5 ms·

People in this thread are massively underestimating the level of financial illiteracy in the general population. We've had multiple people try to convince us t

People in this thread are massively underestimating the level of financial illiteracy in the general population. We've had multiple people try to convince us to set up bank accounts for our kids, so that they could accumulate interest over 18 years. More that tried to convince me to gamble on random pump and dump shitcoins. More still that talked about "investing" in random collectables like Funko Pops or Pokemon cards - they're not a bubble, Logan Paul told me so! You could replace the AI with a piece of paper that says "set aside 10% of your income and invest it in an ETF" and it would outperform the financial "advice" that people receive on a daily basis.

bradfa 2mo ago
What’s wrong with bank accounts for your kids? Sorry, this one doesn’t seem to fit with your other examples.
- dagenix 2mo ago
  Bank account interest is pretty much always less than inflation. So, money sitting in a bank account for 18 years is just losing value.
  - deleted 2mo ago
    [deleted]
  - Danox 2mo ago
    The object of the game is to live within your means, save and invest. More than half the population does not do that. When you’re 18 the treadmill starts turning if you don’t use your time wisely, you’re going to be in trouble at the end of life. When you are young, simple compounding is your friend because you have time. https://www.thewealthminded.com/finance-basics/how-compound-interest-works-and-why-its-your-best-friend https://www.thewealthminded.com/finance-basics/how-compound-... People have won the lottery and blown it all, some people who have extremely high paying professions in their youth, have over the course of time have also blown it all.
  - FabHK 2mo ago
    While banks often pay crap rates, real rates (e.g. from government bonds) have largely been positive (except the short end after GFC and COVID). https://fred.stlouisfed.org/series/REAINTRATREARAT10Y https://fred.stlouisfed.org/series/REAINTRATREARAT10Y https://fred.stlouisfed.org/series/REAINTRATREARAT1YE https://fred.stlouisfed.org/series/REAINTRATREARAT1YE
- theptip 2mo ago
  The interest rate is very low.
- wavemode 2mo ago
  If all you're doing with a bunch of cash over 18 years (!) is holding it in a bank account to collect interest, you're just losing money to inflation. Bank interest is almost nothing. Better to hold stocks, or at the very least bonds if you're extremely risk-averse. Though this needs to be put in context - maybe you actually intend for the child to be permitted to spend the cash, in which case a bank account makes plenty of sense.
- AussieWog93 2mo ago
  The banks might pay 3% interest, whereas even non-volatile conservative investments like cap notes or bonds would pay something like 7%. Plugging it into a calculator: 1.03 ^ 18 = 1.70 1.07 ^ 18 = 3.37 Example numbers, but you're effectively taking half of the money that your kid would have had on their 18th birthday, and giving it to a banker.
  - MBCook 2mo ago
    3% is amazingly good. It’s not hard to beat that, but a savings account at a common bank can easily be below 0.05%. I looked up BoA. 0.04%.
    - eks391 2mo ago
      3% is becoming more common as of the last few years, at least in the US. I know several banks off the top of my head that offer 3.5% or higher (and more if you are a new customer) for their savings accounts. I would persuade people who use banks that haven't moved on from near-zero APY to move on themselves.
      - MBCook 2mo ago
        Yeah just off the top of my head I’d expect Discover and AmEx to be around 3.5%. Apple is at 3.4%. I moved away from near 0% savings accounts more than 20 years ago, it’s amazing to me it’s still so common. You don’t have to try very hard or go wrong to someone you’ve never heard of to get a good rate.
        wingworks 2mo ago
        The rate goes up and down with inflation, high inflation, high interest - low inflation, low interest. But even then, yes some banks still offer no or 0.5% accounts.. because they can, and many people can't be bothered to figure out a better option, or "trust" there bank and don't want to move. (or the bank has high interest account, but make it complicated to use)
- lostaccount 2mo ago
  Not OP, but I think they are referring to the fact that you can get tax advantaged accounts instead of a standard savings account. Not to mention the interest rate on those accounts is basically a rounding error.
  - what 2mo ago
    A child can not get a tax advantaged account. You need earned income to contribute to those.
    - spacefan1984 2mo ago
      If you track chores you can actually set up your kids with a Roth 401k. For example, this company takes care of it for you https://www.halfmore.co/ https://www.halfmore.co/
      - what 2mo ago
        No. You can not consider payment for chores as earned income.
- CliffyA 2mo ago
  As the OP has "Aussie" in their name I think they'd be referring to the Commonwealth Bank of Australia Dollarmites accounts. They were shutdown recently after a watchdog investigation. It was locking kids into using the bank that would continue into adulthood and schools were getting paid to sign kids up. https://www.morningstar.com.au/personal-finance/the-lessons-from-dollarmites https://www.morningstar.com.au/personal-finance/the-lessons-... "They found that it provided little value for children and the largest outcome was that children were being exposed to ‘sophisticated’ marketing tactics."
  - AussieWog93 2mo ago
    Funnily enough the two people we heard that "advice" from were Brits and Saffas. It's just bad interest yields compounding over decades.
- MBCook 2mo ago
  My checking account isn’t the best out there at 1%. Same with my savings account at 3.4%. Neither of those is anywhere near inflation. You are effectively losing money by parking it there. Most checking accounts don’t pay interest at all. I looked up Bank of America's savings account: 0.04%. You read that right. Effectively zero. And it’s a flat rate. Whether you have $10 or $10 million in there.
- GuB-42 2mo ago
  From a return on investment perspective, it is not great. Bank accounts are convenient and safe, but you pay the price with low interest rates. But if you don't intend to touch that money for 18 years, you don't need the ability to withdraw at any time without losing money that a bank account offers, so why pay the price for it? However, it has symbolic and educative value, teaches the value of saving, how interest works without going into the complexities of the financial system, and making it clear to your kids that it is their money, even if they can't touch it yet. So it may be a good thing for that reason, when the sums are reasonable.
- zarzavat 2mo ago
  You should invest in different things depending on your age. An old person might want to have more of their money in yielding assets. They are withdrawing from the account so the certainty of having predictable value might outweigh the inflation risk. Savings intended for a young child should be allocated almost entirely into equities. They are not affected by drawdowns since they won't be withdrawing from the account for a decade or two, but inflation is a primary concern. A bank account is a particularly bad place to put savings intended for a child long-term. A good high yielding account might barely keep pace with inflation, but it's unlikely to grow much in real terms. The average bank account will lose money in real terms in that 10-20 years.
- hiddencost 2mo ago
  Inflation over a long time horizon is about 3%. Especially if it's going to be a decade or more, just put it in an index fund.
Eji1700 2mo ago
“Pay your bills on time and fully” “Do what you can to eliminate addictive vices or never get them” “Max your Roth and 401k contributions before even thinking about anything else” “Try to budget” “Don’t live beyond your means. Monthly payment need to be considered carefully” If you can even TRY to do these things it puts you SO far ahead of the average person. It sucks because I get it, if you’re behind waiting years for things to stabilize sucks, if you even can. So these get rich quick by just doing X scams are enticing but only set you farther behind. God I still remember when a friend showed up on his 18th birthday with a pack of cigarettes to show how “mature” he was. I always think about how much that one decision cost him over the years.
- mohamedkoubaa 2mo ago
  The writer of one punch man was on to something
  - sudo_cowsay 2mo ago
    He knew the way
- prophesi 2mo ago
  > God I still remember when a friend showed up on his 18th birthday with a pack of cigarettes to show how “mature” he was. I always think about how much that one decision cost him over the years. The irony of taxing vices. I imagine most of it's paid by people who didn't know better at a young age, and helps encourage the downward spiral of poverty. And if you say it discourages young people from starting on the addiction, I think we're barking up the wrong tree. Disposable vapes have the highest amount of nicotine they can put in their nicotine salts. Nicotine pouches like zyns sell the most at 6mg and above. Dispensaries and street weed have enough THC that would put a hippie in the 70's in a psychotic break. God bless that Gen Z doesn't drink or smoke cigarettes. But they vape nicotine and marijuana. Or use pouches / edibles. If we don't prevent first time users from getting an intense nicotine head high or accustomed to weed 5 to 10 times stronger than what their parents were used to, then I really don't see the point of excise taxes. It should be about preventing first-time use, and giving off-ramps to these potent products.
hibikir 2mo ago
Yes, and that's from supposed professionals too, not just crazy youtubers or tiktok channels. My neighborhood has enough old people that Edward Jones reps come over to try to manage your money. So I get to ask them questions, and see they are basically offering to rip me off. And that's in the US: You should see the investment recommendations people in Spain get when they talk to supposed advisors in real banks. Search for the Preferential shares scandal, where banks had scripts teaching how to lie to people to sell a product that would prop up the bank while having great chances of wiping out the buyer's savings.
- Danox 2mo ago
  Careful just recently two old guys in Chino Hills, California. Brothers 66 and 67 years old were involved in some sort of apartment deal for 20 million dollars which went south. They were so extremely dissatisfied with something and went to the house of the financial advisor or grifter depending upon your point of view and took it took on him. What is going to start happening with AI data centers?
kristianp 2mo ago
We have bank accounts for our kids, currently earning 1.75% because we aren't depositing money every month. If money is deposited it's another 3.3%. I really need to get around to setting up Vanguard for them. Thanks for the reminder!
- nsvd2 2mo ago
  1.75 is less than the money is losing value from inflation. If that savings is in USD it's quite a bit less than inflation over the past five years.
- samudrijan 2mo ago
  Look into a 529 college savings plan.
- hiddencost 2mo ago
  VTSAX, ASAP. Inflation is usually estimated at 3% + annually over a long enough time horizon. You're losing money.
- Cider9986 2mo ago
  You need to put them in a custodial brokerage account or whatever allows you to buy ETFs for them (not sure of best tax advantaged account for non-working kids) and buy the s&p or total us market. A bank account is horrible idea when they have a long time horizon meaning they aren't affected by ups and downs of market. Bank accounts are for 6-8 months of salary for an emergency fund. You can read this wiki or ask an AI about the strategy. https://www.bogleheads.org/wiki/Main_Page https://www.bogleheads.org/wiki/Main_Page
- bonesss 2mo ago
  My kids have bank accounts to learn how to manage money, banks, and training: getting used to having money in the bank before, during, and after a trip to the mall. My hope is to let them screw up their finances when they’re little instead of 20-something. We’ve also setup tax-deferred retirement investment accounts for them. $1 at 20 can 70x or more by retirement. Mostly it’s the mental training though. Being ok “losing” money during a market correction, saving for wealth in parallel with saving to buy, seeing interest and returns over time, and having a long term plan.
b8 2mo ago
Pokemon is a good investment IMO. My mom even bought me some as an investment in 2008.
fhe 2mo ago
came here to say some version of this. for the average joe, good financial advice is simple and boring (low cost ETF tracking broad based index), and AI is definitely able to give that. the question has always been getting people to listen though, and I am not sure how effective AI will be at that. I continue to be amazed at the confidence that people place in hot stock tips from tiktok (yes, tiktok!). little has changed since the 1920s i guess.
hn_throwaway_99 2mo ago
While I agree with you about the level of financial illiteracy in the general population, I don't really see what AI has to add for the vast majority of the population is simple. Basic financial advice is not hard (save regularly, invest in low cost index funds, don't take on CC debt, etc.), but a lot of it goes against most human nature, especially around delayed gratification. People have known for decades that "diet and exercise" are very important for good health, yet we still have an obesity epidemic. It reminds me of that Saturday Night Live skit from decades ago, "Don't Buy Stuff You Cannot Afford": https://youtu.be/R3ZJKN_5M44 https://youtu.be/R3ZJKN_5M44
- Aachen 2mo ago
  > I don't really see what AI has to add for the vast majority of the population What it does best: sound plausible and never tire of a personal (sounding) conversation An early study (with one of the early versions of ChatGPT) showed that people also come away less convicted about extreme political notions whereas chatting with a human had no or a slight solidifying effect. It's apparently an amazing tool to convince people of reasonable stuff (and probably also unreasonable stuff, if you'd make it, but I guess those proposals didn't pass the ethics committee!). There's loads of Financial cooks out there that'll convince you of golden mountains for anything that gives them a cut, kickback, or straight-out all of your money, so I could even see the reasoning in encouraging people to chat with just about any chatbot about their financial decisions My main concern is the reliability: while it may be feel-good to say that it can prevent, say, 95% of scams and 80% of bad ideas, any time it fails at its job will actively steer someone towards ruining their life. Effort might be better spent on something that reliably works. So I'm not convinced either way yet, just that I could see how this is more convincing (and thus effective, at least in aggregate) than a napkin with legit useful commandments (at least for the USA; idk if we have such a thing as 402(K) here)
throw0101a 2mo ago
> You could replace the AI with a piece of paper […] This is actually the 'schtick' of a book that was written ten years ago: > Emails and comments on his blog asked for a real index card with financial advice, so Pollack jotted down nine rules in two minutes, took a picture of it, and posted it online.[1][4] The image went viral, and was covered on many internet news sites.[4][5][6] Pollack and Olen wrote The Index Card three years later, which Pollack compares with the original index card as commentary to the Ten Commandments.[1][7] * https://en.wikipedia.org/wiki/The_Index_Card https://en.wikipedia.org/wiki/The_Index_Card """ The original index card, pictured above, has:[9] 1. Max your 401(k) or equivalent employee contribution. 2. Buy inexpensive, well-diversified mutual funds such as Vanguard Target 20xx funds. 3. Never buy or sell an individual security. The person on the other side of the table knows more than you do about this stuff. 4. Save 20% of your money. 5. Pay your credit card balance in full every month. 6. Maximize tax-advantaged savings vehicles like Roth, SEP, and 529 accounts. 7. Pay attention to fees. Avoid actively managed funds. 8. Make financial advisors commit to the fiduciary standard. 9. Promote social insurance programs to help people when things go wrong. """ All-in-all, not terribly bad advice; one could do a lot worse.
- wojciii 2mo ago
  10. Teach the next generation to be responsible with money and their use thereof. This means all this akward conversations about why I don't spend money on stuff that I don't need just because some YouTubers want me to.
  - blitzar 2mo ago
    Teach the difference between need and want.
  - throw0101a 2mo ago
    > This means all this akward conversations about why I don't spend money on stuff that I don't need just because some YouTubers want me to. There's nothing awkward about the following advice in conversations: > 1. There are two ways to use money. One is as a tool to live a better life. The other is as a yardstick of status to measure yourself against others. Many people aspire for the former but spend their life chasing the latter. […] > 3. Spending money can buy happiness, but it’s often an indirect path. Money itself doesn’t buy happiness, but it can help you find independence and purpose – both key ingredients for a happier life if you cultivate them. A big, nice house might make you happier, but mostly because it makes it easier to have friends and family over, and the friends and family are actually what are making you happy. […] > 6. Everyone can spend money in a way that will make them happier. But there is no universal formula on how to do it. The nice stuff that makes me happy might seem crazy to you, and vice versa. Debates over what kind of lifestyle you should live are often just people with different personalities talking over each other. Author Luke Burgis puts it another way: “After meeting our basic needs as creatures, we enter into the human universe of desire. And knowing what to want is much harder than knowing what to need.” * https://collabfund.com/blog/my-new-book-the-art-of-spending-money/ https://collabfund.com/blog/my-new-book-the-art-of-spending-... * https://www.goodreads.com/book/show/231148075-the-art-of-spending-money https://www.goodreads.com/book/show/231148075-the-art-of-spe...
what 2mo ago
> We've had multiple people try to convince us to set up bank accounts for our kids, so that they could accumulate interest over 18 years. I don’t really see the problem here? Why wouldn’t you want to set up financial accounts for your children and invest in them?
- HWR_14 2mo ago
  Those accounts should be in something that pays more interest because you give up the liquidity. You pay (in reduced interest rates) for the ability to withdraw at any time. You can instead be completely risk free and make more money* by promising not to need it for another 10, 14 or 18 years. * However many of those methods involve locking in the interest rate, so you might miss out if banks start paying 10% like they did decades ago.
- j3th9n 2mo ago
  Leaving money in the bank is not investing. Also, compare interest rate with inflation, you’re probably throwing away money every year. Meanwhile, your bank is actually investing your money and beating inflation. They pay you the interest and keep the rest.
- blitzar 2mo ago
  > set up bank accounts for our kids yes > so that they could accumulate interest over 18 years at 1% ... no ... the value of that money will so eroded by 18 years of time - a better investment would be in some good memories with them; go to europe and see the Sistine Chapel or teach them to surf / play tennis.
kumarvvr 2mo ago
The last bit of the last bit of what you said is what Warren Buffett has been saying for decades.
jghn 2mo ago
It's easy to see why it works though. I know people like this who have made bank with these stupid schemes. Far higher returns than doing things the "right" way. The problem is you usually only hear from folks like this who are up a gajillion percent on some dumb crypto play, and not from the people who just wasted their life savings.
- Gigachad 2mo ago
  You only ever hear about this stuff while it's up. The NFT bros have been quite for a long time now.
deleted 2mo ago
[deleted]
Gigachad 2mo ago
I've been using LLMs as a rubber duck for scenarios, and I've found they just agree with whatever the last thing you said was unless its blatantly wrong. They will happily 180 the opinion to match the last message, never ask further questions, never push back unless you've said something totally factually incorrect. So I agree with the title. If you already know the answer, LLMs can read it back to you.
- ButlerianJihad 2mo ago
  Are you referring to https://en.wikipedia.org/wiki/Rubber_duck_debugging https://en.wikipedia.org/wiki/Rubber_duck_debugging
petterroea 2mo ago
I'm generally very critical of the idea that people are relying on ai, but the thing I didn't realize in the past and that I see many like me haven't is that the literacy of an average citizen is surprising low. I know people who get very useful life advice from these models. Life advice anyone over 16 should know, but that doesn't matter. This trust people incorrectly put in models means they actually listen. And SOTA models are pretty accurate when it comes to common sense. Most of the time. So it actually works out. I still get very anxious at the idea of people relying on llms though. It just works out more often than we think.
- dns_snek 2mo ago
  > I still get very anxious at the idea of people relying on llms though. It just works out more often than we think. We should all be anxious about technology which is almost guaranteed to turn into metaphorical mind control. Some day these systems will be turned into highly personalized and effective brainwashing machines and topple our supposed democracies overnight. The more people trust them and rely on them, the easier it gets.
noduerme 2mo ago
The other stuff sounds scammy. But what's wrong with setting up savings accounts for your kids? It's a good way to teach them to save money. I was 10 years old or so when my parents set me up a bank account with $100 in it. I saw the statements every month and started putting money I earned into it. I had that account until I left home at 17, and it had several thousand dollars in it by then. I think that was actually crucial to helping me have financial literacy. Maybe you're talking about some scammy email or whatever. But the basic idea of setting up accounts for your kids is a good one.
- lawn 2mo ago
  Inflation will erode the value of money just sitting in an account. Even if you lock it up and get better interest the results will get dwarfed by investing in broad, passive, and low fee funds.
  - altmanaltman 2mo ago
    yeah but the two are different things no? Like yes if you take more risk with even diversified, passive funds you will like get more volatility which could go either way. There is no way you can know it will drawf interest rates provided by the bank which are designed not to beat inflation but prevent your cash from getting eaten away by the inflation as opposed to sitting in your basement locker etc. Also the idea doesn't seem to be "hey kids beat the market and get the best returns" but to gradually show the value of accumulated savings? They can also contribute their own earnings to those savings and at that age it is better to keep it in bank and accumulate interest than invest even in diversified low risk funds if your objective is to get the best savings by the time you are an adult and then you can decide what you want to invest in.
  - karel-3d 2mo ago
    yeah but you get essentially 0 risk (especially if the bank is insured) risk is proportional to gain
  - noduerme 2mo ago
    Yeah, but that's really not the point of opening a bank account for a kid. The point is that saving should become a habit. Seeing a balance grow is satisfying. When you're 12 years old and mowing lawns it's better to put money in your bank account than stuff it under your mattress, or spend it on dumb shit you won't remember next year. Then you talk to your kids about CDs, mutual funds, high yield savings, growth stocks, dividends, inflation, retirement funds, real estate, loans, etc. The first thing is how to open a bank account and put money in it. You'd be amazed how many adults I've met who didn't learn that until their mid-20s.
ornornor 2mo ago
I was at a dealership not that long ago to buy a new car for someone. The seller explained us how a lease was so much better financially than outright buying. He was completely wrong on the fundamentals: basically with a lease the car company makes you a huge favour because after the three years are up the car is worthless but they’ll take it back and lease you a new one anyway and you get a brand new car. Whereas if you own your car is worth 0 at year 3 (???) and you have to pay 100% of the price of a new car again to get a new one. Never mind residual value or that you are allowed to keep a car longer than 3 years. Must be working because most of my relatives friends have a leased car.
- jjav 2mo ago
  > The seller explained us how a lease was so much better financially than outright buying. Of course a lease is better than buying.. for the dealer. So the seller was honest, just not entirely transparent. Leasing is one of the dumbest financial moves ever. Forces you into a perpetual treadmill of payments for life. Just buy a car, pay it off (cash if you can, or with a loan) and then drive it forever.
  - massysett 2mo ago
    Some people want a new car all the time. Leasing is not a bad way to do that. Wanting a new car all the time is the expensive decision, not leasing, which is merely a manifestation of that decision. As someone who drives a ten-year-old car that probably has several good years left, I completely understand why someone would not want my boring life. This is the fallacy of people who recount stories of the “millionaire next door” who has high net worth. Many people do not really want wealth. They want to consume a lot: travel, new cars, restaurants, clothes.
    - jjav 2mo ago
      > Some people want a new car all the time. Leasing is not a bad way to do that. True. But does that make any economic sense? If you're so rich that it doesn't matter, sure why not. But for most people leasing is a terrible economic decision. If money matters, never lease. If your wealth is past the point where money matters, go for it. > As someone who drives a ten-year-old car that probably has several good years left I'd say several decades at least. My new car is 13 years old, which I consider barely broken in. Second oldest is 22 years old, doing great. My other cars are much older, in their third and fourth decades. Barring a crash, older cars can go on for a very long time. Newer cars built these days have a very limited lifetime ahead of them, as the electronics will be unrepairable in short order.

bradfa 2mo ago

What’s wrong with bank accounts for your kids? Sorry, this one doesn’t seem to fit with your other examples.

dagenix 2mo ago
Bank account interest is pretty much always less than inflation. So, money sitting in a bank account for 18 years is just losing value.
- deleted 2mo ago
  [deleted]
- Danox 2mo ago
  The object of the game is to live within your means, save and invest. More than half the population does not do that. When you’re 18 the treadmill starts turning if you don’t use your time wisely, you’re going to be in trouble at the end of life. When you are young, simple compounding is your friend because you have time. https://www.thewealthminded.com/finance-basics/how-compound-interest-works-and-why-its-your-best-friend https://www.thewealthminded.com/finance-basics/how-compound-... People have won the lottery and blown it all, some people who have extremely high paying professions in their youth, have over the course of time have also blown it all.
- FabHK 2mo ago
  While banks often pay crap rates, real rates (e.g. from government bonds) have largely been positive (except the short end after GFC and COVID). https://fred.stlouisfed.org/series/REAINTRATREARAT10Y https://fred.stlouisfed.org/series/REAINTRATREARAT10Y https://fred.stlouisfed.org/series/REAINTRATREARAT1YE https://fred.stlouisfed.org/series/REAINTRATREARAT1YE
theptip 2mo ago
The interest rate is very low.
wavemode 2mo ago
If all you're doing with a bunch of cash over 18 years (!) is holding it in a bank account to collect interest, you're just losing money to inflation. Bank interest is almost nothing. Better to hold stocks, or at the very least bonds if you're extremely risk-averse. Though this needs to be put in context - maybe you actually intend for the child to be permitted to spend the cash, in which case a bank account makes plenty of sense.
AussieWog93 2mo ago
The banks might pay 3% interest, whereas even non-volatile conservative investments like cap notes or bonds would pay something like 7%. Plugging it into a calculator: 1.03 ^ 18 = 1.70 1.07 ^ 18 = 3.37 Example numbers, but you're effectively taking half of the money that your kid would have had on their 18th birthday, and giving it to a banker.
- MBCook 2mo ago
  3% is amazingly good. It’s not hard to beat that, but a savings account at a common bank can easily be below 0.05%. I looked up BoA. 0.04%.
  - eks391 2mo ago
    3% is becoming more common as of the last few years, at least in the US. I know several banks off the top of my head that offer 3.5% or higher (and more if you are a new customer) for their savings accounts. I would persuade people who use banks that haven't moved on from near-zero APY to move on themselves.
    - MBCook 2mo ago
      Yeah just off the top of my head I’d expect Discover and AmEx to be around 3.5%. Apple is at 3.4%. I moved away from near 0% savings accounts more than 20 years ago, it’s amazing to me it’s still so common. You don’t have to try very hard or go wrong to someone you’ve never heard of to get a good rate.
      - wingworks 2mo ago
        The rate goes up and down with inflation, high inflation, high interest - low inflation, low interest. But even then, yes some banks still offer no or 0.5% accounts.. because they can, and many people can't be bothered to figure out a better option, or "trust" there bank and don't want to move. (or the bank has high interest account, but make it complicated to use)
lostaccount 2mo ago
Not OP, but I think they are referring to the fact that you can get tax advantaged accounts instead of a standard savings account. Not to mention the interest rate on those accounts is basically a rounding error.
- what 2mo ago
  A child can not get a tax advantaged account. You need earned income to contribute to those.
  - spacefan1984 2mo ago
    If you track chores you can actually set up your kids with a Roth 401k. For example, this company takes care of it for you https://www.halfmore.co/ https://www.halfmore.co/
    - what 2mo ago
      No. You can not consider payment for chores as earned income.
CliffyA 2mo ago
As the OP has "Aussie" in their name I think they'd be referring to the Commonwealth Bank of Australia Dollarmites accounts. They were shutdown recently after a watchdog investigation. It was locking kids into using the bank that would continue into adulthood and schools were getting paid to sign kids up. https://www.morningstar.com.au/personal-finance/the-lessons-from-dollarmites https://www.morningstar.com.au/personal-finance/the-lessons-... "They found that it provided little value for children and the largest outcome was that children were being exposed to ‘sophisticated’ marketing tactics."
- AussieWog93 2mo ago
  Funnily enough the two people we heard that "advice" from were Brits and Saffas. It's just bad interest yields compounding over decades.
MBCook 2mo ago
My checking account isn’t the best out there at 1%. Same with my savings account at 3.4%. Neither of those is anywhere near inflation. You are effectively losing money by parking it there. Most checking accounts don’t pay interest at all. I looked up Bank of America's savings account: 0.04%. You read that right. Effectively zero. And it’s a flat rate. Whether you have $10 or $10 million in there.
GuB-42 2mo ago
From a return on investment perspective, it is not great. Bank accounts are convenient and safe, but you pay the price with low interest rates. But if you don't intend to touch that money for 18 years, you don't need the ability to withdraw at any time without losing money that a bank account offers, so why pay the price for it? However, it has symbolic and educative value, teaches the value of saving, how interest works without going into the complexities of the financial system, and making it clear to your kids that it is their money, even if they can't touch it yet. So it may be a good thing for that reason, when the sums are reasonable.
zarzavat 2mo ago
You should invest in different things depending on your age. An old person might want to have more of their money in yielding assets. They are withdrawing from the account so the certainty of having predictable value might outweigh the inflation risk. Savings intended for a young child should be allocated almost entirely into equities. They are not affected by drawdowns since they won't be withdrawing from the account for a decade or two, but inflation is a primary concern. A bank account is a particularly bad place to put savings intended for a child long-term. A good high yielding account might barely keep pace with inflation, but it's unlikely to grow much in real terms. The average bank account will lose money in real terms in that 10-20 years.
hiddencost 2mo ago
Inflation over a long time horizon is about 3%. Especially if it's going to be a decade or more, just put it in an index fund.

Eji1700 2mo ago

“Pay your bills on time and fully” “Do what you can to eliminate addictive vices or never get them” “Max your Roth and 401k contributions before even thinking about anything else” “Try to budget” “Don’t live beyond your means. Monthly payment need to be considered carefully” If you can even TRY to do these things it puts you SO far ahead of the average person. It sucks because I get it, if you’re behind waiting years for things to stabilize sucks, if you even can. So these get rich quick by just doing X scams are enticing but only set you farther behind. God I still remember when a friend showed up on his 18th birthday with a pack of cigarettes to show how “mature” he was. I always think about how much that one decision cost him over the years.

mohamedkoubaa 2mo ago
The writer of one punch man was on to something
- sudo_cowsay 2mo ago
  He knew the way
prophesi 2mo ago
> God I still remember when a friend showed up on his 18th birthday with a pack of cigarettes to show how “mature” he was. I always think about how much that one decision cost him over the years. The irony of taxing vices. I imagine most of it's paid by people who didn't know better at a young age, and helps encourage the downward spiral of poverty. And if you say it discourages young people from starting on the addiction, I think we're barking up the wrong tree. Disposable vapes have the highest amount of nicotine they can put in their nicotine salts. Nicotine pouches like zyns sell the most at 6mg and above. Dispensaries and street weed have enough THC that would put a hippie in the 70's in a psychotic break. God bless that Gen Z doesn't drink or smoke cigarettes. But they vape nicotine and marijuana. Or use pouches / edibles. If we don't prevent first time users from getting an intense nicotine head high or accustomed to weed 5 to 10 times stronger than what their parents were used to, then I really don't see the point of excise taxes. It should be about preventing first-time use, and giving off-ramps to these potent products.

hibikir 2mo ago

Yes, and that's from supposed professionals too, not just crazy youtubers or tiktok channels. My neighborhood has enough old people that Edward Jones reps come over to try to manage your money. So I get to ask them questions, and see they are basically offering to rip me off. And that's in the US: You should see the investment recommendations people in Spain get when they talk to supposed advisors in real banks. Search for the Preferential shares scandal, where banks had scripts teaching how to lie to people to sell a product that would prop up the bank while having great chances of wiping out the buyer's savings.

Danox 2mo ago
Careful just recently two old guys in Chino Hills, California. Brothers 66 and 67 years old were involved in some sort of apartment deal for 20 million dollars which went south. They were so extremely dissatisfied with something and went to the house of the financial advisor or grifter depending upon your point of view and took it took on him. What is going to start happening with AI data centers?

kristianp 2mo ago

We have bank accounts for our kids, currently earning 1.75% because we aren't depositing money every month. If money is deposited it's another 3.3%. I really need to get around to setting up Vanguard for them. Thanks for the reminder!

nsvd2 2mo ago
1.75 is less than the money is losing value from inflation. If that savings is in USD it's quite a bit less than inflation over the past five years.
samudrijan 2mo ago
Look into a 529 college savings plan.
hiddencost 2mo ago
VTSAX, ASAP. Inflation is usually estimated at 3% + annually over a long enough time horizon. You're losing money.
Cider9986 2mo ago
You need to put them in a custodial brokerage account or whatever allows you to buy ETFs for them (not sure of best tax advantaged account for non-working kids) and buy the s&p or total us market. A bank account is horrible idea when they have a long time horizon meaning they aren't affected by ups and downs of market. Bank accounts are for 6-8 months of salary for an emergency fund. You can read this wiki or ask an AI about the strategy. https://www.bogleheads.org/wiki/Main_Page https://www.bogleheads.org/wiki/Main_Page
bonesss 2mo ago
My kids have bank accounts to learn how to manage money, banks, and training: getting used to having money in the bank before, during, and after a trip to the mall. My hope is to let them screw up their finances when they’re little instead of 20-something. We’ve also setup tax-deferred retirement investment accounts for them. $1 at 20 can 70x or more by retirement. Mostly it’s the mental training though. Being ok “losing” money during a market correction, saving for wealth in parallel with saving to buy, seeing interest and returns over time, and having a long term plan.

b8 2mo ago

Pokemon is a good investment IMO. My mom even bought me some as an investment in 2008.

fhe 2mo ago

came here to say some version of this. for the average joe, good financial advice is simple and boring (low cost ETF tracking broad based index), and AI is definitely able to give that. the question has always been getting people to listen though, and I am not sure how effective AI will be at that. I continue to be amazed at the confidence that people place in hot stock tips from tiktok (yes, tiktok!). little has changed since the 1920s i guess.

hn_throwaway_99 2mo ago

While I agree with you about the level of financial illiteracy in the general population, I don't really see what AI has to add for the vast majority of the population is simple. Basic financial advice is not hard (save regularly, invest in low cost index funds, don't take on CC debt, etc.), but a lot of it goes against most human nature, especially around delayed gratification. People have known for decades that "diet and exercise" are very important for good health, yet we still have an obesity epidemic. It reminds me of that Saturday Night Live skit from decades ago, "Don't Buy Stuff You Cannot Afford": https://youtu.be/R3ZJKN_5M44 https://youtu.be/R3ZJKN_5M44

Aachen 2mo ago
> I don't really see what AI has to add for the vast majority of the population What it does best: sound plausible and never tire of a personal (sounding) conversation An early study (with one of the early versions of ChatGPT) showed that people also come away less convicted about extreme political notions whereas chatting with a human had no or a slight solidifying effect. It's apparently an amazing tool to convince people of reasonable stuff (and probably also unreasonable stuff, if you'd make it, but I guess those proposals didn't pass the ethics committee!). There's loads of Financial cooks out there that'll convince you of golden mountains for anything that gives them a cut, kickback, or straight-out all of your money, so I could even see the reasoning in encouraging people to chat with just about any chatbot about their financial decisions My main concern is the reliability: while it may be feel-good to say that it can prevent, say, 95% of scams and 80% of bad ideas, any time it fails at its job will actively steer someone towards ruining their life. Effort might be better spent on something that reliably works. So I'm not convinced either way yet, just that I could see how this is more convincing (and thus effective, at least in aggregate) than a napkin with legit useful commandments (at least for the USA; idk if we have such a thing as 402(K) here)

throw0101a 2mo ago

> You could replace the AI with a piece of paper […] This is actually the 'schtick' of a book that was written ten years ago: > Emails and comments on his blog asked for a real index card with financial advice, so Pollack jotted down nine rules in two minutes, took a picture of it, and posted it online.[1][4] The image went viral, and was covered on many internet news sites.[4][5][6] Pollack and Olen wrote The Index Card three years later, which Pollack compares with the original index card as commentary to the Ten Commandments.[1][7] * https://en.wikipedia.org/wiki/The_Index_Card https://en.wikipedia.org/wiki/The_Index_Card """ The original index card, pictured above, has:[9] 1. Max your 401(k) or equivalent employee contribution. 2. Buy inexpensive, well-diversified mutual funds such as Vanguard Target 20xx funds. 3. Never buy or sell an individual security. The person on the other side of the table knows more than you do about this stuff. 4. Save 20% of your money. 5. Pay your credit card balance in full every month. 6. Maximize tax-advantaged savings vehicles like Roth, SEP, and 529 accounts. 7. Pay attention to fees. Avoid actively managed funds. 8. Make financial advisors commit to the fiduciary standard. 9. Promote social insurance programs to help people when things go wrong. """ All-in-all, not terribly bad advice; one could do a lot worse.

wojciii 2mo ago
10. Teach the next generation to be responsible with money and their use thereof. This means all this akward conversations about why I don't spend money on stuff that I don't need just because some YouTubers want me to.
- blitzar 2mo ago
  Teach the difference between need and want.
- throw0101a 2mo ago
  > This means all this akward conversations about why I don't spend money on stuff that I don't need just because some YouTubers want me to. There's nothing awkward about the following advice in conversations: > 1. There are two ways to use money. One is as a tool to live a better life. The other is as a yardstick of status to measure yourself against others. Many people aspire for the former but spend their life chasing the latter. […] > 3. Spending money can buy happiness, but it’s often an indirect path. Money itself doesn’t buy happiness, but it can help you find independence and purpose – both key ingredients for a happier life if you cultivate them. A big, nice house might make you happier, but mostly because it makes it easier to have friends and family over, and the friends and family are actually what are making you happy. […] > 6. Everyone can spend money in a way that will make them happier. But there is no universal formula on how to do it. The nice stuff that makes me happy might seem crazy to you, and vice versa. Debates over what kind of lifestyle you should live are often just people with different personalities talking over each other. Author Luke Burgis puts it another way: “After meeting our basic needs as creatures, we enter into the human universe of desire. And knowing what to want is much harder than knowing what to need.” * https://collabfund.com/blog/my-new-book-the-art-of-spending-money/ https://collabfund.com/blog/my-new-book-the-art-of-spending-... * https://www.goodreads.com/book/show/231148075-the-art-of-spending-money https://www.goodreads.com/book/show/231148075-the-art-of-spe...

what 2mo ago

> We've had multiple people try to convince us to set up bank accounts for our kids, so that they could accumulate interest over 18 years. I don’t really see the problem here? Why wouldn’t you want to set up financial accounts for your children and invest in them?

HWR_14 2mo ago
Those accounts should be in something that pays more interest because you give up the liquidity. You pay (in reduced interest rates) for the ability to withdraw at any time. You can instead be completely risk free and make more money* by promising not to need it for another 10, 14 or 18 years. * However many of those methods involve locking in the interest rate, so you might miss out if banks start paying 10% like they did decades ago.
j3th9n 2mo ago
Leaving money in the bank is not investing. Also, compare interest rate with inflation, you’re probably throwing away money every year. Meanwhile, your bank is actually investing your money and beating inflation. They pay you the interest and keep the rest.
blitzar 2mo ago
> set up bank accounts for our kids yes > so that they could accumulate interest over 18 years at 1% ... no ... the value of that money will so eroded by 18 years of time - a better investment would be in some good memories with them; go to europe and see the Sistine Chapel or teach them to surf / play tennis.

kumarvvr 2mo ago

The last bit of the last bit of what you said is what Warren Buffett has been saying for decades.

jghn 2mo ago

It's easy to see why it works though. I know people like this who have made bank with these stupid schemes. Far higher returns than doing things the "right" way. The problem is you usually only hear from folks like this who are up a gajillion percent on some dumb crypto play, and not from the people who just wasted their life savings.

Gigachad 2mo ago
You only ever hear about this stuff while it's up. The NFT bros have been quite for a long time now.

deleted 2mo ago

[deleted]

Gigachad 2mo ago

I've been using LLMs as a rubber duck for scenarios, and I've found they just agree with whatever the last thing you said was unless its blatantly wrong. They will happily 180 the opinion to match the last message, never ask further questions, never push back unless you've said something totally factually incorrect. So I agree with the title. If you already know the answer, LLMs can read it back to you.

ButlerianJihad 2mo ago
Are you referring to https://en.wikipedia.org/wiki/Rubber_duck_debugging https://en.wikipedia.org/wiki/Rubber_duck_debugging

petterroea 2mo ago

I'm generally very critical of the idea that people are relying on ai, but the thing I didn't realize in the past and that I see many like me haven't is that the literacy of an average citizen is surprising low. I know people who get very useful life advice from these models. Life advice anyone over 16 should know, but that doesn't matter. This trust people incorrectly put in models means they actually listen. And SOTA models are pretty accurate when it comes to common sense. Most of the time. So it actually works out. I still get very anxious at the idea of people relying on llms though. It just works out more often than we think.

dns_snek 2mo ago
> I still get very anxious at the idea of people relying on llms though. It just works out more often than we think. We should all be anxious about technology which is almost guaranteed to turn into metaphorical mind control. Some day these systems will be turned into highly personalized and effective brainwashing machines and topple our supposed democracies overnight. The more people trust them and rely on them, the easier it gets.

noduerme 2mo ago

The other stuff sounds scammy. But what's wrong with setting up savings accounts for your kids? It's a good way to teach them to save money. I was 10 years old or so when my parents set me up a bank account with $100 in it. I saw the statements every month and started putting money I earned into it. I had that account until I left home at 17, and it had several thousand dollars in it by then. I think that was actually crucial to helping me have financial literacy. Maybe you're talking about some scammy email or whatever. But the basic idea of setting up accounts for your kids is a good one.

lawn 2mo ago
Inflation will erode the value of money just sitting in an account. Even if you lock it up and get better interest the results will get dwarfed by investing in broad, passive, and low fee funds.
- altmanaltman 2mo ago
  yeah but the two are different things no? Like yes if you take more risk with even diversified, passive funds you will like get more volatility which could go either way. There is no way you can know it will drawf interest rates provided by the bank which are designed not to beat inflation but prevent your cash from getting eaten away by the inflation as opposed to sitting in your basement locker etc. Also the idea doesn't seem to be "hey kids beat the market and get the best returns" but to gradually show the value of accumulated savings? They can also contribute their own earnings to those savings and at that age it is better to keep it in bank and accumulate interest than invest even in diversified low risk funds if your objective is to get the best savings by the time you are an adult and then you can decide what you want to invest in.
- karel-3d 2mo ago
  yeah but you get essentially 0 risk (especially if the bank is insured) risk is proportional to gain
- noduerme 2mo ago
  Yeah, but that's really not the point of opening a bank account for a kid. The point is that saving should become a habit. Seeing a balance grow is satisfying. When you're 12 years old and mowing lawns it's better to put money in your bank account than stuff it under your mattress, or spend it on dumb shit you won't remember next year. Then you talk to your kids about CDs, mutual funds, high yield savings, growth stocks, dividends, inflation, retirement funds, real estate, loans, etc. The first thing is how to open a bank account and put money in it. You'd be amazed how many adults I've met who didn't learn that until their mid-20s.

ornornor 2mo ago

I was at a dealership not that long ago to buy a new car for someone. The seller explained us how a lease was so much better financially than outright buying. He was completely wrong on the fundamentals: basically with a lease the car company makes you a huge favour because after the three years are up the car is worthless but they’ll take it back and lease you a new one anyway and you get a brand new car. Whereas if you own your car is worth 0 at year 3 (???) and you have to pay 100% of the price of a new car again to get a new one. Never mind residual value or that you are allowed to keep a car longer than 3 years. Must be working because most of my relatives friends have a leased car.

jjav 2mo ago
> The seller explained us how a lease was so much better financially than outright buying. Of course a lease is better than buying.. for the dealer. So the seller was honest, just not entirely transparent. Leasing is one of the dumbest financial moves ever. Forces you into a perpetual treadmill of payments for life. Just buy a car, pay it off (cash if you can, or with a loan) and then drive it forever.
- massysett 2mo ago
  Some people want a new car all the time. Leasing is not a bad way to do that. Wanting a new car all the time is the expensive decision, not leasing, which is merely a manifestation of that decision. As someone who drives a ten-year-old car that probably has several good years left, I completely understand why someone would not want my boring life. This is the fallacy of people who recount stories of the “millionaire next door” who has high net worth. Many people do not really want wealth. They want to consume a lot: travel, new cars, restaurants, clothes.
  - jjav 2mo ago
    > Some people want a new car all the time. Leasing is not a bad way to do that. True. But does that make any economic sense? If you're so rich that it doesn't matter, sure why not. But for most people leasing is a terrible economic decision. If money matters, never lease. If your wealth is past the point where money matters, go for it. > As someone who drives a ten-year-old car that probably has several good years left I'd say several decades at least. My new car is 13 years old, which I consider barely broken in. Second oldest is 22 years old, doing great. My other cars are much older, in their third and fourth decades. Barring a crash, older cars can go on for a very long time. Newer cars built these days have a very limited lifetime ahead of them, as the electronics will be unrepairable in short order.