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> 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 ri

> 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.
  - auntienomen 6y ago
    The picture changes again on even longer time frames. Stock growth rates have been remarkably consistent over the past couple hundred years. Even the Great Depression is barely visible when you look at the largest sample we have. (Although, obviously one must discount a little for Keynes' objection about the long run.)
    - spaetzleesser 6y ago
      Most people didn’t have a timeframe of 100 years. More likely something like 30 or less. If there is a downturn during that time and you don’t have enough cash to avoid touching your principal you can quickly have a problem. For example let’s say stocks have a downturn and you have a serious health issue it’s very possible that all your proceeds are gone and you don’t have any money to reinvest when the market goes up.
  - dragonwriter 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. No, which number is the right pcomparison to be apples to oranges before considering risk has nothing to do with that. Interest rate on debt is directly most comparable to nominal return on investment, not real return. I haven't discussed at all what the correct risk premium to assign to stock market investment based on its historical volatility and what interest rate that would suggest is appropriate to consider equivalent on a risk-adjusted basis, either for some presumed generic investor (which would be meaningless in concrete terms) or in any concrete investment scenarios.
deleted 6y ago
[deleted]
xavierlint 6y ago
> There's so much much better personal finance advice out there, even one-pagers out there I haven't seen concise one-pagers with advices, could you please share some links?
- wdr1 6y ago
  University of Chicago professor Harold Pollack said that the best personal finance advice can fit on a 3-by-5 index card. https://en.wikipedia.org/wiki/The_Index_Card https://en.wikipedia.org/wiki/The_Index_Card - Max your 401(k) or equivalent employee contribution. - Buy inexpensive, well-diversified mutual funds such as Vanguard Target 20xx funds. - Never buy or sell an individual security. The person on the other side of the table knows more than you do about this stuff. - Save 20% of your money. - Pay your credit card balance in full every month. - Maximize tax-advantaged savings vehicles like Roth, SEP and 529 accounts. - Pay attention to fees. Avoid actively managed funds. - Make financial advisors commit to the fiduciary standard. - Promote social insurance programs to help people when things go wrong.

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.
- auntienomen 6y ago
  The picture changes again on even longer time frames. Stock growth rates have been remarkably consistent over the past couple hundred years. Even the Great Depression is barely visible when you look at the largest sample we have. (Although, obviously one must discount a little for Keynes' objection about the long run.)
  - spaetzleesser 6y ago
    Most people didn’t have a timeframe of 100 years. More likely something like 30 or less. If there is a downturn during that time and you don’t have enough cash to avoid touching your principal you can quickly have a problem. For example let’s say stocks have a downturn and you have a serious health issue it’s very possible that all your proceeds are gone and you don’t have any money to reinvest when the market goes up.
- dragonwriter 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. No, which number is the right pcomparison to be apples to oranges before considering risk has nothing to do with that. Interest rate on debt is directly most comparable to nominal return on investment, not real return. I haven't discussed at all what the correct risk premium to assign to stock market investment based on its historical volatility and what interest rate that would suggest is appropriate to consider equivalent on a risk-adjusted basis, either for some presumed generic investor (which would be meaningless in concrete terms) or in any concrete investment scenarios.

deleted 6y ago

[deleted]

xavierlint 6y ago

> There's so much much better personal finance advice out there, even one-pagers out there I haven't seen concise one-pagers with advices, could you please share some links?

wdr1 6y ago
University of Chicago professor Harold Pollack said that the best personal finance advice can fit on a 3-by-5 index card. https://en.wikipedia.org/wiki/The_Index_Card https://en.wikipedia.org/wiki/The_Index_Card - Max your 401(k) or equivalent employee contribution. - Buy inexpensive, well-diversified mutual funds such as Vanguard Target 20xx funds. - Never buy or sell an individual security. The person on the other side of the table knows more than you do about this stuff. - Save 20% of your money. - Pay your credit card balance in full every month. - Maximize tax-advantaged savings vehicles like Roth, SEP and 529 accounts. - Pay attention to fees. Avoid actively managed funds. - Make financial advisors commit to the fiduciary standard. - Promote social insurance programs to help people when things go wrong.