Who taught you about money?

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Who taught you about money?

Postby rickmerrill » Wed Feb 13, 2013 3:55 am

I thought it would be interesting to hear people's stories of how they learned about saving, investing, emergency funds and all the other stuff discusses daily on this forum. It might also be fun to hear some of the best and worst personal finance stories you know. Here is mine (sorry for the rant).

I've been thinking, for years now, that my parents never taught us much about money. I have a financial train wreck of a brother who is over 50 and had to move in with my dad. We love him, and he's not stupid, but I think things might have turned out differently if he had learned about money at a young age. It worked out ok i guess, they sort of take care of each other.

I got a trip to the bank to open a savings account at about 8 years old - but that was about it. Mom would say "no matter how much your father makes, with six kids we just never get ahead". To this day dad never discusses money; he did let on that he messed up when he rolled over his 401k, kept some, and got to pay the taxes and penalty. So, he has made up for that buy getting an advison from Raymond James! I'm positive he has some very expensive bond funds now. I guess my parents didn't know that much about finances so there wasn't much knowledge to impart. I just wonder how many families do bring their kids up with financial knowledge. I didn't learn anything in high school or college. Where do most people learn about money?

By accident, I worked with a guy, I was a few years younger, who was almost 40 and wanted to get out as early as possible. He introduced me to Bogle, Bogleheads and indexing and supplied the supporting research to back up what he said. I may not be that smart but I do know when I'm around someone that is. Because of that chance encounter I learned - I had my own personal Boglehead. I worked with a another guy who after a few years walked away with 270k - mega corp + home + upstairs rental. I was stunned - I'd been working for 10 years and didn't have that much. I vowed to be frugal that very day. He had left teaching physics in Britan to travel the world, he had done it most of his life - he knew how to live cheap and how to save money to fund his adventures.

Funny thing is now that I know I realize that most of the people I know don't know. There is the 39 year old, smart guy with 5 kids that can't afford to invest - but he does clip coupons. There is the 45 year old software contractor who lost his job in the dot com bust who had to liquidate his 401k and will never invest inone again - he has no savings. Or, the 62 year old software contractor who just dropped 75k+ on two new cars (even after I hinted that we may be letting contractors go soon). And, we have a ton of people at work, we have a great all Vanguard plan, between 40-55 that are lucky if the are getting the company match. It drives me nuts! It all just makes me think the db pension was a really good thing and not many people are prepared to properly fund or manage their own retirement investments.
.
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Re: Who taught you about money?

Postby rickmerrill » Wed Feb 13, 2013 4:00 am

Sorry, meant to put this in not investing forum. [I moved it to the proper forum. - Mel]
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Re: Who taught you about money?

Postby Johm221122 » Wed Feb 13, 2013 4:21 am

My first memory of financial handling of money was my grandfather. I guess he was influenced by the great depression. He owned his own bar and kept two drawers full of money in his bedroom. He wouldn't go to bank until second drawer was full.We went to Disney world one year and he had this big pile of money in his pocket. My grandmother told him why won't you get a wallet, he walked right in gift shop at airport and bought one.Then in middle of lobby he was trying to stuff this pile of money into it, with every one watching he was trying to literally stuff it in the wallet. It didn't work but we were mortified by the stares. when he passed away in middle to late 80's the lawyer would keep asking why he had 800k in a checking account with no interest to my grandmother.
Later on when I had a roommate that swore he could successfuly pick options by reading the Heard On The Street article in Wall Street Journal , I started reading books on money. I could not believe this was possible. I kept reading books until I found this site.I literally read every book in my local branch
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Re: Who taught you about money?

Postby rickmerrill » Wed Feb 13, 2013 4:35 am

Great story about you grandfather!

So it looks like you were self-taught.
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Re: Who taught you about money?

Postby Johm221122 » Wed Feb 13, 2013 4:44 am

rickmerrill wrote:Great story about you grandfather!

So it looks like you were self-taught.

Yes , I figure was self taught but this site made me aware that I know very little.I know now to save as much as I can, keep a low cost diversified portfolio and stay the course. I thank the people on this for showing me the right path and giving me the hope that I can reach my goals
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Re: Who taught you about money?

Postby NAVigator » Wed Feb 13, 2013 7:11 am

I always spent less than I made because it made sense to me. I grew up in a family that was always short of money and waited until the next payday. I knew I didn't want to live that way and the only way out was to save and invest. I read all the popular investing books which led me into making one costly mistake after another. I lost several hundred thousand dollars in the process. Finally at age 45 I read a book about index funds and low cost investing. That appealed to me since every other approach failed.

I knew that I had to make up for my losses, so I saved with a passion. It was a good thing I did because I was diagnosed with a serious medical condition over three years ago, forcing me to stop working and start full-time disability at age 56. With two commas in my Vanguard account, I am grateful for what I have learned through reading nearly every Boglehead type book available. I try not to think about learning about investing "the hard way". Instead, I am thankful for learning about index fund investing, finding this group when it was the Diehards at M*, and then the Bogleheads.

No one personally taught me about money and investing, yet I have learned from many, inspired by Jack Bogle.

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Re: Who taught you about money?

Postby DaleMaley » Wed Feb 13, 2013 7:30 am

In the late 1970's, I used to go over to my friends house and I noticed a Money magazine laying out in his brother's room. I thumbed through it....it looked interesting....and I remembered the magazine title.

In 1979, I took an adult ed class taught by an Edward Jones broker. As a text book, he used Venita VanCaspel's 1978 book The New Money Dynamics. Through her book, I learned about the value of compound interest and the importance of saving. I subscribed to Money magazine in Feb of 1980.

I remember thinking that if I'm going to work the next 30 years, what will I have to show for all that work when I am done? I used my trusty Texas Instruments scientific calculator to run some scenarios based upon savings rate, stock market return, and 30 year period.

I decided to save 15% of gross income and each month invest in 3 good no-load stock mutual funds. I decided to pick 3 funds with the best 5 year records and invest in them...starting in 1979.

In the 80's, I got very frustrated because my 3 top performing funds gradually became average versus top performing funds. There seemed to be no way to know in advance how to pick the best performing funds. I kept on saving at least 15% of gross income and investing into these 3 funds.

This problem bugged me so much, that in 1990 I decided to write my term paper in finance for my MBA on how to find the best mutual fund. I had to go to my Finance Professor and get his ok on the term paper topic before I started writing it. I remember he said, That is a great question, I am also dying to know the answer to that question. Go ahead and write your paper.

Using Consumer Reports magazine, I found that only 1 fund came within +/-20% of the S&P 500 in each of the last 5 years....and this fund was the Vanguard Index 500 fund. As a result of this paper, I switched all my common stock mutual fund money to Vanguard's Index 500 fund in late 1990. I have been an avid indexer ever since.

In 1999, I switched my asset allocation from 100:0 to 90:10. In late 2007, I switched my AA to 60:40. I plan on keeping the 60:40 AA through retirement.

So, it was a combination of Money magazine, an adult ed class, Venita VanCaspel's book, watching mutual fund performance over several years, an MBA finance class, and Consumer Reports magazine that got me on the path of index fund investing.....which occurred over a span of about 12 years.
Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. – Warren Buffett
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Re: Who taught you about money?

Postby racy » Wed Feb 13, 2013 7:46 am

My mother taught us kids the value of work (specifically piece work!): she paid a penny for every sand burr we pulled from the lawn. So, we learned that work results in money. The bigger lesson came in college when I learned about compound interest. That's when I saw that steady investing over time results in even more money.
I'm trying to pass this along. I work at a megacorp and we hire many young people. After their training, I have a one on one with them to go over job expectations, etc. I finish with a spreadsheet illustration of how they can become millionaires by participating in our defined contribution plan.
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Re: Who taught you about money?

Postby Keep It Simple » Wed Feb 13, 2013 8:18 am

This forum has taught me far more about money than any other source. The knowledge I have learned here will no doubt be responsible for a majority of the money I will accumulate.

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Re: Who taught you about money?

Postby englishgirl » Wed Feb 13, 2013 8:27 am

Most of us have a hard time finding out about this stuff. I'm sure your parents did their best.

I keep wondering lately if a lot of this is inbuilt character or personality stuff. I also have a brother who is a bit of a financial train wreck, and we had the same upbringing, so why am I one way and he's the other?

Anyway, back to the question, for me I think of two important factors. First, my dad always used to tell me that "money comes to money". Now, he was using this in a complaining way sometimes, that people who had money are the ones that get given the freebies, but also the ones that qualify for loans, credit, and other things like that. You know, like "those that have, get, while those that don't have, don't get." He and my mom went through some really tough times and he felt like they couldn't catch a break for a while there. But it made me realize that I needed to start building up my little nest egg so that I'd have enough to start attracting more! And then second, I think the fact that I was a kid in the late 70's/early 80's helped. I was able to put my meager savings in a savings account, and with the astronomical interest rates at the time, I was able to watch it grow quickly. It really did reinforce the notion that you just get given MORE money seemingly as a gift if you have some to start with. So, that made me into a saver.

As for investing, that took me a long time, and I made some mistakes until I stumbled on the Bogleheads on Morningstar. For my dad, thank goodness he has a DB pension plan! Without it I don't know how he'd be doing these days.
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Re: Who taught you about money?

Postby ks289 » Wed Feb 13, 2013 8:28 am

My parents demonstrated the frugal/saving/importance of education approach (to my chagrin at times) all throughout my childhood.
When it came to investing, they were not particularly savvy (I think it was a lot harder back then) and even the advice I received from MBA relatives didn't feel right (look for actively managed mutual funds with a good long term track record ---- Magellan!)

Did a lot of reading to come to an approach I felt comfortable with.

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Re: Who taught you about money?

Postby livesoft » Wed Feb 13, 2013 8:29 am

I read a book. I think it was a book by Sylvia Porter that was on the bookshelf in the den when I was a teenager. Then I read IRS Publications when I had to file tax returns starting at age 16.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Who taught you about money?

Postby boknows » Wed Feb 13, 2013 8:31 am

My parents are terrible with money. If I learned anything from them, it was the ridiculousness of moving credit card balances from one card to another ad infinium is such a silly idea.

After I graduated college and moved in with my wife (then girlfriend), I was fairly focused on crushing my student loan debt (80k). During that time, I learned that her parents were retiring early (age 51) despite her Mom never working and him never becoming an executive of any kind. The idea that it was possible to retire to early got me poking around online. That was a number of years ago, and throughout my "early retirement" searching online I've come across places like this, ERE, Early-retirement.org, and MMM.

I sort of fell into an employer-paid Masters program, and switched jobs for more money, and all along the way kept LBYM.

The internet mostly taught me about money.
32 - Married - Aiming for FI/ER in early 40s.
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Re: Who taught you about money?

Postby livesoft » Wed Feb 13, 2013 8:40 am

I just had this thought: When I finished college I didn't notice inflation because I didn't own a car, didn't pay a mortgage, didn't pay taxes, and didn't spend any money. But interest rates on CDs and Vanguard money market funds were above 10%. That gets one's attention because 10+% earnings in a bank sure seems like easy money, doesn't it?

Nowadays, folks just starting jobs see interest rates on money market funds at 0.01%. There is no incentive to save anything or invest anything or learn about money because the returns look so dismal.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Who taught you about money?

Postby Grt2bOutdoors » Wed Feb 13, 2013 9:31 am

Growing up, we never had much - on my block we were one of the least well-off. Even so, my folks always made it a priority to put something away when they could in a passbook savings account. Back then the interest rate paid was a standard 5.25%. That always stuck in my head - to put something away whenever you could.
There was a public library not too far from my home, in the summers when off from school, I would pass my days in the library because my home didn't have an air-conditioner, but the library was ice-cold on those muggy humid hot days! I read Money Magazine back when Lilli was the editor in chief, in that magazine was articles on mutual funds and advertisements from fund companies like Twentieth Century, Invesco and Franklin with their toll free numbers. I would take the numbers down and have my folks call for the "free" prospectus and annual reports. I would read them from cover to cover. My first mutual fund purchase was from Twentieth Century which had a lenient minimum investment of a $1. That's right, Stowers who ran the firm believed there should be no obstacle in being able to invest and besides, it made for good business in the form of loyal investors. After that, I moved on to TRowe Price when I could afford the $50 minimum investment.

Another thing, in college I worked in a bank as a window teller. If you want to see how the rest of society lives this is a fine window (no pun intended) into it. After seeing how many folks were struggling with zero retirement savings, poor jobs/poor income, those with obscene amounts of money - some well deserved and earned, others who were spoiled heirs - I used that experience to formulate a savings/investment plan on my own - not to depend on others, especially employers - that was probably the best advice I gave myself seeing how every employer I've been to has done a fine hatchet job of gutting benefits, if it wasn't for my savings plans I'd be up the creek with no paddle like many of my old customers. And I picked up some advice from some of those customers including the fellow who told me about the Wellington fund. I used to prepare my own tax returns by hand, boy that was a tedious exercise, but I also learned alot about deductions like the IRA deduction and taxes - and then came Senator Roth of Delaware's invention - the Roth. I took advantage of that the first time it was offered.

The most important thing though is to have a curiousity about it and to read voraciously - I read all the personal finance books out there - even if it was repetitive information and the Wall Street Journal when it was a real paper, Barrons occassionally and I would talk "stock" with other investors. Today, I talk stock and theory with the Bogleheads and try to impart the knowledge gained from here and everywhere else to those who ask for help or "not". :wink:
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Re: Who taught you about money?

Postby LowER » Wed Feb 13, 2013 9:39 am

Burton Malkiel, this site, mrmoneymustache.com, William Bernstein, and the White Coat Investor. Not much from my parents. I took a class in college, but I was 17 and absorbed nothing.
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Re: Who taught you about money?

Postby Grt2bOutdoors » Wed Feb 13, 2013 9:40 am

racy wrote:My mother taught us kids the value of work (specifically piece work!): she paid a penny for every sand burr we pulled from the lawn. So, we learned that work results in money. The bigger lesson came in college when I learned about compound interest. That's when I saw that steady investing over time results in even more money.
I'm trying to pass this along. I work at a megacorp and we hire many young people. After their training, I have a one on one with them to go over job expectations, etc. I finish with a spreadsheet illustration of how they can become millionaires by participating in our defined contribution plan.


What growth rate are you using to get to that million? I hope it's not the standard 8 percent! :oops:
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Re: Who taught you about money?

Postby mptfan » Wed Feb 13, 2013 9:45 am

Grt2bOutdoors wrote:What growth rate are you using to get to that million? I hope it's not the standard 8 percent! :oops:

Why not? 8% is a conservative estimate... according to Vanguard's portfolio allocation models, an investor with an allocation of 80% stocks and 20% bonds between 1926 and 2011 would have gotten an average annual return of 9.4%.

https://personal.vanguard.com/us/insigh ... llocations
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Re: Who taught you about money?

Postby Grt2bOutdoors » Wed Feb 13, 2013 9:56 am

mptfan wrote:
Grt2bOutdoors wrote:What growth rate are you using to get to that million? I hope it's not the standard 8 percent! :oops:

Why not? 8% is a conservative estimate... according to Vanguard's portfolio allocation models, an investor with an allocation of 80% stocks and 20% bonds between 1926 and 2011 would have gotten an average annual return of 9.4%.

https://personal.vanguard.com/us/insigh ... llocations


Have you earned 8% over the last ten years without taking undue risk? I liken the 8% number as the Dave Ramsey 12% returns. :oops: It's a number, but not a conservative one and given all the predictions about the prospective real returns across all asset classes, you may be pushing it with 8%. Just ask the state and corporate pension funds - they would die to get an 8% return on their money.
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Re: Who taught you about money?

Postby mlipps » Wed Feb 13, 2013 11:04 am

My parents taught me a lot. They were never anything but middle class, and in recent years stagnant wages have probably pushed them down closer to the upper end of lower class, so to speak. But they taught me many important things, chiefly, to always save for emergencies, to invest as much (even if it's a small amount) as you can, and most of all, to live within my means. So many times when I wanted something as a kid and I was disappointed that the Jones's kid got it and I didn't, my mom explained to me that most people are not really able to afford the things they have-that they buy everything on credit and are one emergency away from disaster. My mom and dad taught me to admire people who were well to do but still lived simply and frugally, not people who flashed money around in the form of big houses and fancy cars.
Another really important thing my dad taught me growing up is that no job is too small to be done well. Having gotten my (fantastic) current job through a series of funny accidents relating to this principle, I definitely have him to thank for my success in life. That's a principle that's been passed down from my grandfather (who I never met) to my dad, on to me, and will definitely be handed on to my own kids.
Investing is now something I've been teaching them about in recent years. Most of that information I learned from reading here on Bogleheads. My parents are my role models still though. Although they've only squirreled away about $120k over their working years, they've been preparing their whole lives to survive off their SS when they retire by paying off our house, buying reliable cars that will last them through retirement, living frugally, etc. Their 401k will serve a good emergency fund when they retire if nothing else. I very much look up to them.
So often on this forum, I hear people who have been lucky enough to have high incomes most of their lives marvel at how difficult it is for low income families to raise kids, save, and not go deep into debt. My parents have definitely proven that it's possible and I'm so thankful for that.

Edited to add one more very wise thing my parents have always taught me: If it sounds too good to be true, it probably is. That's kept them out of trouble many times over the years I'm sure.
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Re: Who taught you about money?

Postby Blues » Wed Feb 13, 2013 11:15 am

My father explained the rudiments when I was in my early teens but I must say that most of it was well beyond me at the time and I couldn't quite wrap my head around the concepts of what made share prices go up and down if the businesses were fundamentally unchanged.

In the middle 80's we both decided to buy and invest in our first mutual fund and we independently decided to do some research and get back to one another to see what we came up with. We each chose "Mutual Shares" which was run by Michael Price during that period.

In the years following I read quite a bit from the offerings of Morningstar, AAII, Value Line and other organizations.

Although I did pretty well on my own until finding this site, my most satisfying and personally rewarding education has come via the "Bogleheads" and the related books of such gentlemen as Jack Bogle, Larry Swedroe, Bill Bernstein, Rick Ferri and Burton Malkiel...and for that I tip my hat and thank you all. 8-)
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Re: Who taught you about money?

Postby ddunca1944 » Wed Feb 13, 2013 11:26 am

Self taught.

As a child, I was a saver (i did not get any kind of regular allowance, so actual cash to me was rare. I saved it, hoarded it, and counted it). My childhood was very financially insecure and I grew up, not wanting to become rich, but very much wanting to become financially secure.

I muddled along, making a lot of classic "young person" mistakes, like marrying someone with no discussion about money, saving or the like. We made purchasing decisions based on whether the monthly payments were affordable.

When I was 35, going through a divorce with two kids to support, I made a really bad financial mistake. It was at a time when I could least afford it. I told myself, "you need to learn how to manage money because no one is going to take care of you". I started reading Money magazine, but that was mostly about investing. I needed to learn how to manage my day to day finances. The biggest thing I learned from Money was that I should sign up for the 401K plan at work and maximize my contributions to it. I did so. That was the beginning my my education. I loved watching the amount in my 401K grow, and one year, the growth was more than my contribution. It was a huge epiphany.
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Re: Who taught you about money?

Postby BuckyBadger » Wed Feb 13, 2013 11:29 am

Now that I know more about finance, I'm even more in awe of what my dad accomplished when I was growing up. He raised a family of 4 in a very comfortable middle class lifestyle on what I realize now was at the very peak of his career $100k a year max. My mother worked until the second kid and after that was a stay at home mom. I was able to have nice after school activities, my brother went to private school, and my dad retired very comfortably at 55 even after putting me through an expensive private school with no loans. He now has a part time job doing some consulting that he loves, and my parents travel extensively and even expect to be able to leave something to the two of us kids. Even now I don't know how he did it! He's now in his late 60s and is one hell of a spry old geezer!

Because of him, I was always a saver. I loved saving up to buy something I coveted, and I loved having money put away for a rainy day. He started a mutual fund for me at 16 and matched anything I put into it. I've been maxing out a Roth since I had earned income to do it, and I've been maxing out my 403k since I've had one available to me. I always worked summer jobs off the books to pay for the things I wanted and to save money for things. I worked my way through grad school and haven't been on his books since practically the day I graduated.

My husband came from a very different background. His father made scads more money than mine and was a very successful doctor. They always had 3 or 4 new cars on leases, vacation properties, went on trips and stayed in hotels (I think the first time I stayed in a hotel I was 16 -- and it sure wasn't the 4 seasons). He had credit card bills that he never paid off in full, not because he couldn't, but because for some reason he just didn't want to. He had to work until he was in his late 60s and is now in very poor health and unable to enjoy any fruits of his labor, and although it apperas that he will have enough funds for his own care, he will certainly be tapped out by the time he passes away.

Luckily, my husband ended up not ruined by the experience, but merely uneducated. He lets me manage most money matters and defaults to my father for financial advice. We compromise on cars -- we get them newer, nicer, and more frequently than I'm used to -- but we also put away $80,000 into retirement and retirement earmarked funds every year so I can't complain. And I do enjoy the cars!

As far as the details of investing, that all happened here. I was 100% into target date retirement funds, so I probably would have ended up pretty okay even if I'd never seen bogleheads, but with my new 3 fund portfolio I hope to really knock it out of the part and be mostly retired by 55 like my parents.
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Re: Who taught you about money?

Postby EternalOptimist » Wed Feb 13, 2013 11:34 am

My basic foundation came from my parents who showed me the value of saving money and spending within my means. What I know about investing I've taught myself largely through research and reading. My 'common sense, keeping things simple and take a few risks' approach to life helps. 8-)
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Re: Who taught you about money?

Postby Boglenaut » Wed Feb 13, 2013 11:38 am

Who taught you about money?



Myself.
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Re: Who taught you about money?

Postby EternalOptimist » Wed Feb 13, 2013 11:39 am

Grt2bOutdoors wrote:
mptfan wrote:
Grt2bOutdoors wrote:What growth rate are you using to get to that million? I hope it's not the standard 8 percent! :oops:

Why not? 8% is a conservative estimate... according to Vanguard's portfolio allocation models, an investor with an allocation of 80% stocks and 20% bonds between 1926 and 2011 would have gotten an average annual return of 9.4%.

https://personal.vanguard.com/us/insigh ... llocations


Have you earned 8% over the last ten years without taking undue risk? I liken the 8% number as the Dave Ramsey 12% returns. :oops: It's a number, but not a conservative one and given all the predictions about the prospective real returns across all asset classes, you may be pushing it with 8%. Just ask the state and corporate pension funds - they would die to get an 8% return on their money.



Everyone is entitled to their opinion, it's their life. Everyone's situation is different, not everyone is driven by fear and conservatism. Relying on history coupled with the interest in making progress in life is a good thing. After all, it's only life --not fatal, not final :!:
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Re: Who taught you about money?

Postby Toons » Wed Feb 13, 2013 11:41 am

I wish I knew. When I was a youngster with a paper route(11 years old) , I can remember saving 2 thousand dollars in my passbook savings account ,and on quite a few occasions my Father would ask me to loan him a few dollars until his next payday. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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Re: Who taught you about money?

Postby mptfan » Wed Feb 13, 2013 11:48 am

Grt2bOutdoors wrote:
mptfan wrote:
Grt2bOutdoors wrote:What growth rate are you using to get to that million? I hope it's not the standard 8 percent! :oops:

Why not? 8% is a conservative estimate... according to Vanguard's portfolio allocation models, an investor with an allocation of 80% stocks and 20% bonds between 1926 and 2011 would have gotten an average annual return of 9.4%.

https://personal.vanguard.com/us/insigh ... llocations


Have you earned 8% over the last ten years without taking undue risk? I liken the 8% number as the Dave Ramsey 12% returns. :oops: It's a number, but not a conservative one and given all the predictions about the prospective real returns across all asset classes, you may be pushing it with 8%. Just ask the state and corporate pension funds - they would die to get an 8% return on their money.

You are entitled to your opinion, and you may use whatever numbers you want, but my numbers are based on historical returns over almost 90 years of history, including the great depression, multiple recessions and wars, and several stock market crashes. My projected number is based on hard data, not personal opinion.
I eat risk for breakfast. :)
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Re: Who taught you about money?

Postby Sam I Am » Wed Feb 13, 2013 11:51 am

Message deleted.
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Re: Who taught you about money?

Postby mptfan » Wed Feb 13, 2013 11:52 am

Grt2bOutdoors wrote:Have you earned 8% over the last ten years without taking undue risk?

Yes, and I have an 80/20 allocation. If you don't believe me, look at the average annual return of the Vanguard Lifestrategy Growth Fund over the last 10 years.... it is 8.02% per year. And that number is not an anomoly... the average annual return of that fund since 1994 (almost 20 years) is 7.81%.
I eat risk for breakfast. :)
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Re: Who taught you about money?

Postby Grt2bOutdoors » Wed Feb 13, 2013 12:00 pm

EternalOptimist wrote:
Grt2bOutdoors wrote:
mptfan wrote:
Grt2bOutdoors wrote:What growth rate are you using to get to that million? I hope it's not the standard 8 percent! :oops:

Why not? 8% is a conservative estimate... according to Vanguard's portfolio allocation models, an investor with an allocation of 80% stocks and 20% bonds between 1926 and 2011 would have gotten an average annual return of 9.4%.

https://personal.vanguard.com/us/insigh ... llocations


Have you earned 8% over the last ten years without taking undue risk? I liken the 8% number as the Dave Ramsey 12% returns. :oops: It's a number, but not a conservative one and given all the predictions about the prospective real returns across all asset classes, you may be pushing it with 8%. Just ask the state and corporate pension funds - they would die to get an 8% return on their money.



Everyone is entitled to their opinion, it's their life. Everyone's situation is different, not everyone is driven by fear and conservatism. Relying on history coupled with the interest in making progress in life is a good thing. After all, it's only life --not fatal, not final :!:


Yes, they are, as long as the OP discloses to the employees that the figures are hypothetical, that no reliance should be placed upon the numbers as they are the presenters opinion and not that of the company or what is currently earned in the marketplace, fine. I'm not driven by fear and conservatism, more like practical and reasonable assumptions. Many well-known investment folks are also saying not to expect 8% (Bogle,Bernstein,Grantham,Ferri,Bogleheads,etc.) so there is a basis in why I said I hope he wasn't using the "standard 8%" that exists in fairyland.
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Re: Who taught you about money?

Postby B. Wellington » Wed Feb 13, 2013 12:29 pm

This is a tough one. Like many families at the time, money subjects were Not talked about. No one seemed to make very much either. However, for whatever reason I was a born saver as were my grand parents. Self taught later in life, I found VG, Mutual series' Mike Price, J. Bogle, T. Miller @ Kiplingers, Buffett, Brian Rodgers @ T.Rowe, Savage, just to name a few. I read everything I could find.

The rest is history...I think the Grand Parents would be proud. :happy
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Re: Who taught you about money?

Postby aua868s » Wed Feb 13, 2013 12:33 pm

All that my parents could brave out were the CDs. Anything beyond that is "risky" to them. I did not contribute to 401K for the first 3 years of my worklife. A colleague helped me understand that it is free money. I learned my first building blocks about money from www.bargaineering.com

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Re: Who taught you about money?

Postby Confused » Wed Feb 13, 2013 12:36 pm

Grt2bOutdoors wrote:
mptfan wrote:
Grt2bOutdoors wrote:What growth rate are you using to get to that million? I hope it's not the standard 8 percent! :oops:

Why not? 8% is a conservative estimate... according to Vanguard's portfolio allocation models, an investor with an allocation of 80% stocks and 20% bonds between 1926 and 2011 would have gotten an average annual return of 9.4%.

https://personal.vanguard.com/us/insigh ... llocations


Have you earned 8% over the last ten years without taking undue risk? I liken the 8% number as the Dave Ramsey 12% returns. :oops: It's a number, but not a conservative one and given all the predictions about the prospective real returns across all asset classes, you may be pushing it with 8%. Just ask the state and corporate pension funds - they would die to get an 8% return on their money.


Ha, yeah, I was listening to Dave Ramsey the other day and he was telling some woman that if they got rid of their car payment and put that money away every month for the next 30 years, it would grow to X amount, given a conservative growth rate. But he didn't say what that "conservative growth rate" was, so I tossed the figures into a calculator. I guessed 5%, but that came up way short of the figures he was quoting. Turned out to be 12% and I tried to laugh, but my mouth was hanging open that he could possibly think 12% was a conservative guess.
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Re: Who taught you about money?

Postby bottomfisher » Wed Feb 13, 2013 12:46 pm

Self taught as well. Early on read: Investing for Dummies, newspaper, Random Walk Down Wall St, Common Sense on Mutual Funds.
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Re: Who taught you about money?

Postby chaz » Wed Feb 13, 2013 12:50 pm

I was self-taught.
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Re: Who taught you about money?

Postby MoonOrb » Wed Feb 13, 2013 12:53 pm

I was self-taught, but my mother instilled in me the value of living within my means and putting money away for the future. I didn't learn anything specific from her about how she invested (and I doubt she ever used the word "invested," she said "saved"), so everything I learned I learned on my own. At some point I read about the value of investing while I was young, saw the graphs that show the power of compound interest and thought WOW.

I tried a number of books, but found those by Ric Edelman resonated with me the most. That got me part of the way there, and it was a relatively short leap from the principles in his books to those espoused by Jack Bogle.

So, self-taught yes, but the foundational value of living within my means and putting money away for the future is something I learned from my mom.
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Re: Who taught you about money?

Postby bergcy » Wed Feb 13, 2013 12:54 pm

My wife. She was always careful and respectful of money. Marriage was really the changing point for me.
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Re: Who taught you about money?

Postby MathWizard » Wed Feb 13, 2013 1:07 pm

Self Taught, still reading, still learning.

I will say that my mother taught me that if you want something to be done right, do it yourself,
which I apply to many things, especially finances.
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Re: Who taught you about money?

Postby BolderBoy » Wed Feb 13, 2013 1:26 pm

Father (accounting professor) taught me the basics, but was himself a terrible investor. In 1958 when he was in grad school, he told me that the only two basic ways to get rich are via the stock market and/or via real estate. In grad school I took an investing class from a Prudential agent/rep - learned very little other than some lingo.

1978 was making more money than I ever had before (always been a good saver), so subscribed to Money Magazine, liked the T Rowe Price ad I saw (confirmed its stability with bond broker brother-in-law (who taught me how the banking system works)) and blindly sent them $$$ to open a MM account. Money Mag has taught me almost nothing useful, but I read it religiously and will until the subscription expires in June 2013.

1981, put several thousand into "the stock market" via a broker and lost most of it. Soured, I didn't consider investing again until 1989, then bought some Vanguard bond funds. In 1991 I rolled over a 401k into the Vanguard 500 Index fund because of a suggestion I read in Money Mag...and ignored that until 2007. 1992 found myself able to live on 10% of what I was making and started pouring $$$ into various TRP funds haphazardly. At least I always maxed out all retirement vehicles every year. Thankfully, even stupid people made money in the go-go 1990s.

The 500 Index fund did the best of all my "investments" no matter who was looking after them, and got me to pondering why...

In 2003 I handed over my assets to the first of four "investment advisors", each of whom did worse than *I* did with my dartboard approach, then I discovered the Bogleheads in 2009 where knowledge and discipline rein! Have gone the Boglehead 3-Fund way ever since.

So, on balance, MOST of my understanding of investing comes from the fine folks here. And I know very little even then.
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Re: Who taught you about money?

Postby Fallible » Wed Feb 13, 2013 1:58 pm

I think the general family frugality rubbed off on me, though I was taught precious little about money matters such as compounding, investing, taxes, etc. All that I learned pretty much on my own (with lots of help from a Sylvia Porter book) and it took awhile. I was close to my Depression-era grandparents and picked up many of their money-saving ways and still practice a few, including different ways to cook left-overs until they are truly gone and nothing is wasted.
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Re: Who taught you about money?

Postby SC Hoosier » Wed Feb 13, 2013 2:06 pm

My parents set an example of focusing on dept repayment and dept avoidance. Live on less than you make. This helped my monthly expenses stay low. Echo an earlier post about parents teaching me that it is better to have money and live normally than to pretend to have it. My parents helped me be able to say "no" to myself by saying it to me when I was young. As a kid, when we went into a store, I asked for things and subsequently learned that I could live without them. I have met many adults who are "slaves to their own desires."

Dave Ramsey taught me how to live on a budget without going crazy. I do wish Dave would steer people toward Vangaurd. I love saving for tomorrow = delayed gratification = I have a better tomorrow to look forward to.

Many Happy Returns!

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I live in No Payment Land. It is wonderful, and I'd love for you to live here too.
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Re: Who taught you about money?

Postby Saleen » Wed Feb 13, 2013 2:14 pm

This forum! Started reading it when I started my first job after college. Having an inquisitive nature and wanting to research and understand everything helps.

Took a few binge years to go to law school, hopefully I can get back on track now!
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Re: Who taught you about money?

Postby Savvy » Wed Feb 13, 2013 2:20 pm

My upbringing made me aware of living within your means. I have always been frugal. Part of it was family, part of it was self-taught.

I was going through college from 2007-2011, so I learned that a job/income must not be taken for granted. Money earned should be appreciated and saved, since the economy won't always be doing as well as it was prior to 2007.

I read finance-related books, starting with Rich Dad, Poor Dad. That led me to buy 6-7 books on stock-picking, investing, business-building (think Donald Trump). However, I never read them...my brother eventually gave me Bogleheads' Guide to Investing. I then read Wise Investing Made Simple. Then I joined this forum!

I am still learning.
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Re: Who taught you about money?

Postby caroljm36 » Wed Feb 13, 2013 2:30 pm

Mostly self taught...My parents didn't teach me anything, even though my father was real good with money. I think he assumed I wasn't interested, and it wasn't a proper topic for a daughter anyway. Yeah he was that old. By the time I was interested, he was into some pretty complicated investments that I couldn't understand, like options and shorting.

I took an economics class in HS and that helped with basic theory. So I wasn't all that ignorant as a youth.

Much later I used to watch Wall Street Week in Review every week, from sheer boredom with everything else on TV, and slowly got up to speed with the market, and bought some stock in odd lots from Dean Witter. I think I actually came out ahead on that, but it wasn't a lot of money so it didn't make much difference.

I went back to college in my 30s and the last summer term I took Personal Finance and two quarters of accounting. Learning to use a financial calculator helped a lot. Also, the teacher really trashed Whole Life policies.. lol..

Then I would read Money magazine once in awhile, mainly to check the "best peforming" lists in the back...but it was a long time before I finally got to indexing.
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Re: Who taught you about money?

Postby feh » Wed Feb 13, 2013 2:32 pm

Self-taught, through simply living life and the interwebs.

Neither my parents nor my public high school taught me anything about personal finance or economics. It's a miracle I didn't make many major financial mistakes as a young adult.

I started saving/investing in the early 90s, right when the internet started becoming a source of useful, free information. It's a beautiful thing. I think many people (especially those under 30) take for granted not just how much information, but how much experiential knowledge is available in forums like this one.

Thirty years ago you could go buy or check-out a book, but that pales in comparison.
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Re: Who taught you about money?

Postby crowd79 » Wed Feb 13, 2013 2:36 pm

Father. Opened up a savings account for me at age 10, funded it with $20, and told me he was putting away $5 out of my $20 weekly allowance. This was to teach me how not to spend and waste it all every week going to the candy store 3 blocks away from where we lived.
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Re: Who taught you about money?

Postby scrabbler1 » Wed Feb 13, 2013 2:39 pm

Growing up it was my mother who taught me the most about money. Although not a financial wizard she picked up a lot of things in the 1970s and 1980s and I learned from her. She listened to Dr. Bernard Meltzer http://en.wikipedia.org/wiki/Bernard_Meltzer on the radio all the time and imparted some of his bits of wisdom onto me. One was the value of buying a co-op apartment if one did not need to or could not afford buy a house - a co-op offered the same kind of tax deductions. A good real estate lawyer who advertised on his show would eventually become the one I hired when I bought my place in 1989.

She also learned about the value of tax-free muni bond funds and got me started on them as an alternate to putting money into the bank to get declining (taxable) interest in 1990, when I finally had some money to invest (after buying my co-op). Getting my feet wet in investing beyond my 401(k) was the beginning of my investing "career" and has gone very well since that time.

Being good at math, I learned from my mom how to prepare one's own taxes (she did them with pencil, paper, and calculator) and have done so every year since I have been filing them (1985). She was also well organized so I learned how to keep my own files organized. (My dad's father was also well organized in this manner so I felt I combined the best traits from both of them.)

My mom passed away in 1995 at age 59 so she was not alive to see my investments really take off, leading to my financial independence and early retirement in 2008 at age 45. She also made sure my dad, who is not very financially savvy but is reasonably okay with money, would be okay before she passed away from a long illness.
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Re: Who taught you about money?

Postby travellight » Wed Feb 13, 2013 2:47 pm

Also self-taught. Started reading up on investing around age 20 and bought my first house at age 21.

Got my work ethic from my mother.
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Re: Who taught you about money?

Postby serbeer » Wed Feb 13, 2013 2:48 pm

Myself. Fresh out of college right before 2000, working my first job and investing all my money exclusively into Janus Technology fund, I lost quite a bit (by my "then" standards) in the crash and started looking for better way to invest around 2004. After "disorganized" indexing for a couple of years, and getting married, I was looking for the way to rebalance across all the multiple accounts as the number of them doubled, and through Google, came upon this forum by the end of 2007. Took me 2 years afterwards to really learn, put together spreadsheets and tools needed, and get to the point when most of the things financial are on auto-pilot.

So, altogether, the learning period was around 6 years, on and off (well, 3 out of 6 were active/hands-on, and 3 mostly passive absorption of information).

I am too amazed at number of smart people around me who work hard to earn good money but don't take care of them afterwards. It is not how much you earn, it is how much you keep and what you do with what you kept that matters really.
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