Conversation with co workers/ financial literacy among non-boglehead types

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Triple digit golfer
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Triple digit golfer »

AnnetteLouisan wrote: Sun Oct 02, 2022 10:02 am
Triple digit golfer wrote: Sun Oct 02, 2022 9:56 am
AnnetteLouisan wrote: Sun Oct 02, 2022 9:47 am I’ve had coworkers come by and ask if our paychecks hit our account yet and what time they are supposed to hit. For some, minutes count.
Same. I'm thankful that I'm fortunate not to be in that situation and educated enough to not get in that situation in the future.

I think my neighbors and some family members might think we are not doing great. We drive 10 year old small/average sized cars, don't wear expensive clothes, buy a lot of store brand food and don't go on expensive vacations. We're fine with that. In reality, we're worth 7 figures and doing quite well, still saving 35-40% and my wife is able to stay home and will likely soon either do something part-time or just be a full time room mom and help out at the school for our young daughter. That's the flexibility that living in a "small" house (as one friend couple calls our 1,900 square foot house) and being diligent with money will give you! People are always surprised when we sort of shrug when they ask if my wife is going back to work once our daughter is in school full time.
Same here. We all look like we earn maybe 40-70k but we are all millionaires. My richest family member got a tip once and a stranger paid for his gas at the pump once. He was cheered by the friendliness but amused as well.

Someone paid my bus fare once unasked and tbh I was a little shocked. I don’t look rich but I was dressed neatly and I don’t think I look like I need $1.75 from a stranger… but it was a nice gesture that I remember.

:shock:

My favorite quote from a friend: “I KNOW ya got money. I never hear you complainin’ about no bills…”
I think a lot of us here and millionaire next door types. I'm fine with being that guy on the block!
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AnnetteLouisan
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

student wrote: Sun Oct 02, 2022 10:06 am
AnnetteLouisan wrote: Sun Oct 02, 2022 10:02 am
Triple digit golfer wrote: Sun Oct 02, 2022 9:56 am
AnnetteLouisan wrote: Sun Oct 02, 2022 9:47 am I’ve had coworkers come by and ask if our paychecks hit our account yet and what time they are supposed to hit. For some, minutes count.
Same. I'm thankful that I'm fortunate not to be in that situation and educated enough to not get in that situation in the future.

I think my neighbors and some family members might think we are not doing great. We drive 10 year old small/average sized cars, don't wear expensive clothes, buy a lot of store brand food and don't go on expensive vacations. We're fine with that. In reality, we're worth 7 figures and doing quite well, still saving 35-40% and my wife is able to stay home and will likely soon either do something part-time or just be a full time room mom and help out at the school for our young daughter. That's the flexibility that living in a "small" house (as one friend couple calls our 1,900 square foot house) and being diligent with money will give you! People are always surprised when we sort of shrug when they ask if my wife is going back to work once our daughter is in school full time.
Same here. We all look like we earn maybe 40-70k but we are all millionaires. My richest family member got a tip once and a stranger paid for his gas at the pump once. He was cheered by the friendliness but amused as well.

Someone paid my bus fare once unasked and tbh I was a little shocked. I don’t look rich but I don’t think I look like I need $1.75 from a stranger… but it was a nice gesture that I remember.

:shock:
Is this recent? For the past few years, there is the trend of paying it forward, that people just pay for strangers. Some youtubers do it and post on youtube.
Yes, all in the past few years. I’ve done it too - I’ll buy someone a bottle of water in front or behind me in line if that’s all they are getting. I donate, I gift and I treat at times. I tip fairly well I think. But ya know, a lot of people who actually are in need don’t want to be reminded they are poor and that others have more. Some folks fight every day to preserve a dignified image, and a gratuitous gift can puncture that.

Also I don’t consider myself particularly rich. And since we never see each other’s balance sheets, we really don’t know the finances of others.

Since envy and gossip can literally kill, and at best affect friendships negatively, it’s best to keep it low key unless you are with income or net worth peers. (Speaking of, wouldn’t a boglehead retirement community or gated community be amazing? You’d have to answer 5 questions correctly and sign an oath not to market time or panic sell into a pullback … :))

I occasionally get lectured by people who don’t know my situation - one friend recently cautioned me that retirement years are really coming up soon for me - but I don’t mind too much and I always learn from everyone.
Last edited by AnnetteLouisan on Mon Oct 03, 2022 5:36 pm, edited 3 times in total.
KlangFool
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by KlangFool »

upstate90 wrote: Sun Oct 02, 2022 12:56 am
To make this story actionable ill ask everyone how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a co worker, friend, or family member, how much effort do you put in to trying to explain, or teach them things that could help them?
upstate90,

1) Why is it someone spend so much time and effort to earn their money but spend so little time and effort to understand how their incomes are taxed?

2) Whenever someone contributed to Roth 401K (90+% of time by mistake), I just need to ask a simple question. Do you file your own taxes? And, the answer would be no.

3) In the real world, I do not give anyone financial advice. It is pointless and unproductive. I do not look rich enough to qualify to give financial advice to anyone. For anyone that understand "The Millionaire Next Door", they do not need me to give advice.

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MathWizard
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by MathWizard »

Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
I'm sure the answer was supposed to be more,
though the actual answer is yes you have more, but it may be less valuable depending on how high inflation is, which is not one of the options.
KlangFool
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by KlangFool »

OP,

Most of my income peers (150K) bought their 600K to 700K houses. It was too late for them to save any money after overspending on the houses. So, what is the point for me to pour salts on their wounds?

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student
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by student »

KlangFool wrote: Sun Oct 02, 2022 10:18 am OP,

Most of my income peers (150K) bought their 600K to 700K houses. It was too late for them to save any money after overspending on the houses. So, what is the point for me to pour salts on their wounds?

KlangFool
If they realize their mistake, there may still be time to recover. First example, during the recent housing market boom, they could trade the 600k house for a less expensive house, assuming one is available.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by KlangFool »

student wrote: Sun Oct 02, 2022 10:22 am
KlangFool wrote: Sun Oct 02, 2022 10:18 am OP,

Most of my income peers (150K) bought their 600K to 700K houses. It was too late for them to save any money after overspending on the houses. So, what is the point for me to pour salts on their wounds?

KlangFool
If they realize their mistake, there may still be time to recover. First example, during the recent housing market boom, they could trade the 600k house for a less expensive house, assuming one is available.
student,

Why would they realize their mistakes when they believe their incomes could only go up and their jobs are secured? Then, some of them are unemployed in the coming recession. It would be too late by then. The stories repeated itself every recessions.

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student
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by student »

KlangFool wrote: Sun Oct 02, 2022 10:28 am
student wrote: Sun Oct 02, 2022 10:22 am
KlangFool wrote: Sun Oct 02, 2022 10:18 am OP,

Most of my income peers (150K) bought their 600K to 700K houses. It was too late for them to save any money after overspending on the houses. So, what is the point for me to pour salts on their wounds?

KlangFool
If they realize their mistake, there may still be time to recover. First example, during the recent housing market boom, they could trade the 600k house for a less expensive house, assuming one is available.
student,

Why would they realize their mistakes when they believe their incomes could only go up and their jobs are secured? Then, some of them are unemployed in the coming recession. It would be too late by then. The stories repeated itself every recessions.

KlangFool
You original message did not address what they believe in. You simply said it was too late. My point is it may not be too late as there exists an alternative. If your hypothesis is that your peers will not change, then I have no argument for or against as I do not know these people. While I agree that based on my experience, most will not change, I believe some will.
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whodidntante
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by whodidntante »

Perhaps someone from the John C. Bogle for Financial Literacy can comment.

If not, I can offer comments from the Whodidntante Center for Coworkers Who Can't Invest Good. I've heard the guy who runs that is really, really, ridiculously good-looking. :happy
Last edited by whodidntante on Sun Oct 02, 2022 10:39 am, edited 1 time in total.
epoche
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by epoche »

celia wrote: Sun Oct 02, 2022 3:53 am
upstate90 wrote: Sun Oct 02, 2022 12:56 am To make this story actionable ill ask everyone how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a co worker, friend, or family member, how much effort do you put in to trying to explain, or teach them things that could help them?
I didn’t know much about employee benefits when I started working, so I kept asking co-workers who knew more than I did. In the last 20 years I worked, I helped others learn by asking questions aloud at employee benefit meetings (401K, 457, Flexible Spending plan), even if I already knew the answers. Of course, the employer first had to offer these benefits.

I have to say that I love this idea! My employer keeps making changes to the benefit options almost every year, so it means I'm more likely to be in one of those meetings. I usually do ask some obscure question that I don't actually know the answer to, but perhaps I'll throw in a few I'm pretty sure about.

I find it a bit disheartening that so much of the sentiment on this forum leans toward staying out of it. Knowledge is meant to be shared.
Of course, you have to meet people when they are ready, but there are ways to prime the pump so to speak.

I give every new employee in my group a financial book - I've used a few different ones and am currently using one aimed at people in their twenties and thirties. Nearly all are in this age range. I tell them they may already know some of what is in it, but I wish someone had given me a book like this when I was just starting. They should be sure they understand all of their available benefits, and that I am willing to discuss if they have questions. All act appreciative, very few return with questions; but I pick up that they are contributing to their 403b, I know they use their full PTO, and I see when they request educational benefit credits (the admins tell me that these are almost never used).

I have had some general discussions with family members and friends, and know that it has been especially helpful to a few.

I'm also helping an elderly relative clean up their finances; it is the type of situation that it would have been better to prevent if possible.

I try to find financial literacy charities with a focus on early education that I can support. I remember taking an "Economics" class in high school where we tracked a paper investment account, balanced a checkbook, computed compound interest on a savings account, and filled out mock tax forms. To my memory, it did not cover other basics like budgeting, mortgages, and retirement plans.

Until these topics are routinely taught in grade school, it is important to help where you find opportunities (or are able to create opportunities).
Last edited by epoche on Sun Oct 02, 2022 10:46 am, edited 1 time in total.
Californiastate
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Californiastate »

I tried to help educate my peers (construction) on the value of their time and money. My peers who did the best made sacrifices early in their careers to purchase their first homes. They didn't buy boats. They didn't fly to foreign lands for vacations. They didn't pass up OT when it was available. They sacrificed their time. Most raised families at the same time. Fast forward 40 years. Those who skated during their 20s and 30s still are working. They have memories but little money. Those who sacrificed in their early years are living like it's 1999.
MathWizard
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by MathWizard »

noco-hawkeye wrote: Sun Oct 02, 2022 8:09 am I too avoid these conversations. However - the average 401k balance is for ages 55-64 is $232,379 according to google. With that little saved by so many - it could be practically tax free. (which could be the bigger problem)
That data was quoted as from Vanguard . The median balance for the same age group is $84,714.

So half the coworkers may be in much worse shape than you indicate. Now there may be other factors, such as pension or inheritance that may help the situation.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Luckywon »

I was put in the right track in personal finance by an older colleague, who brought it up unsolicited. I'm forever grateful and enjoy trying to help friends and colleagues in the same way. Some are receptive, some not, but I've never experienced any negative fallout from it.
Last edited by Luckywon on Sun Oct 02, 2022 10:58 am, edited 1 time in total.
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TomatoTomahto
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by TomatoTomahto »

AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am.
I find many coworkers don’t do the flexible spending account because they view it as too much trouble and they are dissuaded by the use it or lose it feature despite the grace period. They also say … which is a little more worrisome … that they don’t have enough medical expenses in a year to bother. Which implies they aren’t getting preventive health and wellness visits in.
We are only eligible for Dental and Vision Limited FSA, and I decided not to do it this year because the PITA hoops Optum Financial makes us jump through for reimbursement are insane and I just won’t do it. I’m financially literate enough to know the value of paying with pre-tax dollars, understand the difference between marginal and effective rates, the difference between withholding and taxes, etc., but NEVER AGAIN FSA.
I get the FI part but not the RE part of FIRE.
Florida Orange
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Florida Orange »

MathWizard wrote: Sun Oct 02, 2022 10:14 am
Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
I'm sure the answer was supposed to be more,
though the actual answer is yes you have more, but it may be less valuable depending on how high inflation is, which is not one of the options.
The question does not include any reference to inflation or the concept of real vs nominal dollars. It is phrased in such a way that any number greater than 1,000 is more.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by NPT »

I recommended William J. Bernstein’s excellent If You Can to a number of young colleagues, who made the impression that they wanted to save and invest responsibly, but lacked sufficient knowledge about how to do it.

I got positive feedback about Lars Kroijer’s Investing Demystified video series, which I recommended to a colleague, who expressed concerns about increased market volatility and dire predictions in the news, and asked how one could prepare for a market crash.
MathWizard
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by MathWizard »

Florida Orange wrote: Sun Oct 02, 2022 10:59 am
MathWizard wrote: Sun Oct 02, 2022 10:14 am
Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
I'm sure the answer was supposed to be more,
though the actual answer is yes you have more, but it may be less valuable depending on how high inflation is, which is not one of the options.
The question does not include any reference to inflation or the concept of real vs nominal dollars. It is phrased in such a way that any number greater than 1,000 is more.
I understand, and yes inflation is not mentioned, but neither is it said to ignore inflation. The issue with multiple choice is that people will bring interpretations into the question.

I wrote tests for my students, and never included multiple choice in the tests because of this.
It took much more work to grade, but I could better evaluate my student's understanding this way.

If I had to ask this question, I'd have added explain your reasoning at the end.

Imagine a physics question about ballistic trajectories which did not include in a vacuum or ignore air resistance.
student
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by student »

MathWizard wrote: Sun Oct 02, 2022 11:09 am
Florida Orange wrote: Sun Oct 02, 2022 10:59 am
MathWizard wrote: Sun Oct 02, 2022 10:14 am
Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
I'm sure the answer was supposed to be more,
though the actual answer is yes you have more, but it may be less valuable depending on how high inflation is, which is not one of the options.
The question does not include any reference to inflation or the concept of real vs nominal dollars. It is phrased in such a way that any number greater than 1,000 is more.
I understand, and yes inflation is not mentioned, but neither is it said to ignore inflation. The issue with multiple choice is that people will bring interpretations into the question.

I wrote tests for my students, and never included multiple choice in the tests because of this.
It took much more work to grade, but I could better evaluate my student's understanding this way.

If I had to ask this question, I'd have added explain your reasoning at the end.

Imagine a physics question about ballistic trajectories which did not include in a vacuum or ignore air resistance.
I also seldom use multiple choice questions and when I do, I usually have an option of none of the above, in case the question is not clear. For this particular question, it seems that the assumption is clear. Perhaps a better way is to ask for the balance.
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JoeRetire
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by JoeRetire »

upstate90 wrote: Sun Oct 02, 2022 12:56 am A few months ago I heard the classic "don't want to go into the next tax bracket" line as if once one dollar crosses a new bracket you have to pay all previous income in that bracket as well.
I've heard that here as well.

Let's not get too tribal here and look down our noses. The world isn't divided into "boglehead types who know everything" and "non-boglehead types who know nothing". Everyone knows some things. Nobody knows everything.
To make this story actionable ill ask everyone how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a co worker, friend, or family member, how much effort do you put in to trying to explain, or teach them things that could help them?
I talk with lots of folks who don't understand many aspects of financial/tax/investing knowledge. And it's not hard to find boglehead types here who are confused, too.

I'm happy to explain my understanding of the concepts to anyone who actually wants to know. But I'm always careful to avoid the discussion when I know the other party is more interested in validation of their path rather than a real discussion. I tread carefully with family and close friends.
This isn't just my wallet. It's an organizer, a memory and an old friend.
delamer
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by delamer »

RadAudit wrote: Sun Oct 02, 2022 9:08 am
upstate90 wrote: Sun Oct 02, 2022 12:56 am how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a ... family member, how much effort do you put in to trying to explain, or teach them things that could help them?
Every day and not much effort. DW (71) doesn't care. Neither do the kids. (DD 42, DS 37). So, I gave up forwarding them info from this site and others, except for Humble Dollar.

Instead, I left a note for them in my IPS to be read after my demise. " I had it. You got it. Stuff's in the drawer. Good luck." For the grandkids, I left a note to be read at some time way into the future "If you don't get enough of my inheritance from your parents to go where you want to go and do what you want to do as long as you want, ask them what they did with it."
This is great! Fortunately, my spouse and adult kids are more engaged in finances then yours, but I admire your choice.

Other general comments:

1. I lost a friend recently I believe, in part, because she resented our financial stability. She is well-educated, in her mid-60’s. But she has to work a low-paying job because she lost her professional job in her late 50’s and couldn’t find a similar job.

2. My undergrad degree is in economics. The only thing I learned in my education specific to personal finance was the relationship between bond values and interest rates. My parents were savers and frugal. That example got me off to a good start spending-wise. My father bought stock in his Fortune 500 company through the ESPP, but they had no other stocks. Thankfully, he didn’t work for Enron.

Anyway, I am self-taught when it comes to investing, taxes, and related topics. I was in my early-30s before I knew what I was doing.

Most people just don’t care enough to learn.

3. Innumeracy is very real. And it scares people off from studying anything number-related. I’ve definitely run into that with friends.

4. Don’t underestimate the people who are doing OK and meeting their goals, and so just aren’t interested in getting into the weeds or saving the 1% advisor fee.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Ron Ronnerson
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Ron Ronnerson »

alpenglow wrote: Sun Oct 02, 2022 9:59 am
coachd50 wrote: Sun Oct 02, 2022 9:54 am
Ron Ronnerson wrote: Sun Oct 02, 2022 6:31 am

Speaking of which, I’ve seen coworkers innocently go into the teacher staff room and sign up for what just about everyone on this forum would consider atrocious investments with terribly high fees. They thought the person who brought in sandwiches had good intentions and was a kind-hearted expert who was there to help. It kills me a little bit each time one of my colleagues (some of whom I consider friends) is taken to the cleaners.
As a teacher (elementary school) I have seen the same and felt the same. The most frustrating thing for me is not that they the feel the person who brought in the sandwiches has good intentions, BUT that most believe that the school system would not bring someone in to them if it wasn't in their best interest.

My district's "benefits people" charge about a 1.5% fee on top of the fund expenses to operate 403b and 457b plans. They get invited in every year. The infuriating part, and what nobody knows (I didn't until a few years ago, 15 years into service when I finally really dug into it) is that employees can deal directly with the Louisiana deferred compensation plan. I missed out on 15 years of tax deferred space!!

So I do open my mouth a bit when it comes to this.
As a teacher, I have been vocal about using the low-fee NYSDCP 457 Plan as compared to the expensive 403b options. Unfortunately, most folks have never heard of it because no one is marketing it to them (no incentive to market this!).
Alpenglow and Coachd50, I hear you both and understand why you feel compelled to say something in these situations. Advocating to the district, school board, or union for better investment options is something I totally support. However, when it comes to coworkers, I take a different approach. The thing for me is that I find a lot of people don't know the difference between an account vs. the investments contained within that account. So if they open a low-cost 457b and then buy low cost index funds in that account and the economy takes a downturn at some point (which it inevitably will), lots of folks will simply ask: "who did this to me?"

I don't want that finger of blame pointed in my direction. That finger is attached to someone I must work with day in and day out. Will they keep their resentment, anger, and sadness all bottled up or share those feelings with lots of other people I work with too? You and I may know that it's not my fault but that won't matter. Real money would be lost, relationships would be strained if not ruined, and the work environment would not be so pleasant anymore.

As far as I'm concerned, they should be advised by some official source such as union leadership or a rep from a vendor that actually offers good investment options.

Now if they were to come up to me and ask me what I do with my money, I would tell them. I don't see any harm in telling someone who asks which company I use for my cell phone service and how much I pay. Recently, a coworker asked me what I'm doing in light of stocks being down this year. I explained that I continue to invest the same as always in total market index funds and don't worry about downturns much since it's out of my control. That was the end of the conversation. This person specifically asked me questions, though, and came to me.

I didn't advise the colleague on what they should do. If they want to spend their money paying crazy fees to someone who gives them a cozy feeling for investing their money in what most people on this board would equate with highway robbery, so be it. It's not my business. I do things with my money that plenty of people would disapprove of as well. If I don't ask them for their opinion, I'd appreciate it if they didn't try to offer their guidance. Actually, I don't want them to offer me unsolicited advice about plenty of other things either. I do the same for them and it keeps things harmonious.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Fallible »

upstate90 wrote: Sun Oct 02, 2022 12:56 am ...
To make this story actionable ill ask everyone how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a co worker, friend, or family member, how much effort do you put in to trying to explain, or teach them things that could help them?
I've learned, the hard way of course, to say as little as possible even when asked directly about anything financial, and what I've learned is what I'm up against when discussing money, as explained by Jason Zweig in his book, Your Money & Your Brain:
The 100 billion neurons that are packed into that three-pound clump of tissue between your ears can generate an emotional tornado when you think about money. Your investing brain does not just add and multiply and estimate and evaluate. When you win, lose, or risk money, you stir up some of the most profound emotions a human being can ever feel.
Nobel psychologist Daniel Kahneman adds:
Financial decision-making is not necessarily about money. It's also about intangible motives like avoiding regret or achieving pride.
Also, trying to help people financially means I'm saying/implying that I know more than they do and therefore they are wrong. Even if I'm right or more right than wrong, that's not going to go over well with a lot of people. I do think explaining something as straightforward as compounding can work, at least for most people...maybe?
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by alpenglow »

Ron Ronnerson wrote: Sun Oct 02, 2022 11:53 am
alpenglow wrote: Sun Oct 02, 2022 9:59 am
coachd50 wrote: Sun Oct 02, 2022 9:54 am
Ron Ronnerson wrote: Sun Oct 02, 2022 6:31 am

Speaking of which, I’ve seen coworkers innocently go into the teacher staff room and sign up for what just about everyone on this forum would consider atrocious investments with terribly high fees. They thought the person who brought in sandwiches had good intentions and was a kind-hearted expert who was there to help. It kills me a little bit each time one of my colleagues (some of whom I consider friends) is taken to the cleaners.
As a teacher (elementary school) I have seen the same and felt the same. The most frustrating thing for me is not that they the feel the person who brought in the sandwiches has good intentions, BUT that most believe that the school system would not bring someone in to them if it wasn't in their best interest.

My district's "benefits people" charge about a 1.5% fee on top of the fund expenses to operate 403b and 457b plans. They get invited in every year. The infuriating part, and what nobody knows (I didn't until a few years ago, 15 years into service when I finally really dug into it) is that employees can deal directly with the Louisiana deferred compensation plan. I missed out on 15 years of tax deferred space!!

So I do open my mouth a bit when it comes to this.
As a teacher, I have been vocal about using the low-fee NYSDCP 457 Plan as compared to the expensive 403b options. Unfortunately, most folks have never heard of it because no one is marketing it to them (no incentive to market this!).
Alpenglow and Coachd50, I hear you both and understand why you feel compelled to say something in these situations. Advocating to the district, school board, or union for better investment options is something I totally support. However, when it comes to coworkers, I take a different approach. The thing for me is that I find a lot of people don't know the difference between an account vs. the investments contained within that account. So if they open a low-cost 457b and then buy low cost index funds in that account and the economy takes a downturn at some point (which it inevitably will), lots of folks will simply ask: "who did this to me?"

I don't want that finger of blame pointed in my direction. That finger is attached to someone I must work with day in and day out. Will they keep their resentment, anger, and sadness all bottled up or share those feelings with lots of other people I work with too? You and I may know that it's not my fault but that won't matter. Real money would be lost, relationships would be strained if not ruined, and the work environment would not be so pleasant anymore.

As far as I'm concerned, they should be advised by some official source such as union leadership or a rep from a vendor that actually offers good investment options.

Now if they were to come up to me and ask me what I do with my money, I would tell them. I don't see any harm in telling someone who asks which company I use for my cell phone service and how much I pay. Recently, a coworker asked me what I'm doing in light of stocks being down this year. I explained that I continue to invest the same as always in total market index funds and don't worry about downturns much since it's out of my control. That was the end of the conversation. This person specifically asked me questions, though, and came to me.

I didn't advise the colleague on what they should do. If they want to spend their money paying crazy fees to someone who gives them a cozy feeling for investing their money in what most people on this board would equate with highway robbery, so be it. It's not my business. I do things with my money that plenty of people would disapprove of as well. If I don't ask them for their opinion, I'd appreciate it if they didn't try to offer their guidance. Actually, I don't want them to offer me unsolicited advice about plenty of other things either. I do the same for them and it keeps things harmonious.
Most of my comments go to the union president when he brings in certain vendors. I was also able to get a Roth option added by speaking with the district business office. As I said further up-thread, I otherwise try to keep my mouth shut. I never recommend specific investments for the very reasons you mention. I do my best to avoid giving unsolicited advice in all areas of life.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by alpenglow »

Fallible wrote: Sun Oct 02, 2022 12:00 pm
upstate90 wrote: Sun Oct 02, 2022 12:56 am ...
To make this story actionable ill ask everyone how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a co worker, friend, or family member, how much effort do you put in to trying to explain, or teach them things that could help them?
I've learned, the hard way of course, to say as little as possible even when asked directly about anything financial, and what I've learned is what I'm up against when discussing money, as explained by Jason Zweig in his book, Your Money & Your Brain:
The 100 billion neurons that are packed into that three-pound clump of tissue between your ears can generate an emotional tornado when you think about money. Your investing brain does not just add and multiply and estimate and evaluate. When you win, lose, or risk money, you stir up some of the most profound emotions a human being can ever feel.
Nobel psychologist Daniel Kahneman adds:
Financial decision-making is not necessarily about money. It's also about intangible motives like avoiding regret or achieving pride.
Also, trying to help people financially means I'm saying/implying that I know more than they do and therefore they are wrong. Even if I'm right or more right than wrong, that's not going to go over well with a lot of people. I do think explaining something as straightforward as compounding can work, at least for most people...maybe?
Personal finance is personal!
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by student »

delamer wrote: Sun Oct 02, 2022 11:42 am 1. I lost a friend recently I believe, in part, because she resented our financial stability. She is well-educated, in her mid-60’s. But she has to work a low-paying job because she lost her professional job in her late 50’s and couldn’t find a similar job.
Oh. If she resented you for this, maybe it is for the better that she is not your friend...
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Ron Ronnerson »

alpenglow wrote: Sun Oct 02, 2022 12:04 pm
Ron Ronnerson wrote: Sun Oct 02, 2022 11:53 am
alpenglow wrote: Sun Oct 02, 2022 9:59 am
coachd50 wrote: Sun Oct 02, 2022 9:54 am
Ron Ronnerson wrote: Sun Oct 02, 2022 6:31 am

Speaking of which, I’ve seen coworkers innocently go into the teacher staff room and sign up for what just about everyone on this forum would consider atrocious investments with terribly high fees. They thought the person who brought in sandwiches had good intentions and was a kind-hearted expert who was there to help. It kills me a little bit each time one of my colleagues (some of whom I consider friends) is taken to the cleaners.
As a teacher (elementary school) I have seen the same and felt the same. The most frustrating thing for me is not that they the feel the person who brought in the sandwiches has good intentions, BUT that most believe that the school system would not bring someone in to them if it wasn't in their best interest.

My district's "benefits people" charge about a 1.5% fee on top of the fund expenses to operate 403b and 457b plans. They get invited in every year. The infuriating part, and what nobody knows (I didn't until a few years ago, 15 years into service when I finally really dug into it) is that employees can deal directly with the Louisiana deferred compensation plan. I missed out on 15 years of tax deferred space!!

So I do open my mouth a bit when it comes to this.
As a teacher, I have been vocal about using the low-fee NYSDCP 457 Plan as compared to the expensive 403b options. Unfortunately, most folks have never heard of it because no one is marketing it to them (no incentive to market this!).
Alpenglow and Coachd50, I hear you both and understand why you feel compelled to say something in these situations. Advocating to the district, school board, or union for better investment options is something I totally support. However, when it comes to coworkers, I take a different approach. The thing for me is that I find a lot of people don't know the difference between an account vs. the investments contained within that account. So if they open a low-cost 457b and then buy low cost index funds in that account and the economy takes a downturn at some point (which it inevitably will), lots of folks will simply ask: "who did this to me?"

I don't want that finger of blame pointed in my direction. That finger is attached to someone I must work with day in and day out. Will they keep their resentment, anger, and sadness all bottled up or share those feelings with lots of other people I work with too? You and I may know that it's not my fault but that won't matter. Real money would be lost, relationships would be strained if not ruined, and the work environment would not be so pleasant anymore.

As far as I'm concerned, they should be advised by some official source such as union leadership or a rep from a vendor that actually offers good investment options.

Now if they were to come up to me and ask me what I do with my money, I would tell them. I don't see any harm in telling someone who asks which company I use for my cell phone service and how much I pay. Recently, a coworker asked me what I'm doing in light of stocks being down this year. I explained that I continue to invest the same as always in total market index funds and don't worry about downturns much since it's out of my control. That was the end of the conversation. This person specifically asked me questions, though, and came to me.

I didn't advise the colleague on what they should do. If they want to spend their money paying crazy fees to someone who gives them a cozy feeling for investing their money in what most people on this board would equate with highway robbery, so be it. It's not my business. I do things with my money that plenty of people would disapprove of as well. If I don't ask them for their opinion, I'd appreciate it if they didn't try to offer their guidance. Actually, I don't want them to offer me unsolicited advice about plenty of other things either. I do the same for them and it keeps things harmonious.
Most of my comments go to the union president when he brings in certain vendors. I was also able to get a Roth option added by speaking with the district business office. As I said further up-thread, I otherwise try to keep my mouth shut. I never recommend specific investments for the very reasons you mention. I do my best to avoid giving unsolicited advice in all areas of life.
Sounds like we’ve got similar philosophies. Congrats on getting a Roth option added!

:sharebeer
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Florida Orange »

AnnetteLouisan wrote: Sun Oct 02, 2022 9:47 am I’ve had coworkers come by and ask if our paychecks hit our account yet and what time they are supposed to hit. For some, minutes count.

I had a coworker ask me to explain the fiduciary rule and why her adviser was asking her to sign a waiver of it back 5 or 6 years ago. It was very clear the coworker didn’t understand it, and her adviser said the waiver didn’t matter, so as a last ditch I said, “if it doesn’t matter, why was the industry fighting it so hard and why is the administration so insistent on implementing it?” That clicked for the coworker and she let the waiver deadline pass without signing it (even though I don’t personally care about the fiduciary rule and think it ties advisers hands too much).

But overall I don’t discuss $ anymore with anyone. I also don’t offer help / loans / etc even when I could help and I know they are struggling. Many people I know and helped in 08 have ugly attitudes about it derived from their families, background and experience, so I don’t poke the bear. Also as you all know I have a lot to learn myself.

“It is far easier to fool a man than to convince a man he has been fooled.”
Why do you think the fiduciary rule ties advisors hands too much?
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

Florida Orange wrote: Sun Oct 02, 2022 12:20 pm
AnnetteLouisan wrote: Sun Oct 02, 2022 9:47 am I’ve had coworkers come by and ask if our paychecks hit our account yet and what time they are supposed to hit. For some, minutes count.

I had a coworker ask me to explain the fiduciary rule and why her adviser was asking her to sign a waiver of it back 5 or 6 years ago. It was very clear the coworker didn’t understand it, and her adviser said the waiver didn’t matter, so as a last ditch I said, “if it doesn’t matter, why was the industry fighting it so hard and why is the administration so insistent on implementing it?” That clicked for the coworker and she let the waiver deadline pass without signing it (even though I don’t personally care about the fiduciary rule and think it ties advisers hands too much).

But overall I don’t discuss $ anymore with anyone. I also don’t offer help / loans / etc even when I could help and I know they are struggling. Many people I know and helped in 08 have ugly attitudes about it derived from their families, background and experience, so I don’t poke the bear. Also as you all know I have a lot to learn myself.

“It is far easier to fool a man than to convince a man he has been fooled.”
Why do you think the fiduciary rule ties advisors hands too much?
I drafted a response but I fear it violates forum policies so I’m not going to post it. Sorry.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by changingtimes »

I grew up and still live in one of the more affluent counties in America, though there's still a fair amount of spread in income levels amongst the people I went to high school with. (There are people in my class who are running food trucks to try to get by, and there are people who have been CEOs/high-level execs of extremely prominent tech companies.) But even among the more well-to-do folks, there's people talking about how they will have to work forever to afford to retire--a lot of that I think is the "keeping up with the Joneses" stuff of private schools/pricey colleges for the kids, big houses, big vacations, cars, etc. etc.

I was recently out with some classmates, and one was talking about how she didn't get how other classmates could be buying second homes, retiring early, etc. The table then turned and looked at me, knowing that I just bought a second home and am cutting back on work hours. Not wanting to get into it, I just said, "Dead husband," and left it at that, figuring (correctly!) it would put a stop to the conversation.

But of course DH and I saved a ton of money--we stayed in the first home we bought, with its tiny mortgage, and we maxxed out our 401ks, and never had credit card debt. (We also never had kids, but that method of financial success is not one people are ever too interested in hearing about.) I am sure that a few of the women sitting around that table would find themselves in tough straits if they lost their husband's income, though at least I think higher earners in this area are more likely to buy life insurance.

Financial illiteracy is not rampant in only people who don't make much money.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by nisiprius »

It's bad.

I try to understand it by thinking of my own behavior when I'm outside my area of serious-hobbyist-level expertise. We're in the process of moving, bought the new house, haven't sold the old one, and both need fair amounts of work done. We know nothing. We take wild guesses, and are happy if someone quotes a price we think we are willing to pay and actually gets the job done. Selling our house, we have have blind trust in the realtor and are doing whatever she says we should do.

The one really serious request I've had for help was someone who had just inherited money, and needed some simple Bogleheadish investment portfolio, anything. She asked if I knew anything about investing. I said "yeah." She started asking me questions. It became very clear that to her "knowing about investing" means one thing and one thing alone: being able to pick the next Tesla.

For a while I was having a language exchange with a woman in Mexico. I would guess that she is middle-class by Mexican standards. She was investing in FOREX for a while, but had just moved on to "binary options."
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.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Normchad »

JoeRetire wrote: Sun Oct 02, 2022 11:33 am
upstate90 wrote: Sun Oct 02, 2022 12:56 am A few months ago I heard the classic "don't want to go into the next tax bracket" line as if once one dollar crosses a new bracket you have to pay all previous income in that bracket as well.
I've heard that here as well.

Let's not get too tribal here and look down our noses. The world isn't divided into "boglehead types who know everything" and "non-boglehead types who know nothing". Everyone knows some things. Nobody knows everything.
To make this story actionable ill ask everyone how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a co worker, friend, or family member, how much effort do you put in to trying to explain, or teach them things that could help them?
I talk with lots of folks who don't understand many aspects of financial/tax/investing knowledge. And it's not hard to find boglehead types here who are confused, too.

I'm happy to explain my understanding of the concepts to anyone who actually wants to know. But I'm always careful to avoid the discussion when I know the other party is more interested in validation of their path rather than a real discussion. I tread carefully with family and close friends.
Very well said Joe!

Part of my hesitancy in these things, is that I am not completely confident that I can always provide the best advice to others. Everybody’s situation really is different. And I know exactly what I am doing, and why I’m doing it, and why it makes sense for me. But that doesn’t mean it makes sense for other people with different circumstances.

And I just don’t think it’s possible to know enough during a 15 minute conversation to provide good advice. My fear is that something will be misunderstood, or misinterpreted, or misapplied, and lead to bad outcomes for the other person. It would be the same as a financial advisor giving bad advice.

And, I also know that I might in fact be wrong. Or that my values are just different than others. Doesn’t mean I’m right and they’re wrong, it’s just different. In fact as I get older, I realize now that I over-prioritized some things in the past. And with hindsight, I would have done it differently.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by like2read »

This topic looks to really be resonating.

I've experienced this same tension: wanting to help vs. wanting to not hurt a relationship. I guess in many ways, money can be a very emotional issue.

I try to remind myself that if someone had a weight issue I wouldn't be volunteering diet advice.

I've resolved to hold my tongue, unless specifically asked. And in that case to avoid specific advice, and just to recommend, and send the link for the Bogleheads getting started wiki. (Admittedly I'm struggling with this one).

Replying to those asking for help on this forum seems to be a safe way to scratch that itch to help.

l2r
Last edited by like2read on Sun Oct 02, 2022 1:59 pm, edited 2 times in total.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Tamalak »

I've been persistently troubled by my own lack of financial literacy. I'm interested in FIRE, I'm almost 40, I've worked for a financial company for 10 years but it's only recently that I could really rattle off how different tax-advantaged accounts even work.

We're never taught this. Our schools don't prioritize it. Our culture doesn't prioritize it. It's just something that's ignored. In high school I was required to read 3 books about apartheid in South Africa and zero about taxes or investing.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Triple digit golfer »

Tamalak wrote: Sun Oct 02, 2022 1:04 pmWe're never taught this. Our schools don't prioritize it. Our culture doesn't prioritize it. It's just something that's ignored. In high school I was required to read 3 books about apartheid in South Africa and zero about taxes or investing.
Ain't that the truth. I went to very good public schools and even took a "General Business" course. It was a joke.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by LHRAdam »

Brilliant and timely thread. I’m retired now - the reaction to coworkers when I left my last job was essentially “you lucky so-and-so; how did you do it?”

The answer is of course entirely 100% found on this blog but the executive summary version was frustrating to me and the questioner. It was easier to smile and let the individual validate whatever opinion they already had about people who “retire early”.

My family think I’m poor because I don’t live in a $$$ house in a HCOL area and fly to France (or wherever) for the weekend. And honestly I have stopped arguing this point. Mostly they give me completely unwanted advice about how “poor people can save money”!

A great deal of people seem completely fixated on property (their own, its value, the local market, the deal they got, the house price inflation over the last xxx years ….. etc - a conversation they would happily have with me for an entire weekend non-stop but god help me if I mention liquidity or the taboo word “shares”).

It’s way better for me to mind my own business and let them get on with it. Dance my dance.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by gavinsiu »

I am thinking of giving advice to another family member who's requested it. In the past, I have given advise to family members, but the results varies.
* The advise is helpful and it improved their finance (my sister)
* It sort of ends poorly, mostly because they can't stay the course (my uncle)
* They just ignore what I said (my cousin).

Over the years, I have attempted to try to avoid giving specific advise but more like guidelines. I don't give specific advise on what to invest in. The only exception was my mom because she wants me to handle the finance completely. I will give specific advise if I get specific questions. For example, my late sister once asked if she should invest in junk bonds in her bond portfolio. I told me that the bond portfolio was for safety and junk bonds are not safe. She also asked if she should get rid of her international portion since it underperformed for a long time. I basically gave her a pros and cons of having and not having international, tell her about my percentage and my reasoning.

For co-workers and friends, I am more guarded. I do not know their specific situation and most in terms of privacy will not give me a full picture of their finance. If they have a narrow questions, I am more likely to answer.

In general, I find that I am way more guarded about my finance these days. This has caused me problems on Boglehead forum because I didn't give out enough information, but everything is indexed and searchable these days.

As for literacy, it's hard to tell. Among my relatives, the education seems to vary. Most of my relatives are relatively well off, some really well off. However, I know that one of them had suffered what I term lack of diversfication and basically stuck with a bunch of "sure-fire" stocks. For my co-workers, the worst sin seems to be undersaving. I remember this young woman in her 20's a decade or two ago join the company was signing up her benefit, she ends up putting 1% in 401K and buying life insurance even though she has no dependence, and skim on the disability. I did try to say something about it, but she ignored my advise. I hope that she has become more wise in the intervening years.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by TomatoTomahto »

Even when asked, I try to avoid giving any direct advice beyond saying what I myself do.

SIL decided I was a genius when the market was roaring. She also decided that I'm an idiot more recently. The good news is that she will stop asking me, perhaps the silver lining to all the recent bad news.
I get the FI part but not the RE part of FIRE.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by SB1234 »

I think one of the reasons about the lack of financial literacy among non boglehead types could be the lack of lack of savings. Its kind of chicken and egg problem, because one can't start saving until one actually has a bit of financial literacy. Saving and FIRE is not the end all and be all for non-bogleheads. Many prefer to be the fiddler grasshopper.
superstition: belief that market will one day come around to your concept of fair value
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by arcticpineapplecorp. »

Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
yeah Dr. William Bernstein has said:

William Bernstein is one of the foremost advocates for individual investors. When he talks about the dynamics of investing, I pay attention to what he says and most of the time I agree with him.

In Bernstein’s underrated book, The Investor’s Manifesto, he shares his thoughts on the difficulty of investing on your own (emphasis mine):

"Having emailed and spoken to thousands of investors over the years, I have come to the conclusion that only a tiny minority will ever succeed in managing their money even tolerably well.

Successful investors need four abilities. First they must possess an interest in the process. It is no different from carpentry, gardening, or parenting. If money management is not enjoyable, then a lousy job inevitably results, and, unfortunately, most people enjoy finance about as much as they do root canal work.

Second, investors need more than a bit of math horsepower, far beyond simple arithmetic and algebra, or even the ability to manipulate a spreadsheet. Mastering the basics of investment theory requires an understanding of the laws of probability and a working knowledge of statistics. Sadly, as one financial columnist explained to me more than a decade ago, fractions are a stretch for 90% of the population.

Third, investors need a firm grasp of financial history, from the South Sea Bubble to the Great Depression. Alas, this is something that even professionals have real trouble with.

Even if investors possess all three of these abilities, it will all be for naught if they do not have a fourth one: the emotional discipline to execute their planned strategy faithfully, come hell, high water, or the apparent end of capitalism as we know it. “Stay the course”: it sounds so easy when uttered at high tide. Unfortunately, when the water recedes, it is not.

I expect no more than 10% of the population passes muster on each of the above counts. This suggests that as few as one person in ten thousand (10% to the 4th power) has the full skill set."

So you’re telling me there’s a chance.

Bernstein is saying that roughly 0.01% of the investing public has the ability to put all of these factors together to be a successful investor.

source: https://awealthofcommonsense.com/2014/0 ... ting-hard/
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Triple digit golfer »

arcticpineapplecorp. wrote: Sun Oct 02, 2022 2:37 pm
Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
yeah Dr. William Bernstein has said:

William Bernstein is one of the foremost advocates for individual investors. When he talks about the dynamics of investing, I pay attention to what he says and most of the time I agree with him.

In Bernstein’s underrated book, The Investor’s Manifesto, he shares his thoughts on the difficulty of investing on your own (emphasis mine):

"Having emailed and spoken to thousands of investors over the years, I have come to the conclusion that only a tiny minority will ever succeed in managing their money even tolerably well.

Successful investors need four abilities. First they must possess an interest in the process. It is no different from carpentry, gardening, or parenting. If money management is not enjoyable, then a lousy job inevitably results, and, unfortunately, most people enjoy finance about as much as they do root canal work.

Second, investors need more than a bit of math horsepower, far beyond simple arithmetic and algebra, or even the ability to manipulate a spreadsheet. Mastering the basics of investment theory requires an understanding of the laws of probability and a working knowledge of statistics. Sadly, as one financial columnist explained to me more than a decade ago, fractions are a stretch for 90% of the population.

Third, investors need a firm grasp of financial history, from the South Sea Bubble to the Great Depression. Alas, this is something that even professionals have real trouble with.

Even if investors possess all three of these abilities, it will all be for naught if they do not have a fourth one: the emotional discipline to execute their planned strategy faithfully, come hell, high water, or the apparent end of capitalism as we know it. “Stay the course”: it sounds so easy when uttered at high tide. Unfortunately, when the water recedes, it is not.

I expect no more than 10% of the population passes muster on each of the above counts. This suggests that as few as one person in ten thousand (10% to the 4th power) has the full skill set."

So you’re telling me there’s a chance.

Bernstein is saying that roughly 0.01% of the investing public has the ability to put all of these factors together to be a successful investor.

source: https://awealthofcommonsense.com/2014/0 ... ting-hard/
I disagree with this. I know people who have a very tiny amount of knowledge or interest in investing, yet they plug away in a target date fund or index fund for years and come out great.
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Jazztonight
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Jazztonight »

Every quarter or so I get a brochure from the local Adult Education provider, and inevitably they offer a "class" about investing, social security, 401Ks, IRAs, and all the other acronyms.

It's always being taught by a "financial consultant" or advisor from Edward Jones or whomever, with a bunch of initials after their name.

I could probably offer them Boglehead philosophy advice and tell them about this site and the Wiki and a few Bogle books, but where is my motivation? It's like herding cats. And besides, I don't have any products to sell (and the initials after my name have nothing to do with finance!).

It's all very sad.
"What does not destroy me, makes me stronger." Nietzsche
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arcticpineapplecorp.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by arcticpineapplecorp. »

Triple digit golfer wrote: Sun Oct 02, 2022 2:49 pm
arcticpineapplecorp. wrote: Sun Oct 02, 2022 2:37 pm
Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
yeah Dr. William Bernstein has said:

William Bernstein is one of the foremost advocates for individual investors. When he talks about the dynamics of investing, I pay attention to what he says and most of the time I agree with him.

In Bernstein’s underrated book, The Investor’s Manifesto, he shares his thoughts on the difficulty of investing on your own (emphasis mine):

"Having emailed and spoken to thousands of investors over the years, I have come to the conclusion that only a tiny minority will ever succeed in managing their money even tolerably well.

Successful investors need four abilities. First they must possess an interest in the process. It is no different from carpentry, gardening, or parenting. If money management is not enjoyable, then a lousy job inevitably results, and, unfortunately, most people enjoy finance about as much as they do root canal work.

Second, investors need more than a bit of math horsepower, far beyond simple arithmetic and algebra, or even the ability to manipulate a spreadsheet. Mastering the basics of investment theory requires an understanding of the laws of probability and a working knowledge of statistics. Sadly, as one financial columnist explained to me more than a decade ago, fractions are a stretch for 90% of the population.

Third, investors need a firm grasp of financial history, from the South Sea Bubble to the Great Depression. Alas, this is something that even professionals have real trouble with.

Even if investors possess all three of these abilities, it will all be for naught if they do not have a fourth one: the emotional discipline to execute their planned strategy faithfully, come hell, high water, or the apparent end of capitalism as we know it. “Stay the course”: it sounds so easy when uttered at high tide. Unfortunately, when the water recedes, it is not.

I expect no more than 10% of the population passes muster on each of the above counts. This suggests that as few as one person in ten thousand (10% to the 4th power) has the full skill set."

So you’re telling me there’s a chance.

Bernstein is saying that roughly 0.01% of the investing public has the ability to put all of these factors together to be a successful investor.

source: https://awealthofcommonsense.com/2014/0 ... ting-hard/
I disagree with this. I know people who have a very tiny amount of knowledge or interest in investing, yet they plug away in a target date fund or index fund for years and come out great.
sure there's always anecdotes either way. In this same post thread there was at least one teacher who knew his/her coworkers were being taken for a ride by their workplace administrators plan (pushing annuities likely). Sometimes people can do well despite doing the wrong things. Knowing the right things can make things easier and people can retire earlier if they'd have the financial knowledge they don't have, perhaps they could have had less financial stress at a minimum.

If you read through all the posts as I had, you hear the anger in so many people (not the posters, but the posters co-workers, friends, family) because they don't understand how taxes work and don't understand how people retire early and don't understand how people can buy second homes and so on. They're angry because they don't know what they could. I guess if they had the information they could still be angry if they didn't take advantage of the things they should learn. But then they only have themselves to be angry with.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
Triple digit golfer
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Triple digit golfer »

arcticpineapplecorp. wrote: Sun Oct 02, 2022 2:54 pm
Triple digit golfer wrote: Sun Oct 02, 2022 2:49 pm
arcticpineapplecorp. wrote: Sun Oct 02, 2022 2:37 pm
Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
yeah Dr. William Bernstein has said:

William Bernstein is one of the foremost advocates for individual investors. When he talks about the dynamics of investing, I pay attention to what he says and most of the time I agree with him.

In Bernstein’s underrated book, The Investor’s Manifesto, he shares his thoughts on the difficulty of investing on your own (emphasis mine):

"Having emailed and spoken to thousands of investors over the years, I have come to the conclusion that only a tiny minority will ever succeed in managing their money even tolerably well.

Successful investors need four abilities. First they must possess an interest in the process. It is no different from carpentry, gardening, or parenting. If money management is not enjoyable, then a lousy job inevitably results, and, unfortunately, most people enjoy finance about as much as they do root canal work.

Second, investors need more than a bit of math horsepower, far beyond simple arithmetic and algebra, or even the ability to manipulate a spreadsheet. Mastering the basics of investment theory requires an understanding of the laws of probability and a working knowledge of statistics. Sadly, as one financial columnist explained to me more than a decade ago, fractions are a stretch for 90% of the population.

Third, investors need a firm grasp of financial history, from the South Sea Bubble to the Great Depression. Alas, this is something that even professionals have real trouble with.

Even if investors possess all three of these abilities, it will all be for naught if they do not have a fourth one: the emotional discipline to execute their planned strategy faithfully, come hell, high water, or the apparent end of capitalism as we know it. “Stay the course”: it sounds so easy when uttered at high tide. Unfortunately, when the water recedes, it is not.

I expect no more than 10% of the population passes muster on each of the above counts. This suggests that as few as one person in ten thousand (10% to the 4th power) has the full skill set."

So you’re telling me there’s a chance.

Bernstein is saying that roughly 0.01% of the investing public has the ability to put all of these factors together to be a successful investor.

source: https://awealthofcommonsense.com/2014/0 ... ting-hard/
I disagree with this. I know people who have a very tiny amount of knowledge or interest in investing, yet they plug away in a target date fund or index fund for years and come out great.
sure there's always anecdotes either way. In this same post thread there was at least one teacher who knew his/her coworkers were being taken for a ride by their workplace administrators plan (pushing annuities likely). Sometimes people can do well despite doing the wrong things. Knowing the right things can make things easier and people can retire earlier if they'd have the financial knowledge they don't have, perhaps they could have had less financial stress at a minimum.

If you read through all the posts as I had, you hear the anger in so many people (not the posters, but the posters co-workers, friends, family) because they don't understand how taxes work and don't understand how people retire early and don't understand how people can buy second homes and so on. They're angry because they don't know what they could. I guess if they had the information they could still be angry if they didn't take advantage of the things they should learn. But then they only have themselves to be angry with.
That is all very true.
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arcticpineapplecorp.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by arcticpineapplecorp. »

jebmke wrote: Sun Oct 02, 2022 8:08 am
alpenglow wrote: Sun Oct 02, 2022 8:02 am
AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated and reproached for budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said that’s not possible.
I've had similar experiences, but who is laughing now?!
Then they resent you on the backend. There is no win here.
there is no win here for two reasons:
1. the person is closed minded. Instead of asking, "Huh? I don't understand how that could be possible. Could you show me or explain more about that?" they say " That's not possible". End of discussion.

2. People unfortunately think in black and white terms. As if to say, "If I can't live off interest then there's no reason to save". How about, "Even if you can't live off the interest, wouldn't it be nice to have more money rather than less? Wouldn't it be nice to have savings from to supplement the low SS you're going to be forced to live on?"

In these ways I find so many people are not only innumerate, but really illogical as well. They don't want to expend the energy thinking through things, weighing pros and cons, looking at different options, etc. I want to say, "How's that working for ya?"
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
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arcticpineapplecorp.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by arcticpineapplecorp. »

upstate90 wrote: Sun Oct 02, 2022 12:56 am Later when talking to the 52 year old about overtime they said they didn't work as much since they take so much more out in taxes for that pay period to which I replied that when you file taxes it will all even out anyway, which they didn't seem to understand and I didn't care enough to go into detail.
A few months ago I heard the classic "don't want to go into the next tax bracket" line as if once one dollar crosses a new bracket you have to pay all previous income in that bracket as well.

To make this story actionable ill ask everyone how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a co worker, friend, or family member, how much effort do you put in to trying to explain, or teach them things that could help them?
perhaps if we had a simpler tax system like a flat tax people would understand how their money is being taxed and then they could more easily assess the outcome of working more?
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
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AnnetteLouisan
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

arcticpineapplecorp. wrote: Sun Oct 02, 2022 3:05 pm
jebmke wrote: Sun Oct 02, 2022 8:08 am
alpenglow wrote: Sun Oct 02, 2022 8:02 am
AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated and reproached for budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said that’s not possible.
I've had similar experiences, but who is laughing now?!
Then they resent you on the backend. There is no win here.
there is no win here for two reasons:
1. the person is closed minded. Instead of asking, "Huh? I don't understand how that could be possible. Could you show me or explain more about that?" they say " That's not possible". End of discussion.

2. People unfortunately think in black and white terms. As if to say, "If I can't live off interest then there's no reason to save". How about, "Even if you can't live off the interest, wouldn't it be nice to have more money rather than less? Wouldn't it be nice to have savings from to supplement the low SS you're going to be forced to live on?"

In these ways I find so many people are not only innumerate, but really illogical as well. They don't want to expend the energy thinking through things, weighing pros and cons, looking at different options, etc. I want to say, "How's that working for ya?"
One of my oldest friends surmised that I was doing well financially and asked me if I could help her learn about personal finance etc since she and her husband were struggling. I said I’d love to! This was 20 years ago or so. I said I knew all about creating a budget, cutting costs, saving, separating wants from needs, etc. glad to help share what I knew!

Her response? “Uh no… not *that* part…”

More recently I asked her if she’d decided when she planned to retire since we are both mid 50s. Her response? “retire?! We’re way too young to start thinking about *that*!

Another friend of mine was unemployed but still spending up a storm. He’d learned to manage his bills a bit better so he was telling me about how he was worried now since he was unemployed. I said, well, now that you aren’t working, wouldn’t it be a good time to review your spending, see what you could cut, and pull back a little until you find work again?

He uttered a very common, forum policy violating directive ending with “…. that!”

But in their defense, they had reasons. And they actually weren’t bad reasons. Both of them were significantly more deprived in various ways than I was (I’m not deprived at all tbh) and spending helped them make up for that. At a certain point you know that there is no more point engaging on such topics.
Jeepergeo
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Jeepergeo »

Jack FFR1846 wrote: Sun Oct 02, 2022 7:43 am Most 401k providers are required to provide an annual group presentation on the 401k, options and tax treatment. Employees are not required to attend and the OP's coworkers likely assumed that they knew all they needed to know. Even after one of these presentations, which I always attended, some of my co-workers were talking about the expense ratios. One asked, "This one is point one percent. Is that per week?". So mis-understanding is quite high. Also, these presentations can be very biased to get employees to either buy more expensive products being offered (think Fidelity index target date vs managed target date) or to get employees to sign up for one on one meetings where they can then convince people to pay for account management.
The 401k presentation at my place of employment is an absolute joke. The presenter is very crafty at diversion and not answering questions, especially those about the full costs associated with participation in the plan. He'd commonly leave out Plan Administration fees and Advisory fees. He even the fund of funds target date funds had no fees at all, yet on inspection the fund paid fees to the underlying funds which hit the savers as reduced returns while they pay well asldministration fees and the Advisory fees. He'd get downright snarky when asked about the total an investor with a $100,000 balance would pay in fees each year. And most funny, he suggested the company he represents dies not make anything when investors are not making any money or are losing money.

For staff that ask, I lay it out for them and review the value of the match, which IMHO is the primary reason for maintaining an account.
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like2read
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by like2read »

arcticpineapplecorp. wrote: Sun Oct 02, 2022 2:37 pm
Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
yeah Dr. William Bernstein has said:

William Bernstein is one of the foremost advocates for individual investors. When he talks about the dynamics of investing, I pay attention to what he says and most of the time I agree with him.

In Bernstein’s underrated book, The Investor’s Manifesto, he shares his thoughts on the difficulty of investing on your own (emphasis mine):

"Having emailed and spoken to thousands of investors over the years, I have come to the conclusion that only a tiny minority will ever succeed in managing their money even tolerably well.

Successful investors need four abilities. First they must possess an interest in the process. It is no different from carpentry, gardening, or parenting. If money management is not enjoyable, then a lousy job inevitably results, and, unfortunately, most people enjoy finance about as much as they do root canal work.

Second, investors need more than a bit of math horsepower, far beyond simple arithmetic and algebra, or even the ability to manipulate a spreadsheet. Mastering the basics of investment theory requires an understanding of the laws of probability and a working knowledge of statistics. Sadly, as one financial columnist explained to me more than a decade ago, fractions are a stretch for 90% of the population.

Third, investors need a firm grasp of financial history, from the South Sea Bubble to the Great Depression. Alas, this is something that even professionals have real trouble with.

Even if investors possess all three of these abilities, it will all be for naught if they do not have a fourth one: the emotional discipline to execute their planned strategy faithfully, come hell, high water, or the apparent end of capitalism as we know it. “Stay the course”: it sounds so easy when uttered at high tide. Unfortunately, when the water recedes, it is not.

I expect no more than 10% of the population passes muster on each of the above counts. This suggests that as few as one person in ten thousand (10% to the 4th power) has the full skill set."

So you’re telling me there’s a chance.

Bernstein is saying that roughly 0.01% of the investing public has the ability to put all of these factors together to be a successful investor.

source: https://awealthofcommonsense.com/2014/0 ... ting-hard/
I think Dr. Bernstein nailed it on this one. (And on many other things!).

It's kinda like someone skilled at throwing a football going - "well, you just need to hold the ball like this, put your left foot forward....." Some have an interest and are going to be willing and able to learn from that, and execute, and some others not. Some have no interest in football. Some can master the basics. Some hire someone to play football for them. And some number become quarterbacks.

l2r
FD1150
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by FD1150 »

For most of my career, I was a fire officer in command of one or more fire stations. As such, it was my responsibility to see that my firefighters were well trained and prepared for whatever the job threw at them. I always made sure, whenever I got a new person, to talk to them about our 457b plan and suggest to them that it might be a good thing to enroll in. The Representative for the 457b provider was a sucker for good pot roast. I would call him and invite him to dinner with our shift. He would get a good, free dinner(firefighters can cook and we eat well) and my new recruit to sell on the plan. It was not the best deal around, but it was the only deal that we had access to. I must have been responsible for 30-40 new signups over my career.

Now that I am long retired and living a very comfortable life, I occasionally get a call from my fellow firefighters thanking me for strong-arming them into the 457b plan. Mission accomplished.
Rudedog
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Rudedog »

Most just turn their money blindly over to an "advisor" and don't even look at their statements. If anyone asks me a direct question I would answer it, but nothing else.
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