The Best Financial Advice Ever

So what is the best financial advice you can give anyone?

The secret to mutual funds that beat the market?

Good luck with that. Only 2 funds out of 1,700 beat the market each year in a five year span – that means you have a 0.1% chance of beating the market. Your odds in Vegas are better than that, so my advice is that same as everyone else. Keep expenses to a minimum and quick trying to time the market. Those index funds are great for that.

Leverage up so you can invest in real estate and get the big returns?

That worked real well for all of those people who bought houses with payments they could not afford in 2006 and 2007. When those teaser rates expired in 2008 and 2009 and housing prices collapsed, they were stuck with mortgage payments they couldn’t afford and a house worth less then they owed. A reasonable mortgage payment (no more 25% of your take home salary using a 30 year mortgage with a fixed rate) is fine, but if you want to invest in real estate then do it without the leverage that can leave you bankrupt WHEN (not if) the next down market occurs.

Invest through a 401(k), an IRA or an HSA (yes you can use those for investing too)?

All good ideas and certainly part of any balanced approached to financial success, but they don’t qualify as the best surefire way to win financially. So what is the best financial advice I can give anyone.

When you get married, stay married.

Divorce is a bigger detriment to financial success than any other cause. It destroys long-term plans and forces you to sell assets at the most inopportune times. The irony is that the biggest single cause of marital strife is financial issues. The good news is that this issue can be addressed with just a little work. Talk about money with your fiancé or spouse. What is important to you and them? Is a vacation to the beach every year very important? If so, incorporate that into your plans. Is a ultra-secure retirement more important, than maybe the beach trip needs to be every other year to allow more money to be put aside.

Getting married for money rarely works out, but ignoring money in a marriage is just as bad. Have that conversation, it is the best thing you can do to be financially successful. (And staying with the love of your life is a great benefit too!)

One Comment on “The Best Financial Advice Ever”

  1. Great info! Very simple and easy. Nobody can explain as interesting as this. I appreciate your time and effort on making things simple and easily understandable. I have bookmarked your site. Thanks

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