12 ms·

Every thought about personal finance I've ever had, as concisely as possible

109 points by aadillpickle 6y ago

ketamine__ 6y ago
> This portfolio was made when I was young and stupid. Chances are you're still young if you have crypto.
- will_pseudonym 6y ago
  35.5% in NFT's reads very young.
  - RyanShook 6y ago
    Trying to figure out if author is serious about this. He did start out with disclaimer it’s not financial advice...
    - will_pseudonym 6y ago
      My money is resoundingly on yes. I'm deeply cynical about NFT's the same way I'm cynical about Beanie Babies and Pokémon & MtG cards. It's not for me, but I get it, and they'll likely do quite well in terms of investment returns.
      - ketamine__ 6y ago
        But first: Let's establish it's not all wash trading.
        will_pseudonym 6y ago
        To me, participating in these markets is akin to telling people you have a hot tip on a game of musical chairs where you know when the music is going to stop. I've played those games successfully, a la GME and BTC. But I don't feel good about the proposition. I feel more and more that Charlie Munger is mostly right on this one.
mattm 6y ago
> When you should (and shouldn't) buy things For me, any non-trivial purchase I put on a list. If I'm still thinking about buying it a week or two later then I'll buy it. This not only saves money but saves clutter as well.
derekp7 6y ago
This list leaves off the most important thing -- emergency fund. You should have enough to cover expenses for a sudden loss of employment (3 months is usually recommended, but in this climate I wouldn't feel comfortable with anything less than 6). And esp. if you own a home, you need enough to cover things that pop up without depleting your emergency fund too much. For example I had to spend 9k recently to have a sewer line replaced in the yard. Yes, you have better return on investments if you pay off that 20% interest credit card. But if you become unemployed, it is better to be able to have that fund so you can keep your house and the lights on.
- mooreds 6y ago
  Yes, this is very true. Emergency funds will make your life so much less stressful. I will say that his recommendation to buy in bulk is in some way an emergency fund (or an aspect of it) because you're saving money on things you know you'll buy in the future. One thing I did when I lost a job was move some of my retirement account (roth IRA) to money market funds (from short term bonds). Basically moving some of the bond portion of my retirement from slightly risky to not risky/cash. Roth IRAs let you pull out your contribution. This was basically to augment my emergency fund, just in case finding the right new job took longer than I thought. (I was lucky, it didn't, and I was able to convert the money market funds back to short term bonds). Not a fan of pulling from retirement, but if I had to, better to take from the tax penalty free, stable portion of it.
- nostromo 6y ago
  With respect, I think this is outdated advice. Sitting on tens of thousands of dollars of cash (six months of income!) in a zero interest rate environment is a mistake that really compounds over the years -- to the point of a few $100k in lost appreciation over your career. Equities are no longer hard to turn into cash in an emergency. You can pull money out of your investment account the same day using a debit card if need be, no need to even sell your equities. Keeping access to credit, but not using it unless it's needed, is the better plan. But after several years of saving you won't need it anyway.
  - 6y ago
mooreds 6y ago
Love how the author leads with "NOTE: LITERALLY ZERO OF THIS IS FINANCIAL ADVICE!!! DO YOUR OWN RESEARCH!!!" And yet, I still read it.
- gonzo41 6y ago
  Wendy's!
vsskanth 6y ago
> 35.5% virtual NBA trading cards If somebody told me they have a third of their assets in virtual trading cards I would either guess that their net worth is max $1000 or conclude they are completely nuts and won't take this person seriously.
- dj_mc_merlin 6y ago
  I haven't been able to stop laughing..
- nostromo 6y ago
  I actually did a Google search to see if this was a new blockchain technology I hadn't yet heard of.
  - mandelbrotwurst 6y ago
    You’re probably looking for NFTs: https://coincentral.com/nba-top-shot-nfts/ https://coincentral.com/nba-top-shot-nfts/
  - agumonkey 6y ago
    nice one slightly related I remember as a kid I used to hold Dragon Ball cards collection called 'trading collection' look at this offer https://www.ebay.com/i/142949370670?chn=ps https://www.ebay.com/i/142949370670?chn=ps also, people are starting to create soccer team tokens so maybe there will be a basketballcoin
- dumbfounder 6y ago
  If he spent $1k on this because he truly enjoys it and it went up 100x is that reason to not take him seriously? It’s a good list. Yes this allocation of assets stands out and needs more explanation... but it doesn’t invalidate the rest.
  - vsskanth 6y ago
    OK this is a fair point. Never thought of it this way. Only OP can clarify but I hope it's just something he spent play money on that shot up 100x or something. However, the rest of his portfolio isn't something I would emulate either. I would consider someone more credible if they practice what they preach.
nostromo 6y ago
Skip the investment advice here and go read Ray Dalio's writing on the subject. Or if you want to keep it real simple, John Bogle. The rest has some good tips about controlling spending and the like.
- RivieraKid 6y ago
  What Ray Dalio's writing?
- superbcarrot 6y ago
  I don't think Ray Dalio has ever given much investment advice beyond "diversify into everything". I think his next book is supposed to cover some of that though.
lainga 6y ago
>In fact, you're probably losing ~$1000 a year - if you invested that, you could have ~$650K in 40 years 11% real return? Really?
- deleted 6y ago
  [deleted]
- adeelk93 6y ago
  The author uses both 7% and 11% as average expected returns to illustrate different points. Unbelievable inconsistency.
safeerm 6y ago
After giving the same advice to my friends over and over again, I created https://101.finance https://101.finance. Would love feedback on it!
- banachtarski 6y ago
  Hedging against inflation buy purchasing an unproven hype currency that very few people use as a currency (it’s more like a tulip) makes little sense imo. Buy crypto if you dig the hype and get fomo, but if you actually wanted to hedge against inflation you’d starting hoarding gold or silver.
Trasmatta 6y ago
If somebody is actually new to personal finance or investing, I would be careful with a lot of the stuff in this post. You're likely better off reading the r/personalfinance wiki, the r/financialindependence wiki (even if you're not interested in FIRE, there is a lot of extremely useful advice), and the Bogleheads wiki.
- oflannabhra 6y ago
  I read most of this article and this person is young and single. Even given that, there is some astoundingly bad advice in here (eg, the “I recommend 30% in crypto + individual stocks”). I think a better analysis would be to compare their personal strategy against a baseline one: ie, if they had invested everything from the beginning (including their NBA cards!!) in a total market index fund. I think it is fine to engage in lots of strategies, including investing in individual stocks, but that should not be included in a portfolio recommended to others.
hogFeast 6y ago
You say you don't like hold inflation and then suggest 20% cash levels...hold no cash. Also, and this is something that I have say every time these days: hold more quality stocks, and diversify geographically. The mistake with not holding quality stocks is a weird one. I worked in financial advice (research, not an adviser), and there was this adviser who was 20-30% in EM stocks...the logic being back then (in ~2012, before EMs really started underperforming) that you want to own volatile stuff because volatile stuff outperforms in the LT. Now this isn't true, I knew this wasn't true then but people automatically think that volatility=returns. It doesn't, the opposite is true. Volatile, high-beta stuff will underperform. The point of my example is that even people who should know better don't know this. Everyone owns too much US tech. If you are 100% equity and leverage constrained then geographic diversification is a genuine free lunch. Maybe we are seeing some secular change in equity ownership akin to the financialisation of savings in the 80/90s...we are not...and even if we are, you can own other countries going through the same change, no reduction in upside, more diversification. Also, you should consider options. No need to do anything crazy like selling options but volatility is, generally, pretty cheap and a way to reduce your downside without reducing upside (in fact, you have actually been paid to reduce risk...people really love picking up quarters in front of steamrollers...let's assume this won't continue though). This isn't for everyone though, some people don't care about volatility, and this strategy is only very profitable if you can lever up your beta (although I know a fund that finished the year up 20% unlevered, running zero market risk because they had a put-buying strategy). There are very few ways to reduce risk in this environment, options is one (bonds are another, you need to go quite far out to hedge out equity properly though). Also, the long-term real return from stocks is ~300bps. I think you say 6-7%, that is really best-case imo (it is not self-evident, to me at least, that the US just hockey-sticks forever).
- omgwtfbyobbq 6y ago
  It seems like a real 6+% has been possible over the past half century. https://thume.ca/indexView/ https://thume.ca/indexView/ Granted, it could be that the SP500 or the US over the past half century is not representative of equities over a longer time period, like a century, but in that case I don't know what is.
swimorsinka 6y ago
I have a knee jerk reaction against posts like this, mostly because of the reference to $4 cups of coffee. While the point is true, I think your time is best spent worrying about other things. 90% of money problems seem to come from a few things: * Expensive cars - bought with debt. * Expensive housing - again bought with debt. * Expensive schooling - even more debt. I've never bought (pun intended) the argument that dining out in any form (including coffee) even comes close to these other items. Even if you're eating out 3-5 nights per week, it's just not expensive enough. I guess if you're always feeding a family of 5 and buying expensive bottles of wine while you eat, then maybe. I also think that time spent worrying about trivial stuff like coffee would be better spent trying to make more money.
- thinkingemote 6y ago
  Edits I'm with you totally. It doesn't feel right or valid. why worry about a coffee? ( I don't!). But that feeling could be worth challenging... If there's 2 of you and you eat out 5 times a week for the length of time you would own a car... then it might be equivalent? There's that old paradoxical saying about how the rich are rich because they don't buy anything.
  - BrianOnHN 6y ago
    52×5×40=10,400
- omgwtfbyobbq 6y ago
  That's a good point. The only thing I can think of adding is that in some markets, housing is just plain expensive, and people don't have as much wiggle room there unless they can make more relative to lower housing costs in some other area and are willing/able to move there.
- gen220 6y ago
  Unless you’re really special, your grocery bills at the end of the year will dominate your takeout and restaurants bills combined. This was an eye opener to me, after meticulously tracking my finances for a year. There’s two takeaways. (1) on the days where you don’t feel like cooking, do not feel bad about ordering take out or dining out. (2) consider how you can minmax your staple grocery items, by buying in bulk, joining a food co-op. Etc You win a lot more by shaving dimes off every pound of oatmeal, integrated over a lifetime. And it’s recurring returns on a one-time investment of finding the best source in your neighborhood. Buy the coffee every once in a while if it brings you joy. Everything in moderation, of course.
omgwtfbyobbq 6y ago
> Pay down any debts greater than 7% per year (7% is the average yearly return for the stock market) Don't even think about investing until you do this, not being charged 15% a year in interest and penalties on credit card debt gives you a 2x higher return than the average investor I feel like this should include inflation. Granted, low rates have become the standard, but I think people should be aware of how higher rates can really change things. If the inflation rate is at 10%, and you can get 7-8% from a Cd, then that debt isn't looking so bad. When comparing interest rates to market returns, I think the fact that markets have returned net negatives for some ~5-10 year periods, and have returned net nothing for I believe some ~15+ year periods, should be included. Only compare interest to debts to the market over multi-decade time periods, and keep in mind that some long tail events may still not be captured.
arthurjj 6y ago
The title of this article is accurate but it's pretty bad advice. For HN crowd you can get 90% of the benefit from 1. pay off CC debts 2. Set bill pay AND investment to auto. Invest in index funds 3. max out 401k 4. Google FI/RE movement if you want to be fancy.
- MSM 6y ago
  Personally I never set up auto pay. Why? Because it hits a little harder (and you pay more attention) when you're actually typing it in every month. Sure, there's a risk I might miss a payment and get dinged, but you're guarding against Comcast quietly raising your bill $25/mo, or not realizing how much you're truly spending on your credit card every month. Otherwise I agree with the list.
  - faitswulff 6y ago
    May I suggest auto pay with notifications? I’m a forgetful person, so this lets me avoid late charges while keeping me up to date on my payments. Most banks will let you set a threshold for transactions, above which it will send you an email or SMS alert.
  - jmcgough 6y ago
    Once you have eight different things you need to pay a month it becomes way too time consuming to manually pay bills. Easier to just set up a mint account and check your finances once a month.
    - astura 6y ago
      I'm calling BS, I have more than 20 credit cards, a mortgage, and utilities and I don't find it time consuming to manually pay everything (and my mortgage has no escrow)
      - JohnJamesRambo 6y ago
        I call bs on the fact that you don’t think manually paying 20 bills every month is time consuming. Set a timer next time then multiply to see how much of your life you are going to waste doing that.
idlewords 6y ago
There's a pretty fun subreddit satirizing this mindset. Eat lentils, drive a 2003 Corolla, save every penny for retirement. https://www.reddit.com/r/PFJerk/ https://www.reddit.com/r/PFJerk/ Also, just in case anyone needs to hear this, starting your own company is not carte blanche to deduct all your living expenses, hire your spouse, etc. There's a lot of folk beliefs around this circulating on the internet, and following such advice without doing the legwork is a good way to get yourself into hot water with the IRS, or your local equivalent.
quicklime 6y ago
> Buy things if they: > Get used everyday (Ex. Nice pants, laptop and phone). > Come in between you and the ground (Ex. Mattresses, chairs, winter tires). Lately I've been hearing from friends and marketers "you use your mattress for 8+ hours a day so you should spend $2k on it" or something ridiculous like that. But I can't help feeling that it's bad advice. You should decide to spend money when the marginal benefit that you get out of those extra dollars is higher than some threshold, that's it. If you spend an extra $1500 on a mattress that isn't any better than a $500 one, then you've wasted $1500, regardless of how much time you spend sleeping on it. On the other hand, maybe it's a good idea to spend an extra few thousand dollars on safety equipment for your woodsaw that you use for your occasional weekend hobby, if it means you don't lose a finger one day.
- fy20 6y ago
  I think this goes together with the "don't buy cheap" rule. If you spend $100 on a mattress after a year or two it'll be ruined (and probably not very comfortable to begin with), so it's better to invest say $500 (random number, I have no idea how much you should spend on a 'good enough' mattress) to get something better quality. But yeah as you say, after a certain point it's diminishing returns. A Corolla will get you to work just as well as a Porsche, but that's not why people buy Porsches.
  - lotsofpulp 6y ago
    $400 to $600 is the price Hilton/Marriott/Hyatt/IHG negotiated with Tempur Sealy and Simmons for their hotel mattresses. They come with pillow tops and don’t need to be flipped.
  - jpetso 6y ago
    I may, in less experienced earlier years, have bought a needlessly semi-expensive >$1000 mattress. Even then, after sleeping on it for almost 10 years now, it has amortized pretty well. $100 a year isn't really something to worry over much, and saving half of it makes less of a difference than reducing coffee consumption for example. The cost per year still keeps falling. Even a $2000 mattress wouldn't be a giant expense compared to frequent & more expensive discretionary spending that people casually indulge in, such as new flagship smartphones or desktop CPUs/GPUs after 2-3 years, more than a single streaming video service or (God forbid) a car if bike+transit is a viable choice in your area. Nowadays I'd go about mattresses a little different, but in the grand scheme of things? Not even a blip.
DavidPiper 6y ago
> NOTE: LITERALLY ZERO OF THIS IS FINANCIAL ADVICE!!! DO YOUR OWN RESEARCH!!! I'm glad this is the opening line. Puts the rest of the article in perspective. We also appear to be contributing to the author's own P&D scheme for HN credits :-) https://twitter.com/aadillpickle/status/1365454284104626182 https://twitter.com/aadillpickle/status/1365454284104626182
- oflannabhra 6y ago
  Except that the author then goes on to outline a portfolio and recommends it. It’s also terrible advice (~30% in crypto and self-picked stocks).
Supermancho 6y ago
> Newton: This is where I buy crypto, Bunch of reasonable and sound advice, but it is revealed to be a social media crypto ad at the end. SMH
asdfasgasdgasdg 6y ago
Some nits to pick (well a few of these are bigger than nits, to be honest): The gains available via #1.2 are probably not all that significant, depending on your household income. Maybe you can eke out $1000 in bulk purchase savings per year, but probably not even that much. Regarding TP, buy a bidet for $20 on Amazon instead, and spend insignificant money on toilet paper for the indefinite future. This is actually a great example of how this advice could be substituted for a better one: find ways to consume less that don't hurt your wellbeing. #1.3 is fine, but the graph is misleading because it uses far too optimistic a rate of return -- at least twice as good as you can expect to get in the market after you factor in inflation. The point about giving gifts in #2.1.1 is incorrect, as far as I'm aware. Actually gifts are normally not a good investment, because most times people don't get that much out of them. Maybe you have a friend that really loves receiving gifts, but even then, this shouldn't be a significant fraction of your annual spend. Economists have done research on this subject, and gift giving is pretty inefficient on average. Likewise, travel is great, but it is not automatically on the list of things you should spend on. It depends on how you value it. I see no reason to believe that travel falls into the category of things that "make you better." It's a conspicuous consumption good, at least the way most people do it. #3 The term for this is tax avoidance, not legal tax evasion. #4 It's good to see you are divesting of the riskier aspects of your portfolio, because these positions are nonsensical. For most investors, it's probably best to stick only with whole market ETFs. Tech sector has been doing great for the last twenty years, but there is a lot of regulatory risk for the sector currently. Past performance is not necessarily indicative of future performance.
ram_rar 6y ago
> 7.1% tech ETFS (ZQQ, ARKK) Why would you but ZQQ with expense ratio of 0.39% ? Its basically just a bunch of tech stocks, which one could buy themselves. Someone who is beginning into this journey, I strongly recommend learning from boggleheads [1] forum. [1] https://www.bogleheads.org/wiki/Getting_started https://www.bogleheads.org/wiki/Getting_started
wolfgang42 6y ago
> Then you can hire a family member, deduct home office expenses and even if you lose money operating the business, you'll save money on taxes. This entire sentence is “top things the IRS has seen before and will not be amused by.” Sure, you can put this stuff on your Schedule C and get more money in your refund, but just wait until the IRS audits you in 5 years and determines that your family member is not engaging in activities that make them a legitimate employee, your living room is not a home office just because you have a desk in the corner, and since you’re making continuous losses and not operating in a “businesslike manner” your ‘business’ is actually a hobby; and then sends you a bill for back taxes plus interest and penalties. (Sure, those are all actual deductions, but if your mindset is “legal tax evasion” and not “this is a business expense” you’re probably not qualified to take them.)
- wheybags 6y ago
  100% agree, I started getting very suspicious of this article at that point, and then gave up completely when they said 30% of their assets were "invested" in virtual NBA trading cards. This is not good advice.
  - deleted 6y ago
    [deleted]
  - lotsofpulp 6y ago
    I also liked the heading “legal tax evasion”.
ixacto 6y ago
Best strategy with a >10yr timeline is 100% S&P 500 in a free or low cost index fund combined with minimizing taxable income and backdoor ira if applicable. Then Just about anyone can retire with >=1.5MM and be doing ok. Of course double this number if you are in VHCOL but otherwise it’ll work just about anywhere.
steventey 6y ago
Love this piece! It’s super helpful for Gen Z-ers who wanna get better at managing their finances!
- poochy 6y ago
  You forgot the /s
jplr8922 6y ago
Msc Finance + CFA chartholder here. The advice in this post is not that bad. However over years of speaking to friends and sometime strangers about their money problems, I would like to share a few things. In order of magnitude, here is a list of factors which can have an bad impact on your personal finances 1) Mental Health. Any addiction or any other mental health problem with a low impact on your budget will, at some point, explose and affect your life negatively. Ex: you have a burnout and don't manage it well, you become irritable with all your colleagues and make your professional network smaller. If that 4$ coffee makes you happy and gives you the opportunity to chitchat with the CEO every morning, it is a good investment. 2) Toxic relationship. A female friend of mine wasted 4 years of her romantic life with an alcoholic based on the belief that "she must take care of him in order to be a good person". When she finally left, she went on party mode order to be busy and not go back with him. Five month later, she could not understand where this 10k on her credit was coming from. 3) Understanding the hidden expenses related to your work. Do you want to become Mr. Big Short on wall street? I mean if it's really what you want, go for it. But the money you will make can become a prison. In order to climb up the rank of your firm, you will have to network with specific people, go to the same expensive gym, purchase luxury items and lifestyle to impress them, get a trophee girlfriend to increase your status, etc. You have to spend a lot to make a lot. I view it as a hidden tax. 4) Stupid debt. Debt in itself is a way to raise capital for an investment. A rule of thumb is that the duration of your debt should match the duration of your asset. Ex: you take a 25y mortgage to be in a house where you plan to raise your family for 25y. Ideally, your asset gives you an economic benefit and helps you pay the debt. If you are in your twenties, I recommend you to learn... a) ... to take care of your mental health. Manage anxiety, meet a psychologist, start to meditate, choose your friends carefully. Down the road, it will compound much more than a lucky jackass who made a few $$$ gambling with Gamestop or bitcoins. b) ... the fiscal rules of your country. Compound investment is nice, *if it isn't taxed*. In the US these are 401k, in Canada RRSP and TFSA. Also, different contry treats the interest payment on some assets differently. Ex: in the US interest payments on mortgage are tax deductible, in Canada they are not. c) ... the impact of employment benefits. Some employers will give you a defined benefit plan, while others will not. It completely change your investments and saving needs.
wcarss 6y ago
> generally look for quality items with lifetime warranties, 1 coat that costs $1000 but lasts 30 years has better ROI than buying a $100 coat every other year. Plus it's less mental strain since you don't have to think about replacing it and you'll get to use something you actually like. This is a common thing I hear, e.g. the rich man/poor man parable about boots, but I have never been able to give it real credence. It just isn't a realistic choice, whether we're talking about coats, boots, beds, knives, or whatever. First, I cannot assess the value of a good I do not yet possess to a sufficient degree to determine if it will really last, and will be something I'll 'love' for >5 years, and I wouldn't trust any company to actually honour a "lifetime guarantee" on a meaningfully expensive purchase. Very few of those are even advertised. Second, trying to make that sort of assessment for most purchases sounds extremely stressful. What if I go wrong? A lot of business depends on tricking un-knowledgeable consumers into spending big money on perceived-but-false "quality". One mistake puts you way in the hole overall in this cost/benefit analysis, and the internet is full of shills. So rather than trying to find the coat that's "really worth" $1000, and hoping beyond hope it'll last 30 years without any way to tell, I will spend ~$150 on a coat, and it should last ~2-3 years. I learned how to mend buttons and sew small tears, and my actual coat that I bought for ~$150 lasted almost a decade before it was done. I spent 5 minutes at the first store I found in the mall, way back in college, and just asked for something warm. Last year, I did a lot of research and I spent $700 on a new coat, and it had lost a button and gained a hole in its pocket within a month. I have a more controversial take overall: Wealth is, unfortunately, only really available to the lucky, so most of this just doesn't matter. I'm comparatively lucky, (I was born in North America! I have a ton of majority privilege! I liked computers!) but I don't have connections to anyone from any top 10 schools, and I am unlikely to even ever work for a FAANG. Living frugally and intelligently investing will likely make the difference between whether or not I can take vacations during retirement, and maybe move the retirement date around by 5-7 years, provided I don't actively throw my money away on things (like GME). But becoming "wealthy"? That would require a lottery-type win. The literal lottery, or the startup lottery, or similar. As a ~30-something, (hopefully) competent, privileged urban software engineer, with a decent scholastic and vocational pedigree, actual wealth just probably is not in the cards, no matter what actions I take. So (again excepting learning not to throw all my money away), I just can't make myself feel like personal financial advice really matters overall. Either I win the lottery someday, or I don't. I'm curious though, to anyone still reading, what makes it matter to you?
seattle_spring 6y ago
> $1000 coat "It's a banana, michael. What could it cost, $10?"
ultrasaurus 6y ago
I'm a voracious reader of personal finance tips and they seem to break down into 3 categories: * Focusing on selling you something: books, training, high commission investment vehicles etc * Telling you what worked for them: usually it's lucking into a good property market or options. This article firmly belongs here, but that was a fun twist -- 35% invested in beanie babies... er virtual basketball cards * and tax advice
CPLX 6y ago
This is bad advice from a person who appears to have no success or real experience as an investor at all. It’s not even the good kind of bad advice, like presenting a unique or novel alternate perspective. It’s just a mishmash of ideas that don’t make much sense. Why it’s on the HN front page is a bit of a mystery.
cedricgle 6y ago
In summary the underline is: beat various market (stock, crypto, virtual cards) and grow 11% a year, so simple yet so difficult.
zrail 6y ago
Awhile back I wrote a short series describing my own system. It is radically simpler than the system described here and might actually be useful to some people. https://www.petekeen.net/automatic-finances https://www.petekeen.net/automatic-finances
IkmoIkmo 6y ago
> Pay down any debts greater than 7% per year (7% is the average yearly return for the stock market) Pretty poor advice imo, it's comparing a risky versus a risk-free return. Paying off a 7% interest nets you that return, guaranteed. Investing in a 7% stock market nets you that return on average, but it could be -30% that year, too. Volatility and risk requires compensation for it to simply be accepted. Where the threshold lies is hard to say, but I think it's much more sensible for example to pay off a 5% interest in lieu of investing in a volatile asset class that does 7% on average. > If you have the space, buy products you're guaranteed to use in bulk on sale That's true but, space comes at a cost, too. A square metre in a city costs about $6000. I'm not interested in buying 'years of supply of toilet paper' on sale and getting into the business of storage at the most premium price (residential real estate) level. Not a bad suggestion but shouldn't be in the top 50 I think, let alone as point nr 2. Alright the rest is kinda of mediocre, not really worth going into. There's so much much better personal finance advice out there, even one-pagers out there, that this isn't really worth discussing.
- dragonwriter 6y ago
  > Pretty poor advice imo, it's comparing a risky versus a risk-free return. Paying off a 7% interest nets you that return, guaranteed. Investing in a 7% stock market nets you that return on average, but it could be -30% that year, too. Volatility and risk requires compensation for it to simply be accepted. Where the threshold lies is hard to say, but I think it's much more sensible for example to pay off a 5% interest in lieu of investing in a volatile asset class that does 7% on average. You'd be right, but also consider than 7% is the real, not nominal, long-term return of the S&P500; the nominal (pre-inflation) return is 11%, and that's what you should compare to interest on debt.
  - spaetzleesser 6y ago
    That’s the view of people who have grown up during an ever rising market like the last 12 years and think that’s just the way it always is. The picture changes once there is a huge drop in the market like 2000 or 2008. Then the debt may come to haunt you. Especially if you have lost your job during that period. This may be even fine if you have a well off dad that can support you during hard times. If you don’t have that yi7 will regret the debt for a long time.
reactspa 6y ago
> If you have a company, incorporated or not, you can write off lots of things as business expenses like transportation, buying new equipment or rent for co-working spaces. Is this accurate? From what I've learned, unless you make some acceptable amount of revenue, constantly expensing "business expenses" is considered very suspect by the IRS, and is illegal... please correct me if this I'm wrong here...
- troydavis 6y ago
  (US-specific) You're correct, particularly if the business continues to declare a loss year after year (which it would if it was created as an excuse to itemize business deductions). While making a profit is not required, the activity must be "engaged in for profit," ie, you must be genuinely trying: https://www.irs.gov/pub/irs-utl/irc183activitiesnotengagedinforprofit.pdf https://www.irs.gov/pub/irs-utl/irc183activitiesnotengagedin... More practically, if a business continues to declare a loss, especially with little or no revenue, it will stand out. In an audit, the IRS considers 9 factors. Quoting: 1. the manner in which the taxpayer carried on the activity, 2. the expertise of the taxpayer or his or her advisers, 3. the time and effort expended by the taxpayer in carrying on the activity, 4. the expectation that the assets used in the activity may appreciate in value, 5. the success of the taxpayer in carrying on other similar or dissimilar activities, 6. the taxpayer’s history of income or loss with respect to the activity, 7. the amount of occasional profits, if any, which are earned, 8. the financial status of the taxpayer, and 9. elements of personal pleasure or recreation. A profit-seeking motive is presumed if a profit is declared in 3 of 5 consecutive years. That ninth factor covers something called a "hobby loss": "(9) Elements of personal pleasure or recreation. The presence of personal motives in carrying on of an activity may indicate that the activity is not engaged in for profit, especially where there are recreational or personal elements involved. On the other hand, a profit motivation may be indicated where an activity lacks any appeal other than profit. It is not, however, necessary that an activity be engaged in with the exclusive intention of deriving a profit or with the intention of maximizing profits. For example, the availability of other investments which would yield a higher return, or which would be more likely to be profitable, is not evidence that an activity is not engaged in for profit. An activity will not be treated as not engaged in for profit merely because the taxpayer has purposes or motivations other than solely to make a profit. Also, the fact that the taxpayer derives personal pleasure from engaging in the activity is not sufficient to cause the activity to be classified as not engaged in for profit if the activity is in fact engaged in for profit as evidenced by other factors whether or not listed in this paragraph." tl;dr: If you have meaningful revenue relative to expenses, it's probably a business. If you don't have meaningful revenue, then the other factors should be in your favor instead.
RickJWagner 6y ago
Too jumbled for me, and seems not quite fully baked. I like the approach taken at bogleheads.org. Proven, simple methods adapted by many mature and wealthy people. Please visit and share with others.

109 points by aadillpickle 6y ago

ketamine__ 6y ago

> This portfolio was made when I was young and stupid. Chances are you're still young if you have crypto.

will_pseudonym 6y ago
35.5% in NFT's reads very young.
- RyanShook 6y ago
  Trying to figure out if author is serious about this. He did start out with disclaimer it’s not financial advice...
  - will_pseudonym 6y ago
    My money is resoundingly on yes. I'm deeply cynical about NFT's the same way I'm cynical about Beanie Babies and Pokémon & MtG cards. It's not for me, but I get it, and they'll likely do quite well in terms of investment returns.
    - ketamine__ 6y ago
      But first: Let's establish it's not all wash trading.
      - will_pseudonym 6y ago
        To me, participating in these markets is akin to telling people you have a hot tip on a game of musical chairs where you know when the music is going to stop. I've played those games successfully, a la GME and BTC. But I don't feel good about the proposition. I feel more and more that Charlie Munger is mostly right on this one.

mattm 6y ago

> When you should (and shouldn't) buy things For me, any non-trivial purchase I put on a list. If I'm still thinking about buying it a week or two later then I'll buy it. This not only saves money but saves clutter as well.

derekp7 6y ago

This list leaves off the most important thing -- emergency fund. You should have enough to cover expenses for a sudden loss of employment (3 months is usually recommended, but in this climate I wouldn't feel comfortable with anything less than 6). And esp. if you own a home, you need enough to cover things that pop up without depleting your emergency fund too much. For example I had to spend 9k recently to have a sewer line replaced in the yard. Yes, you have better return on investments if you pay off that 20% interest credit card. But if you become unemployed, it is better to be able to have that fund so you can keep your house and the lights on.

mooreds 6y ago
Yes, this is very true. Emergency funds will make your life so much less stressful. I will say that his recommendation to buy in bulk is in some way an emergency fund (or an aspect of it) because you're saving money on things you know you'll buy in the future. One thing I did when I lost a job was move some of my retirement account (roth IRA) to money market funds (from short term bonds). Basically moving some of the bond portion of my retirement from slightly risky to not risky/cash. Roth IRAs let you pull out your contribution. This was basically to augment my emergency fund, just in case finding the right new job took longer than I thought. (I was lucky, it didn't, and I was able to convert the money market funds back to short term bonds). Not a fan of pulling from retirement, but if I had to, better to take from the tax penalty free, stable portion of it.
nostromo 6y ago
With respect, I think this is outdated advice. Sitting on tens of thousands of dollars of cash (six months of income!) in a zero interest rate environment is a mistake that really compounds over the years -- to the point of a few $100k in lost appreciation over your career. Equities are no longer hard to turn into cash in an emergency. You can pull money out of your investment account the same day using a debit card if need be, no need to even sell your equities. Keeping access to credit, but not using it unless it's needed, is the better plan. But after several years of saving you won't need it anyway.
- 6y ago

mooreds 6y ago

Love how the author leads with "NOTE: LITERALLY ZERO OF THIS IS FINANCIAL ADVICE!!! DO YOUR OWN RESEARCH!!!" And yet, I still read it.

gonzo41 6y ago
Wendy's!

vsskanth 6y ago

> 35.5% virtual NBA trading cards If somebody told me they have a third of their assets in virtual trading cards I would either guess that their net worth is max $1000 or conclude they are completely nuts and won't take this person seriously.

dj_mc_merlin 6y ago
I haven't been able to stop laughing..
nostromo 6y ago
I actually did a Google search to see if this was a new blockchain technology I hadn't yet heard of.
- mandelbrotwurst 6y ago
  You’re probably looking for NFTs: https://coincentral.com/nba-top-shot-nfts/ https://coincentral.com/nba-top-shot-nfts/
- agumonkey 6y ago
  nice one slightly related I remember as a kid I used to hold Dragon Ball cards collection called 'trading collection' look at this offer https://www.ebay.com/i/142949370670?chn=ps https://www.ebay.com/i/142949370670?chn=ps also, people are starting to create soccer team tokens so maybe there will be a basketballcoin
dumbfounder 6y ago
If he spent $1k on this because he truly enjoys it and it went up 100x is that reason to not take him seriously? It’s a good list. Yes this allocation of assets stands out and needs more explanation... but it doesn’t invalidate the rest.
- vsskanth 6y ago
  OK this is a fair point. Never thought of it this way. Only OP can clarify but I hope it's just something he spent play money on that shot up 100x or something. However, the rest of his portfolio isn't something I would emulate either. I would consider someone more credible if they practice what they preach.

nostromo 6y ago

Skip the investment advice here and go read Ray Dalio's writing on the subject. Or if you want to keep it real simple, John Bogle. The rest has some good tips about controlling spending and the like.

RivieraKid 6y ago
What Ray Dalio's writing?
superbcarrot 6y ago
I don't think Ray Dalio has ever given much investment advice beyond "diversify into everything". I think his next book is supposed to cover some of that though.

lainga 6y ago

>In fact, you're probably losing ~$1000 a year - if you invested that, you could have ~$650K in 40 years 11% real return? Really?

deleted 6y ago
[deleted]
adeelk93 6y ago
The author uses both 7% and 11% as average expected returns to illustrate different points. Unbelievable inconsistency.

safeerm 6y ago

After giving the same advice to my friends over and over again, I created https://101.finance https://101.finance. Would love feedback on it!

banachtarski 6y ago
Hedging against inflation buy purchasing an unproven hype currency that very few people use as a currency (it’s more like a tulip) makes little sense imo. Buy crypto if you dig the hype and get fomo, but if you actually wanted to hedge against inflation you’d starting hoarding gold or silver.

Trasmatta 6y ago

If somebody is actually new to personal finance or investing, I would be careful with a lot of the stuff in this post. You're likely better off reading the r/personalfinance wiki, the r/financialindependence wiki (even if you're not interested in FIRE, there is a lot of extremely useful advice), and the Bogleheads wiki.

oflannabhra 6y ago
I read most of this article and this person is young and single. Even given that, there is some astoundingly bad advice in here (eg, the “I recommend 30% in crypto + individual stocks”). I think a better analysis would be to compare their personal strategy against a baseline one: ie, if they had invested everything from the beginning (including their NBA cards!!) in a total market index fund. I think it is fine to engage in lots of strategies, including investing in individual stocks, but that should not be included in a portfolio recommended to others.

hogFeast 6y ago

You say you don't like hold inflation and then suggest 20% cash levels...hold no cash. Also, and this is something that I have say every time these days: hold more quality stocks, and diversify geographically. The mistake with not holding quality stocks is a weird one. I worked in financial advice (research, not an adviser), and there was this adviser who was 20-30% in EM stocks...the logic being back then (in ~2012, before EMs really started underperforming) that you want to own volatile stuff because volatile stuff outperforms in the LT. Now this isn't true, I knew this wasn't true then but people automatically think that volatility=returns. It doesn't, the opposite is true. Volatile, high-beta stuff will underperform. The point of my example is that even people who should know better don't know this. Everyone owns too much US tech. If you are 100% equity and leverage constrained then geographic diversification is a genuine free lunch. Maybe we are seeing some secular change in equity ownership akin to the financialisation of savings in the 80/90s...we are not...and even if we are, you can own other countries going through the same change, no reduction in upside, more diversification. Also, you should consider options. No need to do anything crazy like selling options but volatility is, generally, pretty cheap and a way to reduce your downside without reducing upside (in fact, you have actually been paid to reduce risk...people really love picking up quarters in front of steamrollers...let's assume this won't continue though). This isn't for everyone though, some people don't care about volatility, and this strategy is only very profitable if you can lever up your beta (although I know a fund that finished the year up 20% unlevered, running zero market risk because they had a put-buying strategy). There are very few ways to reduce risk in this environment, options is one (bonds are another, you need to go quite far out to hedge out equity properly though). Also, the long-term real return from stocks is ~300bps. I think you say 6-7%, that is really best-case imo (it is not self-evident, to me at least, that the US just hockey-sticks forever).

omgwtfbyobbq 6y ago
It seems like a real 6+% has been possible over the past half century. https://thume.ca/indexView/ https://thume.ca/indexView/ Granted, it could be that the SP500 or the US over the past half century is not representative of equities over a longer time period, like a century, but in that case I don't know what is.

swimorsinka 6y ago

I have a knee jerk reaction against posts like this, mostly because of the reference to $4 cups of coffee. While the point is true, I think your time is best spent worrying about other things. 90% of money problems seem to come from a few things: * Expensive cars - bought with debt. * Expensive housing - again bought with debt. * Expensive schooling - even more debt. I've never bought (pun intended) the argument that dining out in any form (including coffee) even comes close to these other items. Even if you're eating out 3-5 nights per week, it's just not expensive enough. I guess if you're always feeding a family of 5 and buying expensive bottles of wine while you eat, then maybe. I also think that time spent worrying about trivial stuff like coffee would be better spent trying to make more money.

thinkingemote 6y ago
Edits I'm with you totally. It doesn't feel right or valid. why worry about a coffee? ( I don't!). But that feeling could be worth challenging... If there's 2 of you and you eat out 5 times a week for the length of time you would own a car... then it might be equivalent? There's that old paradoxical saying about how the rich are rich because they don't buy anything.
- BrianOnHN 6y ago
  52×5×40=10,400
omgwtfbyobbq 6y ago
That's a good point. The only thing I can think of adding is that in some markets, housing is just plain expensive, and people don't have as much wiggle room there unless they can make more relative to lower housing costs in some other area and are willing/able to move there.
gen220 6y ago
Unless you’re really special, your grocery bills at the end of the year will dominate your takeout and restaurants bills combined. This was an eye opener to me, after meticulously tracking my finances for a year. There’s two takeaways. (1) on the days where you don’t feel like cooking, do not feel bad about ordering take out or dining out. (2) consider how you can minmax your staple grocery items, by buying in bulk, joining a food co-op. Etc You win a lot more by shaving dimes off every pound of oatmeal, integrated over a lifetime. And it’s recurring returns on a one-time investment of finding the best source in your neighborhood. Buy the coffee every once in a while if it brings you joy. Everything in moderation, of course.

omgwtfbyobbq 6y ago

> Pay down any debts greater than 7% per year (7% is the average yearly return for the stock market) Don't even think about investing until you do this, not being charged 15% a year in interest and penalties on credit card debt gives you a 2x higher return than the average investor I feel like this should include inflation. Granted, low rates have become the standard, but I think people should be aware of how higher rates can really change things. If the inflation rate is at 10%, and you can get 7-8% from a Cd, then that debt isn't looking so bad. When comparing interest rates to market returns, I think the fact that markets have returned net negatives for some ~5-10 year periods, and have returned net nothing for I believe some ~15+ year periods, should be included. Only compare interest to debts to the market over multi-decade time periods, and keep in mind that some long tail events may still not be captured.

arthurjj 6y ago

The title of this article is accurate but it's pretty bad advice. For HN crowd you can get 90% of the benefit from 1. pay off CC debts 2. Set bill pay AND investment to auto. Invest in index funds 3. max out 401k 4. Google FI/RE movement if you want to be fancy.

MSM 6y ago
Personally I never set up auto pay. Why? Because it hits a little harder (and you pay more attention) when you're actually typing it in every month. Sure, there's a risk I might miss a payment and get dinged, but you're guarding against Comcast quietly raising your bill $25/mo, or not realizing how much you're truly spending on your credit card every month. Otherwise I agree with the list.
- faitswulff 6y ago
  May I suggest auto pay with notifications? I’m a forgetful person, so this lets me avoid late charges while keeping me up to date on my payments. Most banks will let you set a threshold for transactions, above which it will send you an email or SMS alert.
- jmcgough 6y ago
  Once you have eight different things you need to pay a month it becomes way too time consuming to manually pay bills. Easier to just set up a mint account and check your finances once a month.
  - astura 6y ago
    I'm calling BS, I have more than 20 credit cards, a mortgage, and utilities and I don't find it time consuming to manually pay everything (and my mortgage has no escrow)
    - JohnJamesRambo 6y ago
      I call bs on the fact that you don’t think manually paying 20 bills every month is time consuming. Set a timer next time then multiply to see how much of your life you are going to waste doing that.

idlewords 6y ago

There's a pretty fun subreddit satirizing this mindset. Eat lentils, drive a 2003 Corolla, save every penny for retirement. https://www.reddit.com/r/PFJerk/ https://www.reddit.com/r/PFJerk/ Also, just in case anyone needs to hear this, starting your own company is not carte blanche to deduct all your living expenses, hire your spouse, etc. There's a lot of folk beliefs around this circulating on the internet, and following such advice without doing the legwork is a good way to get yourself into hot water with the IRS, or your local equivalent.

quicklime 6y ago

> Buy things if they: > Get used everyday (Ex. Nice pants, laptop and phone). > Come in between you and the ground (Ex. Mattresses, chairs, winter tires). Lately I've been hearing from friends and marketers "you use your mattress for 8+ hours a day so you should spend $2k on it" or something ridiculous like that. But I can't help feeling that it's bad advice. You should decide to spend money when the marginal benefit that you get out of those extra dollars is higher than some threshold, that's it. If you spend an extra $1500 on a mattress that isn't any better than a $500 one, then you've wasted $1500, regardless of how much time you spend sleeping on it. On the other hand, maybe it's a good idea to spend an extra few thousand dollars on safety equipment for your woodsaw that you use for your occasional weekend hobby, if it means you don't lose a finger one day.

fy20 6y ago
I think this goes together with the "don't buy cheap" rule. If you spend $100 on a mattress after a year or two it'll be ruined (and probably not very comfortable to begin with), so it's better to invest say $500 (random number, I have no idea how much you should spend on a 'good enough' mattress) to get something better quality. But yeah as you say, after a certain point it's diminishing returns. A Corolla will get you to work just as well as a Porsche, but that's not why people buy Porsches.
- lotsofpulp 6y ago
  $400 to $600 is the price Hilton/Marriott/Hyatt/IHG negotiated with Tempur Sealy and Simmons for their hotel mattresses. They come with pillow tops and don’t need to be flipped.
- jpetso 6y ago
  I may, in less experienced earlier years, have bought a needlessly semi-expensive >$1000 mattress. Even then, after sleeping on it for almost 10 years now, it has amortized pretty well. $100 a year isn't really something to worry over much, and saving half of it makes less of a difference than reducing coffee consumption for example. The cost per year still keeps falling. Even a $2000 mattress wouldn't be a giant expense compared to frequent & more expensive discretionary spending that people casually indulge in, such as new flagship smartphones or desktop CPUs/GPUs after 2-3 years, more than a single streaming video service or (God forbid) a car if bike+transit is a viable choice in your area. Nowadays I'd go about mattresses a little different, but in the grand scheme of things? Not even a blip.

DavidPiper 6y ago

> NOTE: LITERALLY ZERO OF THIS IS FINANCIAL ADVICE!!! DO YOUR OWN RESEARCH!!! I'm glad this is the opening line. Puts the rest of the article in perspective. We also appear to be contributing to the author's own P&D scheme for HN credits :-) https://twitter.com/aadillpickle/status/1365454284104626182 https://twitter.com/aadillpickle/status/1365454284104626182

oflannabhra 6y ago
Except that the author then goes on to outline a portfolio and recommends it. It’s also terrible advice (~30% in crypto and self-picked stocks).

Supermancho 6y ago

> Newton: This is where I buy crypto, Bunch of reasonable and sound advice, but it is revealed to be a social media crypto ad at the end. SMH

asdfasgasdgasdg 6y ago

Some nits to pick (well a few of these are bigger than nits, to be honest): The gains available via #1.2 are probably not all that significant, depending on your household income. Maybe you can eke out $1000 in bulk purchase savings per year, but probably not even that much. Regarding TP, buy a bidet for $20 on Amazon instead, and spend insignificant money on toilet paper for the indefinite future. This is actually a great example of how this advice could be substituted for a better one: find ways to consume less that don't hurt your wellbeing. #1.3 is fine, but the graph is misleading because it uses far too optimistic a rate of return -- at least twice as good as you can expect to get in the market after you factor in inflation. The point about giving gifts in #2.1.1 is incorrect, as far as I'm aware. Actually gifts are normally not a good investment, because most times people don't get that much out of them. Maybe you have a friend that really loves receiving gifts, but even then, this shouldn't be a significant fraction of your annual spend. Economists have done research on this subject, and gift giving is pretty inefficient on average. Likewise, travel is great, but it is not automatically on the list of things you should spend on. It depends on how you value it. I see no reason to believe that travel falls into the category of things that "make you better." It's a conspicuous consumption good, at least the way most people do it. #3 The term for this is tax avoidance, not legal tax evasion. #4 It's good to see you are divesting of the riskier aspects of your portfolio, because these positions are nonsensical. For most investors, it's probably best to stick only with whole market ETFs. Tech sector has been doing great for the last twenty years, but there is a lot of regulatory risk for the sector currently. Past performance is not necessarily indicative of future performance.

ram_rar 6y ago

> 7.1% tech ETFS (ZQQ, ARKK) Why would you but ZQQ with expense ratio of 0.39% ? Its basically just a bunch of tech stocks, which one could buy themselves. Someone who is beginning into this journey, I strongly recommend learning from boggleheads [1] forum. [1] https://www.bogleheads.org/wiki/Getting_started https://www.bogleheads.org/wiki/Getting_started

wolfgang42 6y ago

> Then you can hire a family member, deduct home office expenses and even if you lose money operating the business, you'll save money on taxes. This entire sentence is “top things the IRS has seen before and will not be amused by.” Sure, you can put this stuff on your Schedule C and get more money in your refund, but just wait until the IRS audits you in 5 years and determines that your family member is not engaging in activities that make them a legitimate employee, your living room is not a home office just because you have a desk in the corner, and since you’re making continuous losses and not operating in a “businesslike manner” your ‘business’ is actually a hobby; and then sends you a bill for back taxes plus interest and penalties. (Sure, those are all actual deductions, but if your mindset is “legal tax evasion” and not “this is a business expense” you’re probably not qualified to take them.)

wheybags 6y ago
100% agree, I started getting very suspicious of this article at that point, and then gave up completely when they said 30% of their assets were "invested" in virtual NBA trading cards. This is not good advice.
- deleted 6y ago
  [deleted]
- lotsofpulp 6y ago
  I also liked the heading “legal tax evasion”.

ixacto 6y ago

Best strategy with a >10yr timeline is 100% S&P 500 in a free or low cost index fund combined with minimizing taxable income and backdoor ira if applicable. Then Just about anyone can retire with >=1.5MM and be doing ok. Of course double this number if you are in VHCOL but otherwise it’ll work just about anywhere.

steventey 6y ago

Love this piece! It’s super helpful for Gen Z-ers who wanna get better at managing their finances!

poochy 6y ago
You forgot the /s

jplr8922 6y ago

Msc Finance + CFA chartholder here. The advice in this post is not that bad. However over years of speaking to friends and sometime strangers about their money problems, I would like to share a few things. In order of magnitude, here is a list of factors which can have an bad impact on your personal finances 1) Mental Health. Any addiction or any other mental health problem with a low impact on your budget will, at some point, explose and affect your life negatively. Ex: you have a burnout and don't manage it well, you become irritable with all your colleagues and make your professional network smaller. If that 4$ coffee makes you happy and gives you the opportunity to chitchat with the CEO every morning, it is a good investment. 2) Toxic relationship. A female friend of mine wasted 4 years of her romantic life with an alcoholic based on the belief that "she must take care of him in order to be a good person". When she finally left, she went on party mode order to be busy and not go back with him. Five month later, she could not understand where this 10k on her credit was coming from. 3) Understanding the hidden expenses related to your work. Do you want to become Mr. Big Short on wall street? I mean if it's really what you want, go for it. But the money you will make can become a prison. In order to climb up the rank of your firm, you will have to network with specific people, go to the same expensive gym, purchase luxury items and lifestyle to impress them, get a trophee girlfriend to increase your status, etc. You have to spend a lot to make a lot. I view it as a hidden tax. 4) Stupid debt. Debt in itself is a way to raise capital for an investment. A rule of thumb is that the duration of your debt should match the duration of your asset. Ex: you take a 25y mortgage to be in a house where you plan to raise your family for 25y. Ideally, your asset gives you an economic benefit and helps you pay the debt. If you are in your twenties, I recommend you to learn... a) ... to take care of your mental health. Manage anxiety, meet a psychologist, start to meditate, choose your friends carefully. Down the road, it will compound much more than a lucky jackass who made a few $$$ gambling with Gamestop or bitcoins. b) ... the fiscal rules of your country. Compound investment is nice, *if it isn't taxed*. In the US these are 401k, in Canada RRSP and TFSA. Also, different contry treats the interest payment on some assets differently. Ex: in the US interest payments on mortgage are tax deductible, in Canada they are not. c) ... the impact of employment benefits. Some employers will give you a defined benefit plan, while others will not. It completely change your investments and saving needs.

wcarss 6y ago

> generally look for quality items with lifetime warranties, 1 coat that costs $1000 but lasts 30 years has better ROI than buying a $100 coat every other year. Plus it's less mental strain since you don't have to think about replacing it and you'll get to use something you actually like. This is a common thing I hear, e.g. the rich man/poor man parable about boots, but I have never been able to give it real credence. It just isn't a realistic choice, whether we're talking about coats, boots, beds, knives, or whatever. First, I cannot assess the value of a good I do not yet possess to a sufficient degree to determine if it will really last, and will be something I'll 'love' for >5 years, and I wouldn't trust any company to actually honour a "lifetime guarantee" on a meaningfully expensive purchase. Very few of those are even advertised. Second, trying to make that sort of assessment for most purchases sounds extremely stressful. What if I go wrong? A lot of business depends on tricking un-knowledgeable consumers into spending big money on perceived-but-false "quality". One mistake puts you way in the hole overall in this cost/benefit analysis, and the internet is full of shills. So rather than trying to find the coat that's "really worth" $1000, and hoping beyond hope it'll last 30 years without any way to tell, I will spend ~$150 on a coat, and it should last ~2-3 years. I learned how to mend buttons and sew small tears, and my actual coat that I bought for ~$150 lasted almost a decade before it was done. I spent 5 minutes at the first store I found in the mall, way back in college, and just asked for something warm. Last year, I did a lot of research and I spent $700 on a new coat, and it had lost a button and gained a hole in its pocket within a month. I have a more controversial take overall: Wealth is, unfortunately, only really available to the lucky, so most of this just doesn't matter. I'm comparatively lucky, (I was born in North America! I have a ton of majority privilege! I liked computers!) but I don't have connections to anyone from any top 10 schools, and I am unlikely to even ever work for a FAANG. Living frugally and intelligently investing will likely make the difference between whether or not I can take vacations during retirement, and maybe move the retirement date around by 5-7 years, provided I don't actively throw my money away on things (like GME). But becoming "wealthy"? That would require a lottery-type win. The literal lottery, or the startup lottery, or similar. As a ~30-something, (hopefully) competent, privileged urban software engineer, with a decent scholastic and vocational pedigree, actual wealth just probably is not in the cards, no matter what actions I take. So (again excepting learning not to throw all my money away), I just can't make myself feel like personal financial advice really matters overall. Either I win the lottery someday, or I don't. I'm curious though, to anyone still reading, what makes it matter to you?

seattle_spring 6y ago

> $1000 coat "It's a banana, michael. What could it cost, $10?"

ultrasaurus 6y ago

I'm a voracious reader of personal finance tips and they seem to break down into 3 categories: * Focusing on selling you something: books, training, high commission investment vehicles etc * Telling you what worked for them: usually it's lucking into a good property market or options. This article firmly belongs here, but that was a fun twist -- 35% invested in beanie babies... er virtual basketball cards * and tax advice

CPLX 6y ago

This is bad advice from a person who appears to have no success or real experience as an investor at all. It’s not even the good kind of bad advice, like presenting a unique or novel alternate perspective. It’s just a mishmash of ideas that don’t make much sense. Why it’s on the HN front page is a bit of a mystery.

cedricgle 6y ago

In summary the underline is: beat various market (stock, crypto, virtual cards) and grow 11% a year, so simple yet so difficult.

zrail 6y ago

Awhile back I wrote a short series describing my own system. It is radically simpler than the system described here and might actually be useful to some people. https://www.petekeen.net/automatic-finances https://www.petekeen.net/automatic-finances

IkmoIkmo 6y ago

> Pay down any debts greater than 7% per year (7% is the average yearly return for the stock market) Pretty poor advice imo, it's comparing a risky versus a risk-free return. Paying off a 7% interest nets you that return, guaranteed. Investing in a 7% stock market nets you that return on average, but it could be -30% that year, too. Volatility and risk requires compensation for it to simply be accepted. Where the threshold lies is hard to say, but I think it's much more sensible for example to pay off a 5% interest in lieu of investing in a volatile asset class that does 7% on average. > If you have the space, buy products you're guaranteed to use in bulk on sale That's true but, space comes at a cost, too. A square metre in a city costs about $6000. I'm not interested in buying 'years of supply of toilet paper' on sale and getting into the business of storage at the most premium price (residential real estate) level. Not a bad suggestion but shouldn't be in the top 50 I think, let alone as point nr 2. Alright the rest is kinda of mediocre, not really worth going into. There's so much much better personal finance advice out there, even one-pagers out there, that this isn't really worth discussing.

dragonwriter 6y ago
> Pretty poor advice imo, it's comparing a risky versus a risk-free return. Paying off a 7% interest nets you that return, guaranteed. Investing in a 7% stock market nets you that return on average, but it could be -30% that year, too. Volatility and risk requires compensation for it to simply be accepted. Where the threshold lies is hard to say, but I think it's much more sensible for example to pay off a 5% interest in lieu of investing in a volatile asset class that does 7% on average. You'd be right, but also consider than 7% is the real, not nominal, long-term return of the S&P500; the nominal (pre-inflation) return is 11%, and that's what you should compare to interest on debt.
- spaetzleesser 6y ago
  That’s the view of people who have grown up during an ever rising market like the last 12 years and think that’s just the way it always is. The picture changes once there is a huge drop in the market like 2000 or 2008. Then the debt may come to haunt you. Especially if you have lost your job during that period. This may be even fine if you have a well off dad that can support you during hard times. If you don’t have that yi7 will regret the debt for a long time.

reactspa 6y ago

> If you have a company, incorporated or not, you can write off lots of things as business expenses like transportation, buying new equipment or rent for co-working spaces. Is this accurate? From what I've learned, unless you make some acceptable amount of revenue, constantly expensing "business expenses" is considered very suspect by the IRS, and is illegal... please correct me if this I'm wrong here...

troydavis 6y ago
(US-specific) You're correct, particularly if the business continues to declare a loss year after year (which it would if it was created as an excuse to itemize business deductions). While making a profit is not required, the activity must be "engaged in for profit," ie, you must be genuinely trying: https://www.irs.gov/pub/irs-utl/irc183activitiesnotengagedinforprofit.pdf https://www.irs.gov/pub/irs-utl/irc183activitiesnotengagedin... More practically, if a business continues to declare a loss, especially with little or no revenue, it will stand out. In an audit, the IRS considers 9 factors. Quoting: 1. the manner in which the taxpayer carried on the activity, 2. the expertise of the taxpayer or his or her advisers, 3. the time and effort expended by the taxpayer in carrying on the activity, 4. the expectation that the assets used in the activity may appreciate in value, 5. the success of the taxpayer in carrying on other similar or dissimilar activities, 6. the taxpayer’s history of income or loss with respect to the activity, 7. the amount of occasional profits, if any, which are earned, 8. the financial status of the taxpayer, and 9. elements of personal pleasure or recreation. A profit-seeking motive is presumed if a profit is declared in 3 of 5 consecutive years. That ninth factor covers something called a "hobby loss": "(9) Elements of personal pleasure or recreation. The presence of personal motives in carrying on of an activity may indicate that the activity is not engaged in for profit, especially where there are recreational or personal elements involved. On the other hand, a profit motivation may be indicated where an activity lacks any appeal other than profit. It is not, however, necessary that an activity be engaged in with the exclusive intention of deriving a profit or with the intention of maximizing profits. For example, the availability of other investments which would yield a higher return, or which would be more likely to be profitable, is not evidence that an activity is not engaged in for profit. An activity will not be treated as not engaged in for profit merely because the taxpayer has purposes or motivations other than solely to make a profit. Also, the fact that the taxpayer derives personal pleasure from engaging in the activity is not sufficient to cause the activity to be classified as not engaged in for profit if the activity is in fact engaged in for profit as evidenced by other factors whether or not listed in this paragraph." tl;dr: If you have meaningful revenue relative to expenses, it's probably a business. If you don't have meaningful revenue, then the other factors should be in your favor instead.

RickJWagner 6y ago

Too jumbled for me, and seems not quite fully baked. I like the approach taken at bogleheads.org. Proven, simple methods adapted by many mature and wealthy people. Please visit and share with others.