Read on Twitter
There are thousands of personal finance "experts" out there. Bloggers, YouTube, and Instagram influencers.
Most of these people have no idea what the fuck they are talking about.
Thread.
Most of these people have no idea what the fuck they are talking about.
Thread.
Personal finance seems deceptively simple, but is actually impossibly complex. It's the world's most fiendishly difficult linear optimization problem.
Questions such as "which debt do I pay down first?" are often very nuanced, and have a lot of considerations.
Questions such as "which debt do I pay down first?" are often very nuanced, and have a lot of considerations.
Most of this advice is centered around the idea that you can get rich as the product of a million small decisions, like giving up coffee or turning up the thermostat up to 86 in the summer.
It's not the little things, it's the big things.
It's not the little things, it's the big things.
There are four big things that determine whether you have money:
1. What house did you get and how did you finance it
2. What car did you get
3. Student loans
4. How many kids you have
If you get these things right, you don't have to worry about the small stuff.
1. What house did you get and how did you finance it
2. What car did you get
3. Student loans
4. How many kids you have
If you get these things right, you don't have to worry about the small stuff.
For example, if you get a $400,000 house instead of a $300,000 house, you'll end up paying an additional $70,000 in interest, which is 100 years of coffee.
And the reality is that people find it easy to give up big luxuries, but they can't give up small luxuries.
And the reality is that people find it easy to give up big luxuries, but they can't give up small luxuries.
And the investment advice of these personal finance "experts" is downright idiotic.
Most of it centers around a portfolio that is 100% or nearly 100% stocks, in index funds.
Why? Because they return the most.
But you have to consider risk as well as returns
Most of it centers around a portfolio that is 100% or nearly 100% stocks, in index funds.
Why? Because they return the most.
But you have to consider risk as well as returns
Investors should focus on risk first and returns second.
The purpose of volatility is to make people make stupid decisions.
if you invest in an index, you get the volatility of an index.
If you can't handle the volatility, you will liquidate it at the worst possible time.
The purpose of volatility is to make people make stupid decisions.
if you invest in an index, you get the volatility of an index.
If you can't handle the volatility, you will liquidate it at the worst possible time.
A lot of it has to do with psychology, which leads to paradoxical conclusions.
Like: high fees are better than low fees, because they disincentivized active trading, and encourage buy and hold.
The worst development in the history of personal finance was free commissions.
Like: high fees are better than low fees, because they disincentivized active trading, and encourage buy and hold.
The worst development in the history of personal finance was free commissions.
You don't need any qualifications to be a personal finance guru. There's no Series 7, no continuing education, no nothing.
Some of these people are living in a van.
The idea that personal finance is easy is very seductive. Just do these 10 easy steps and you'll be rich. No.
Some of these people are living in a van.
The idea that personal finance is easy is very seductive. Just do these 10 easy steps and you'll be rich. No.
I hope to have a book out on this at some point in the future. /end
