Lately I've been spending my time doing a lot of reading. I've read 'You're Broke Because You Want To Be' by Larry Winget, which talks about all the stupid ways we keep ourselves out of money. This book talks less about the 'advanced' topics of investing but is good in its own right. His 'in your face' writing style calls you out on all your irresponsible character flaws and is either funny or disturbing, depending on how you look at it. I thought it was funny with a twinge of painful personal truth.
I've read Dave Ramsey's Total Money Makeover (with workbook), where there was more of the same (really good advice about wise vehicle buying philosophies), helping you see the benefit of doing things smarter so that you can pay down debt and use that newly freed up money to begin investing. Very motivating.
But better than both of them is a book called I Will Teach You To Be Rich by Ramit Sethi. This book picks up where Dave Ramsey's book leaves off. It's geared towards twenty and early thirty-somethings who want their cake and eat it too. You won't find a bunch of frugality-preaching here; he tells you to pick a few areas you can get some Big Wins in (think areas to revamp which will allow you to spend less/make more) freeing up money for investing over the long term. Not to mention Ramit has a funny, smart-alec writing style that keeps you engaged and laughing.
Personally, my investment history is abysmal. I've never really actively invested; I had a financial advisor, who helped me with my 401K which I rolled over into an IRA, and I had another investment account (some kind of IRA) that my stepfather had set up for me. I cashed them both in around the same time due to cash shortages for bill paying. Before that, I'd never even been able to contribute to the IRAs, or chosen to, my priorities being elsewhere. I've never bought stocks and never learned anything about it, only absorbing what others have said about investing (which is fraught with misinformation, lack of information and horror stories of loss stemming from poor investment decisions), which of course scared me away.
Ramit explains things in such a way that it is easy to understand. Even if you are a high school student, you can understand this. Combined with the successful actions of investors such as Warren Buffet, and David Swenson (who has milked a 16.5% return rate from the market and has doubled Yale University's money every 4.5 years since 1985), and recommended courses of actions by Ramit Himself, this book gives you NO EXCUSE for making your plan to save and invest your way to retirement.
He tells you:
Basic term definitions
Why you should NOT get a financial advisor
Why Index Funds are a much better choice than mutual funds
Why people who say investing is risky say this and why not to listen to them
How you can invest (safely for retirement) even if you are Lazy and are Not Interested in learning about investing
A pie chart used by Warren Buffet giving the types of investments and quantities of each, as a guide
on how to diversify (invest over several categories to spread out chances for gain and reducing chances for loss in any one area)
Step by step how to on choosing 401K investments
How to choose funds and actually buy them for your Roth IRA
Pitfalls (and successful actions) of considering your home/Real Estate an investment
How to (tools, equations etc) choose funds that have lower fees
How to choose (tools etc) funds for a diverse asset allocation (how to choose a nice balanced portfolio)
And did I mention the ONE type of FUND to buy (based on your current age) if all this makes your eyes glaze over and likely to continue not investing?! (spoiler alert: it's a Lifecycle Fund aka Target Date Fund)
Ramit has made me SO EXCITED* that I've opened an online high interest savings account** so that I can save up enough to get one of these funds. I checked out his book at the Round Rock Public Library but so far have taken about twenty pages of notes. I should just buy the book and highlight and mark it up, but I'm going to save my money instead! (it's only 7.88 on Amazon.com)
Please check it out here: Your future self put you on this webpage for a reason...it's because he/she wants you to take the steps now so he/she can be happy later.
*I am a tiny bit sad that I can't start actually acting on Ramit's extremely sexy investment advice right away; instead we are working simultaneously on our debt repayment (we don't have any really high interest debts) and an emergency fund of $1000, and after that we will keep socking money away. We recognize that our next savings goal should probably be to save three months' worth of living expenses which would amount to about $6,900. But it will be very hard not to raid that prematurely to open up a Lifecycle Fund.....we'll see what happens!!
**The reason I opened an online savings account is so that it won't be linked to my checking and me or my husband's present-day selves cannot easily transfer money OUT of it to cover shortages, thus saddening our future selves. It gives 1% APY/interest (better than a brick and mortar bank due to not having cost of maintaining buildings and more employees etc) and yet we would still be able to get access to our funds (keeping them liquid) within three days if a true emergency came up, unlike a CD/certificate of deposit.
No comments:
Post a Comment