WALL STREET LOVES to depict everyday investors as fools. But there’s scant evidence this is true—and plenty of reason to question Wall Street’s motives in perpetuating this myth.
No doubt about it, many individuals make investment mistakes. But so, too, do many professionals. Indeed, if everyday investors were so incompetent, it would presumably be easy for professional money managers to take the other side of their misguided trades and thereby beat the market. Yet reams of data prove that most money managers trail the market averages.

CAN YOU AFFORD TO retire—or should you tough it out in the workforce for a few more years? It’s time to run the numbers.
First, take all your retirement savings and divide that amount by 25. That’ll tell you how much you could potentially withdraw from your nest egg each year, assuming a 4% withdrawal rate. Be warned: You might need to make those withdrawals during a major market downturn. As a precaution, consider keeping five years of portfolio withdrawals in a money-market fund,

IF WE AREN’T ON TRACK to retire debt-free, we should make a big push to pay off all loans before we quit the workforce. Why? There are the obvious reasons: Once we retire, we’ll no longer have a paycheck to service those debts, plus—by paying off all loans—we lower our cost of living and make retirement more affordable.
But there’s a less publicized problem: If we carry debt into retirement, we’ll need to generate additional income to service those loans.

WHEN WE’RE AROUND age 50, we should give our insurance coverage a serious rethink. There’s the usual question: Should we raise the deductibles on our homeowner’s and auto policies, because we’re now wealthier and can afford to take more financial risk?
But the thornier issue involves three other policies: Can we afford to drop our disability and life insurance—and should we purchase long-term-care coverage? In each case, we need to consider how much we’ve already saved for retirement or how much we’re likely to have when we retire.

THE LIST OF MAJOR financial goals is short, but daunting: Prepare for financial emergencies, save for retirement and buy a home. To this list, many of us need to add one more: Pay for our children’s college education.
Ponder what sort of college your kids might go to—a state university, a typical private college or an elite private college—and find out the likely annual cost. Multiply by four and you’ll have the cost in today’s dollars to send each of your children to college for four years.

WHEN WE FIRST ENTER the workforce, we shouldn’t worry about precisely how much we need for retirement—and instead focus simply on socking away as much money as we can. Those initial dollars we save may seem like a drop in the bucket, but they should make a major contribution to our eventual retirement, because they’ll enjoy decades of investment compounding.
But around age 40, it’s probably worth sitting down and calculating how much we might have at retirement—and whether it’ll be enough.

ESTATE PLANNING can involve all kinds of legal documents and complicated strategies. But three simple steps are essential: We should make sure we have a will, the right beneficiaries named on our life insurance and the right beneficiaries listed on our retirement accounts. Naming the right folks on our retirement accounts is especially important, because there’s a good chance these accounts hold the bulk of our wealth.
These aren’t one-and-done decisions. For instance, we’ll want to revise our will if we move to another state,

PURCHASING A HOME is a huge mistake if we’ll move within the next few years. But it can be a great idea if we envisage staying put for at least five years and preferably far longer. And, no, this isn’t because houses are a great source of price appreciation—which they usually aren’t. Instead, there are two solid reasons to buy a house.
First, we lock in our housing costs. While renters face never-ending increases in their monthly payments,

HEALTH INSURANCE can help us to stay productive and earn an income in the short term. But we also need to consider our long-term earnings, and what would happen if we suffered a disability or—perish the thought—we died prematurely.
We should start by pondering who depends on us financially. If nobody does, we probably don’t need life insurance. But if we have a spouse and children, we might need heaps of coverage. We should think about how much we’ve saved already—and how much additional money our family might need in the years after our death to,

IF FUNDING A 401(K) with an employer match is the best deal in savings, the second-best deal is paying down high-interest debt, notably credit card debt. Got a card balance costing 20% a year? Paying off that debt is like earning a guaranteed 20%—a rate of return far higher than we’re likely to earn in the financial markets.
What if we have lower-cost debt, such as student loans, car loans and mortgage debt? Much depends on what the interest rate is,

YES, WE’RE ONLY ON step No. 4—and we’re already talking about retirement. There’s a host of reasons saving for retirement should be a top priority. But two reasons stand out.
First, retirement is easily our most expensive goal, and it takes decades of saving diligently and earning investment returns to amass enough. By starting to save for retirement as soon as we enter the workforce, the sum we need to sock away each month will be far more manageable.

FORGET THE DEBATE over how best to ensure access to health insurance, whether it’s Obamacare, Medicare for All or some other system. One way or another, we should each make sure we have health coverage—because our financial life could quickly unravel without it.
It isn’t simply that those without coverage might be reluctant to see a doctor, imperiling their long-term health and their ability to work. On top of that, if we don’t have health insurance,

THERE’S NOTHING LIKE a pile of cash to ease our financial worries. Indeed, while today’s spending often brings only fleeting pleasure, not spending that money—and instead building up a cash cushion—will likely deliver ample long-term happiness.
Consider stashing that cash in a low-cost money-market mutual fund or a high-yield online savings account. These accounts should pay more than a savings account at a brick-and-mortar bank, plus separating our cash cushion from our everyday bank account will likely make us think twice before dipping in.

ALL TOO MANY Americans lead shaky financial lives. They often overdraw their checking account. They carry credit card balances. They pay bills late. Even an unexpected $400 or $500 expense can leave them scrambling.
We should strive mightily to avoid this sort of financial life—because it’s a life overflowing with stress. How do we escape its clutches? We should cultivate three qualities.
First, we need to build some financial breathing room into our lives by limiting our monthly fixed financial obligations.

ONCE YOU’VE BUILT your portfolio of low-cost index funds, benign neglect is the best strategy. But you shouldn’t neglect your portfolio entirely.
Every year or so—or after big market moves—look to rebalance your portfolio. This isn’t something you need worry about if you opt for a one-stop shopping fund, described in step 4. But everybody else should have target percentages for their various fund holdings. For instance, you might have earmarked 40% of your portfolio for a total U.S.