1918, small, a converted oil from coal furnace (with some coal still there) one bath, no extra anything, nothing that is considered “essential” today. Cost $29,000 with mortgage at 9-1/2%
My first car was cool. It was a VW Bug convertible that cost me $600 and I paid cash.
Sure the valves were blown, when I went up a hill it would only go about 30mph, both backseat floor boards were rusted through, and the exterior was a rust bucket. But when the top was down it was cool… And so was I.
VW, the fifth Beatle 😄
I wish I could find one of those today. I equipped it with a “computer” and used it for sports car rallying And drove it from NJ to CA.
Before I got a dedicated rally computer, I used a spreadsheet on a laptop to navigate (keep time).
We just used two stopwatches, no such thing as a laptop in those days.
I think the most effective way for parents to teach their children is by setting a good example, and you learned the most fundamental principles: “how to save, live within your means and spend wisely”. This does not require superior intelligence or advanced education, but rather discipline, wisdom and the ability to resist or ignore emotional reactions to the latest “breaking news”. Good post, Peter.
A valid point, but I learned by what my parents didn’t do which I guess is a form of example. They didn’t have much to save, but what they had was in a checking account, never invested and lived on SS in retirement.
Oh, me too. Just about all my financial decisions come from NOT wanting to follow my parents’ example. 😳
Thanks Dick. I truly believe that children, at least while they are young and growing learn so much more from observing their parents’ behavior than from any instructions they may have gotten from them. And it works both ways, that is, whether our behaviors are good or not so good, they are learning from us.
So true, which I think those who are quick to criticize younger generations should keep in mind.
My children learned about good spending habits from us. In regards to my post above, I have been trying to convince my daughter to upgrade her 10+ old car but can’t convince her to. She just doesn’t want a car payment. My son just bought his first new vehicle and he is nearing 40 years old. His previous one was starting to fall apart.
Properly maintained cars should easily last 10-15 years nowadays. But one should be banking the equivalent car payment for future maintenance and to defray the eventual cost of the next vehicle.
And, keeping a “beater” is fine as long as you don’t rely on it for everything – long distance trips with family, important long distance appointments, etc.
Her long distance trips to visit family always involve an airplane as we live on opposite coasts.
Nice post, Peter. You had a wonderful teacher in your dad. Taxes and investing aren’t rocket science. If they were, I sure wouldn’t be able to do them. I think the secret is making these things a priority in one’s life. Some school lessons wouldn’t hurt either.