The best financial advice I’ve heard sounds impossible to most people.  To reach these people, you have to offer them small improvements to how they handle their finances, and you have to avoid making them feel bad about their past choices.  This is the approach Kelley Keehn takes in her book Talk Money to Me: Save Well, Spend Some, and Feel Good about Your Money . The best car advice I know is to pay cash for cars.  The financial benefits of saving up for cars and buying modest cars are enormous.  However, most people think this is impossible.  And once they’ve built a lifestyle with debt, paying cash for a car may well be impossible.  Keehn’s focus is on steering her readers to doing research on cars and car financing before entering a showroom.  This will have her readers making somewhat less financially damaging car choices.  So, she’s looking to help people a little with advice they might follow instead of giving great advice that few will fo...

Perfect is the enemy of good. – Voltaire quoting an Italian proverb, 1770 In my career as an engineer/mathematician, I worked with some people who had trouble declaring a design “good enough.”  They’d want to keep tinkering endlessly.  They couldn’t stand to stop work knowing that some part of the design could still be improved.  This drive to tinker and improve things served them well in some ways and hurt them in others. When it comes to investing, it’s a bad idea to get paralyzed seeking the perfect strategy instead of just getting started.  Perfecting your investment strategy is quite unimportant when you’re just getting started with small amounts of money. I’ve been investing my money for decades now, and there’s never been a time when I thought I was doing it perfectly.  Sometimes I’ve just had a feeling I wasn’t doing something right.  Other times I knew exactly what I wasn’t doing well, but didn’t yet know how to improve it. I’ve always been at ease...

A promoter sent me a press release announcing that billionaires increased their net worth by $584 billion since the start of the pandemic.  I guess I’m supposed to be outraged that they profit while everyone else suffers with job losses, sickness, and death.  Coincidentally, the “start of the pandemic” lines up with the bottom of the stock market crash.  If we use VTI as a proxy for billionaire wealth, these investors lost about $780 billion in the month before the pandemic started.  Suddenly the outrage melts away.  I’m all for improving equality of opportunity, but I don’t see how this misleading garbage will help. Here are my posts for the past two weeks: Questions for Your Financial Advisor Borrowing to Invest Here are some short takes and some weekend reading: Justin Bender completes his podcast series of 4 portfolios with different asset-location strategies. Robb Engen at Boomer and Echo says that asset location isn’t worth worrying about. ...

Borrowing money to invest is like weaving through traffic.  You'll get to your destination sooner as long as nothing bad happens. – MJ, 2020 The case for leverage (borrowing money to invest) seems compelling.  You can borrow money at 3-4% interest, and invest it in stocks that will probably make 6-8%.  What’s not to like? The answer is “the unexpected.”  Anything that forces you to sell your investments while they’re down can cost you a lot of money.  You could be forced to sell when you lose your job due to problems with your boss, your company, or the whole economy.  Or your lender could demand its money back.  You can’t anticipate every possible reason why your stocks might crash at the same time as you’re forced to sell. It’s true that such problems are likely rare.  But they don’t have to happen often to make leverage look like a bad idea.  Selling when your stocks are down 30% gives back a decade of expected excess stock gains above loa...

“Don’t ask a barber whether you need a haircut.” – Daniel S. Greenberg, 1972 We’re all guilty of coming to conclusions that line up with our self-interest.  However, it’s not always as obvious as in the case of a barber who always thinks people need haircuts.  Often we don’t even recognize that we’re guilty of being influenced by self-interest. Financial advisors, like the rest of us, have biased reasoning.  Here I answer some common investor questions from the point of view of a most financial advisors. Do I need a financial advisor? Yes.  How else can I make a living?   People with advisors end up with more savings than those without an advisor. Do I need to save more for retirement? Yes.  That way you’ll have more money invested with me, and I’ll collect more fees.   You don’t want to run out of money in retirement. How much do I pay in fees? You shouldn’t think about that.  It’s an obsession of mine, but if you think about it, you might insist...

Over the past two weeks, I started four different posts, but they were all leaning too negative to publish. It’s tempting to write about the various types of bad financial advice I see, but it’s better to hold up examples of good advice. Hopefully, I’ll have something to say in the coming fortnight. Here are some short takes and some weekend reading: The Rational Reminder Podcast interviews Professor Ken French of the well-known Fama-French 3-factor asset pricing model. CMHC is tightening their mortgage rules as of July 1. One change is to reduce the Gross and Total Debt Servicing ratio limits to 35% and 42%, respectively. These percentages still seem very high to me. I would never want to live that close to the edge. CDIC has extended their coverage to foreign cash and term deposits of more than 5 years. Unfortunately, the coverage limit remains $100,000, where it’s been for 15 years. The Blunt Bean Counter explains financial and estate issues with blended families. Moshe ...