List of Worst financial advice (what not to do):
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List of Worst financial advice (what not to do):
I am new to this board and every day I am excited to share something new I learned here with my wife (and now my children are listening). My wife asked to make a list to put on the refrigerator <for guests to see...they seem to really like to read what we have up> of the "worst financial advice" according to Bogleheads. This is not sarcasm; she is serious but we need some help.
Suggestions? House, school, consumer debt on credit cards, financial adviser fees, whole life insurance, market timing ...
Suggestions? House, school, consumer debt on credit cards, financial adviser fees, whole life insurance, market timing ...
Re: List of Worst financial advice (what not to do):
Never cosign loans for anyone.
I don't care if it was your buddy who carried you on his back from Hamburger Hill under fire to the aid station, you don't cosign.
Give him the money as a gift if you can, but don't cosign.
(The above is only an example; I was a very young child in New York City in the late 1960s.)
I don't care if it was your buddy who carried you on his back from Hamburger Hill under fire to the aid station, you don't cosign.
Give him the money as a gift if you can, but don't cosign.
(The above is only an example; I was a very young child in New York City in the late 1960s.)
"Ritter, Tod und Teufel"
Re: List of Worst financial advice (what not to do):
Blindly listening to the bank and taking out loan for maximum they approve you for for house without evaluating your own expenses.
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Re: List of Worst financial advice (what not to do):
Tap into half of your cash reserves to pay for a $45k wedding and hope your taxable investments do not tank before you need the money for a down on a house payment. As read on a current Boglehead thread.
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Re: List of Worst financial advice (what not to do):
Don't buy a time share. It's a money pit.
- Taylor Larimore
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Worst financial advice.
"You get what you pay for."Worst financial advice?
Best wishes."If there's anything in the whole world of mutual funds that you can take to the bank, it's that expense ratios help you make a better decision. In every single time period and data point tested, low-cost funds beat high-cost funds." -- Russel Kinnel, director of mutual fund research for Morningstar
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Re: List of Worst financial advice (what not to do):
Spend your wealth without tracking where it goes (and how it comes in).
I misunderstood the theme of the post.
I misunderstood the theme of the post.
Last edited by dumbbunny on Wed Jul 09, 2014 2:16 am, edited 1 time in total.
“It’s the curse of old men to realize that in the end we control nothing." "Homeland" episode, "Gerontion"
- LAlearning
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Re: List of Worst financial advice (what not to do):
+1Busting Myths wrote:Tap into half of your cash reserves to pay for a $45k wedding and hope your taxable investments do not tank before you need the money for a down on a house payment. As read on a current Boglehead thread.
I know nothing!
Re: List of Worst financial advice (what not to do):
Not sure if it is explicitly stated, but having a "trusted friend" in the investment business handling your money has to be about the worst.
I never cease to be amazed how people simply will not tolerate a conversation (I NEVER initiate it) about investing any other way than though their friend who handles all the funds.
Another bad one is borrowing against your 401k, or even worse, tapping ira funds when in a cash pinch
I never cease to be amazed how people simply will not tolerate a conversation (I NEVER initiate it) about investing any other way than though their friend who handles all the funds.
Another bad one is borrowing against your 401k, or even worse, tapping ira funds when in a cash pinch
“Attention is the rarest and purest form of generosity.” |
— Simone Weil
Re: List of Worst financial advice (what not to do):
+2LAlearning wrote:+1Busting Myths wrote:Tap into half of your cash reserves to pay for a $45k wedding and hope your taxable investments do not tank before you need the money for a down on a house payment. As read on a current Boglehead thread.
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
- nisiprius
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Re: List of Worst financial advice (what not to do):
Mid 1970s: "Look at how much our 8-3/4% adjustable-rate mortgage could save you compared to a 9% fixed-rate mortgage."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: List of Worst financial advice (what not to do):
Worst advice: "Yes, you should buy that expensive car/handbag/jewelry/boat because you worked hard and you deserve it!"
Re: List of Worst financial advice (what not to do):
"Who cares about the total cost, what's the monthly payment?"
Re: List of Worst financial advice (what not to do):
"Avoid peer pressure by having more than my neighbors do."
"I was born with nothing and I have most of it left."
Re: List of Worst financial advice (what not to do):
1. "you work hard, so you deserve it" - a true BH will have buyer's remorse on this. Buy something because you love it, not you deserve it.
2. "the quote to remodel this room is firm" - yeah right, always increases once construction is started
3. anything dealing with not taking proper precautions to prevent an unwanted pregnancy
2. "the quote to remodel this room is firm" - yeah right, always increases once construction is started
3. anything dealing with not taking proper precautions to prevent an unwanted pregnancy
Re: List of Worst financial advice (what not to do):
Just the other day I was reading an article online with some good advice about investing (i.e., Boglehead ideas). It was looking good (passive and boring) until the writer added advice about subscribing to WSJ and signing up for a bunch of other "investment" publications. Can't remember where I saw that, but I think it was some place that required a subscription or Facebook sign-in so I couldn't respond to that "wisdom."
Re: List of Worst financial advice (what not to do):
Mixing insurance with investing.
Re: List of Worst financial advice (what not to do):
Here are several of the best examples of bad advice I can think of.......
"Don't worry about saving for retirement when you're young. Just wait till you're older and have more money. Then you can start investing"
"Lease a car. After the lease is over, turn it in and get a new one. That way you get a new car every three years and you don't have to worry about it breaking."
"The stock market is a scam and only works for rich folks. Keep your saving safe and put it in the bank and in CD's"
"Don't worry about saving for retirement when you're young. Just wait till you're older and have more money. Then you can start investing"
"Lease a car. After the lease is over, turn it in and get a new one. That way you get a new car every three years and you don't have to worry about it breaking."
"The stock market is a scam and only works for rich folks. Keep your saving safe and put it in the bank and in CD's"
Re: List of Worst financial advice (what not to do):
"This service contract protects you from having to pay hundreds of dollars for repairs for just pennies a day"
(And they were just telling you how reliable the product is.)
You can express any amount of money in "pennies a day"!
(And they were just telling you how reliable the product is.)
You can express any amount of money in "pennies a day"!
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Re: List of Worst financial advice (what not to do):
This is gold. Thank you so much.
sambb, your #3 caused drinks to be sprayed across the table.
This list is going to get laminated and prominently displayed.
sambb, your #3 caused drinks to be sprayed across the table.
This list is going to get laminated and prominently displayed.
Re: List of Worst financial advice (what not to do):
"Holding a lot of gold is a good investment and will protect you against the invasion from the reptilians, north koreans, the banker cabal, marxists, etc..."
"These _insert current fad collectible item_ will be worth something someday!"
For the younger bogleheads:
"It's ok to get an expensive post grad degree in humanities that will put you in a high five or six figure debt but it's ok because your future salary should make up for it!"
"These _insert current fad collectible item_ will be worth something someday!"
For the younger bogleheads:
"It's ok to get an expensive post grad degree in humanities that will put you in a high five or six figure debt but it's ok because your future salary should make up for it!"
- ClevrChico
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Re: List of Worst financial advice (what not to do):
Being told by family to buy a car equal to my net worth because "I deserve it." By the time I got it home, the bumper was starting to come off. I returned it on Monday. A near miss.
Thank you Autobytel return policy.
Said car can now be purchased on Ebay (mint condition) for 1% of my net worth. Tempting. Do I deserve it?
Thank you Autobytel return policy.
Said car can now be purchased on Ebay (mint condition) for 1% of my net worth. Tempting. Do I deserve it?
Re: List of Worst financial advice (what not to do):
On NBC News tonight, it's WHAT you take (STEM) not where you went to school ( public/private )that determines your Employablity /Salary ."It's ok to get an expensive post grad degree in humanities that will put you in a high five or six figure debt but it's ok because your future salary should make up for it!"
All the Best, |
Joe
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Re: List of Worst financial advice (what not to do):
Not the worst, but it is the most irresistible:
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Re: List of Worst financial advice (what not to do):
Consider your house an investment rather than a place to live because real estate always goes up!
- cheese_breath
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Re: List of Worst financial advice (what not to do):
"Superior portfolio performance will more than pay my fees" ... Financial Advisor
The surest way to know the future is when it becomes the past.
Re: List of Worst financial advice (what not to do):
I was at a dinner party at my next door neighbor's (he's worth about $20 million) and he said, "Diversification is stupid. I only invest in tech." (He made his money selling a business, not from investing.)
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Re: List of Worst financial advice (what not to do):
Lending money to friends and family because you know them and they are trustworthy.
You've graduated school, the car dealership sends you a congratulations postcard and a $500 coupon off the purchase of a new car - all because you deserve it!
Borrowing money on a home equity line of credit to invest in the stock market because over the long haul the market only goes up. They forgot the part about "the market can remain irrational longer than you can remain solvent, not to mention you could lose your home if you fail to make the payments on time".
Buying a fund like XYZ Growth fund because it was up 50% last year, so buying it at a high price is an even better opportunity for more gains. Chasing performance almost never leads to a good outcome.
Paying more means you are buying quality.
You've graduated school, the car dealership sends you a congratulations postcard and a $500 coupon off the purchase of a new car - all because you deserve it!
Borrowing money on a home equity line of credit to invest in the stock market because over the long haul the market only goes up. They forgot the part about "the market can remain irrational longer than you can remain solvent, not to mention you could lose your home if you fail to make the payments on time".
Buying a fund like XYZ Growth fund because it was up 50% last year, so buying it at a high price is an even better opportunity for more gains. Chasing performance almost never leads to a good outcome.
Paying more means you are buying quality.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: List of Worst financial advice (what not to do):
"land. theyre not making any more of it."
Re: List of Worst financial advice (what not to do):
Yep. The school loan industry is practically built on useless degrees. STEM is the only practical path to employment.joe8d wrote:On NBC News tonight, it's WHAT you take (STEM) not where you went to school ( public/private )that determines your Employablity /Salary ."It's ok to get an expensive post grad degree in humanities that will put you in a high five or six figure debt but it's ok because your future salary should make up for it!"
The poor minority version is:
"You have some athletic and music ability you should forgo all academic/career concerns and chase your passion in it!"
The number of professional athletes in the U.S.: Less than <20,000 professionals out of a population of 300 million people, this includes the NFL, NBA, tennis, golf, MLB, MLS, NHL.
The number of bankable musicians: <200
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Re: List of Worst financial advice (what not to do):
Ding!Mill wrote:"land. theyre not making any more of it."
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Re: List of Worst financial advice (what not to do):
"Buy as much house as you can afford!"
Not sure what the rationale was but I was too timid to do it anyway.
Not sure what the rationale was but I was too timid to do it anyway.
Re: List of Worst financial advice (what not to do):
"Sure, go ahead and buy a house together when you are not ready to get married. "
"Don't buy those TIPS that are yielding more than 2% above inflation."
"Don't buy those TIPS that are yielding more than 2% above inflation."
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Re: List of Worst financial advice (what not to do):
"Even if you have the cash, always pay the minimum payment on your credit cards."
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Re: List of Worst financial advice (what not to do):
2 .Listening to other people's advice
1. Listening to your own advice.
1. Listening to your own advice.
Re: List of Worst financial advice (what not to do):
I wouldn't worry about the sales load on a mutual fund. After all you're buying it to make money aren't you?
The closest helping hand is at the end of your own arm.
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Re: List of Worst financial advice (what not to do):
This is a half-truth. The top-earning majors are indeed engineering majors. But some humanities and social science degrees have good earning potential, especially if you look at mid-career salaries, rather than at salaries right out of college, as this table shows:joe8d wrote:On NBC News tonight, it's WHAT you take (STEM) not where you went to school ( public/private )that determines your Employablity /Salary ."It's ok to get an expensive post grad degree in humanities that will put you in a high five or six figure debt but it's ok because your future salary should make up for it!"
http://www.payscale.com/college-salary- ... y-you-back
At mid-career, government and economics majors do very well indeed, better than software engineering, geology, chemistry, biochemistry, or mathematics majors. Classics majors and philosophy majors do slightly better at mid-career than biology majors; history majors and literature majors earn only a tad less. Incidentally, all of these humanities majors have higher mid-career earning potential than business (as an undergraduate major).
The point about going into debt for post-graduate humanities degrees is completely true--it makes no sense to go into debt to get a humanities Ph.D. Humanities Ph.D.degrees are often fully funded, though. The financial risk has less to do with debt and more to do with the terrible job market in academia.
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Re: List of Worst financial advice (what not to do):
Maxxing out my 401k contribution percentage, so it maxed out the total annual contribution around August. I left significant employer match on the table over several years.
Sadly that was my advice to myself. Fortunately not as impacting most other items on this thread.
Sadly that was my advice to myself. Fortunately not as impacting most other items on this thread.
Re: List of Worst financial advice (what not to do):
"And if you don't have the cash, just charge it."dolphintraveler wrote:"Even if you have the cash, always pay the minimum payment on your credit cards."
"If the markets go down, you can sell and get out. Then when they go back up, you can buy back in."
"Start taking Social Security as soon as you're able, since it (or you) may not be there later."
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
Re: List of Worst financial advice (what not to do):
As a former chef for 20 years, here's my 2 cents:
Open your own independent restaurant.
Open your own independent restaurant.
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
Re: List of Worst financial advice (what not to do):
If you can't afford it, take out a loan. It's the American way.
Bonds are just a drag on your portfolio.
Bonds are just a drag on your portfolio.
Re: List of Worst financial advice (what not to do):
Please explain how you missed out on the matching contributions. Thanks.darrellr wrote:Maxxing out my 401k contribution percentage, so it maxed out the total annual contribution around August. I left significant employer match on the table over several years.
Sadly that was my advice to myself. Fortunately not as impacting most other items on this thread.
- bertilak
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Re: List of Worst financial advice (what not to do):
I've been given that advice in spades.cheese_breath wrote:"Superior portfolio performance will more than pay my fees" ... Financial Advisor
Along with it, these two:
- "Buy this fund with a 6.5% front end load because once you are into the fund family you can switch around from fund to fund for free." It's like being in an exclusive club. Once you are "in" the load no longer matters.
- On about a monthly basis: "Buy these stocks because our world-class research department recommends them."
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
- LAlearning
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Re: List of Worst financial advice (what not to do):
Some employer's only match per paycheck, not per year. So if you filled up your 401k early, you would not receive the full match.vankleef wrote:Please explain how you missed out on the matching contributions. Thanks.darrellr wrote:Maxxing out my 401k contribution percentage, so it maxed out the total annual contribution around August. I left significant employer match on the table over several years.
Sadly that was my advice to myself. Fortunately not as impacting most other items on this thread.
I know nothing!
- cheese_breath
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Re: List of Worst financial advice (what not to do):
At least you managed to avoid the other sharks.bertilak wrote: .... I could not get my "Wealth Manager" to articulate an overall plan or strategy his advice fit into. He didn't even seem to understand what I was asking for. Actually, I didn't make it to Bogleland right away. I simply jumped ship into deep waters and had to splash around on my own for a while before I washed up on the shores of Bogleland!
The surest way to know the future is when it becomes the past.
- bertilak
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Re: List of Worst financial advice (what not to do):
Quite true. My company's plan was clever enough to put that on autopilot so we would reach the full match before running out of room. Originally we had to manage that on our own. Many people did not understand the situation and missed out until that autopilot was instituted.LAlearning wrote:Some employer's only match per paycheck, not per year. So if you filled up your 401k early, you would not receive the full match.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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Re: List of Worst financial advice (what not to do):
"focus on the payment"
Stay the course. If you can't resist greed, and fear is proven to be 2x as strong, you are doomed as an investor.
- HardKnocker
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Re: List of Worst financial advice (what not to do):
"Don't just stand there...do something!"
“Gold gets dug out of the ground, then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility.”--Warren Buffett
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Re: List of Worst financial advice (what not to do):
OFGS India and China produce STEM graduates by the millions. Pure STEM work can be outsourced to low wage producers.chameleon wrote: STEM is the only practical path to employment.
STEM combined with a pervasive knowledge of the target culture is what is valuable.
- bertilak
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Re: List of Worst financial advice (what not to do):
Mostly.cheese_breath wrote:At least you managed to avoid the other sharks.bertilak wrote: .... I could not get my "Wealth Manager" to articulate an overall plan or strategy his advice fit into. He didn't even seem to understand what I was asking for. Actually, I didn't make it to Bogleland right away. I simply jumped ship into deep waters and had to splash around on my own for a while before I washed up on the shores of Bogleland!
I did lose a toe or two before hitting shore. I fiddled with W.J. O'Neil's CAN-SLIM method, options, and a bunch of expensive newsletters. I knew the waters were infested so never committed more than a small amount to check things out.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet