I doubt there are any HumbleDollar readers who buy into the dozen notions listed below. But trust me: There are plenty of folks who do.
Trying to play financial coach to friends or family members? You’ve got your work cut out for you if:
- They imagine they can achieve financial freedom without living well below their means.
- They believe their car—or any other possession, for that matter—is an investment.
- They think it’s easy to beat the stock market averages.
- They rack up credit-card charges without considering how they’ll pay off the resulting card balance.
- They think Wall Street is on their side.
- They fail to fund a 401(k) plan with an employer match.
- They haven’t bothered planning their estate because there’ll be plenty of time later.
- They assume the safest option is to keep everything in cash investments.
- They see financial peril coming—a big home repair, the need for a new car, a possible layoff—and yet they don’t immediately start prepping their finances.
- They think tax deductions are financial freebies.
- They buy their investments from their insurance agent.
- They imagine they can wait until their 50s to start saving for retirement.
Any other signs that folks are likely a financial lost cause? And is there any way to wake them up from their money stupor?
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Mr. Clements,
I have been reading your columns for years and have enjoyed them immensely. They also have impacted positively my family’s finances. The most impactful article was one you wrote for the WSJ titled “20 Tips for No-Nonsense Investing.” I’ve shared this article with many people over the years. I notice that many articles you write are variants of this article. Thinking back to this article, are there any updates you’d make today? Also, any chance you could post this article again on humble dollar (with any updates? I believe it would benefit us all. Thanks for all you do.
Here’s the article you’re referring to, which probably can’t be read without a WSJ subscription:
https://www.wsj.com/articles/SB114031062160177956
I can’t post the full article to HumbleDollar because the rights belong to the WSJ. But, for those who can read it, I believe it’s as relevant today as when I wrote it.
I think #6 is the key. “There’s no substitute for saving money.”
They have a good reason why they bought each of their many different mutual funds. I once helped a friend with his taxes. His Fidelity tax statement showed he had losses in 40 mutual funds. While it was a bad year (2018) for the S&P 500, I questioned why he had so many funds with overlapping holdings. I looked up the expense ratios of each of the funds and made a spreadsheet showing the expense ratios (averaging .72%) and suggested he dump them all and replace them with a few funds from either Fidelity or Vanguard with expense ratios averaging less than .2%. Given that he was also paying Fidelity twice what Vanguard charges for financial management, I also pointed out that he was not getting very good advice, since they were keeping him in a complicated set of conflicting, high expense funds, making it nearly impossible to tell what he had invested in any given market segment. However, he was unwilling to discuss this further or consider my suggestions. We’re still good friends, but he just closes down when I bring up finances. I probably should have approached it differently. `I did not find a way to wake him up.