I have learned my lesson. No more preaching finances to my friends or family

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dharrythomas
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by dharrythomas »

arcticpineapplecorp. wrote: Thu Jan 21, 2021 3:25 pm if you think you're mad now, wait til 10 to 15 years from now when your friend realizes he got snookered in fees all those years and says to you, "Man I wish someone told me years ago to beware of overpriced fees and advisors!"

you'll have to bite your tongue until it bleeds.
:o :P Yep!
dharrythomas
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by dharrythomas »

I’ve given advice when asked, it is often ignored. Two of my three brothers talk to me about money, one of those two has an advisor anyway. Both my kids and spouses are listening. I discuss the TSP with all my new employees and encourage each of them to go to a retirement seminar early in their career.

My last job in the Army Reserve, I did a presentation on the TSP and encouraged anyone who wasn’t already maxing out a 401(K) at work to set aside part of their Reserve check in the TSP. Just put it in a Target Date fund and let it ride. The guy we hired straight out of graduate school said he appreciated me talking to him and urging him to max his savings.

I was visiting some of our facilities with the woman who was my staff equivalent one level up. She’s 15-20 years younger than me and had been a government employee for 5 or 10 years and had never invested in the TSP. The one thing I convinced her was that she had to invest in the TSP enough to get the 5% match and just put it in a Target Date fund. Then I followed up until she told me that she did it. Several years later when I called to congratulate her on a new job, she told me that she was glad she had done it and she was just leaving it alone :moneybag!

You can plant some seeds, but don’t push and don’t take it personally when you are ignored. I look at the few people I’ve been able to help and am thankful for those opportunities, not resentful of the people I couldn’t help!
mikejuss
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by mikejuss »

That's a bummer. Everyone has to find his or her own way to indexing (or not). Don't take it too hard.
infotrader
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by infotrader »

This is a very good posting.
Here is what I think:
1) Personal finance is process of personal enlightenment. It takes time, and most people will never be enlightened. I feel that fewer than 1% of the people can be convinced of the BH way.
2) People believe that if you are paying for something, it should be good. Nobody wants to take free advice from you.
3) Even if people want to learn about personal finances, they think it is very complicated stuff. If you tell them the BH 3 fund approach, it cannot be good. Otherwise, why there are not so many millionaires out there? Since it is complicated stuff, PAS is the way to go. 1% AUM fee is really nothing. A plumber charges more.
4) People are generally lazy. Even if they know that you are right, they just don't want to admit it. It is really a pain if you keep on preaching your DIY ideas which reminds them that they should do about something that is long overdue.
5) Talk about finances when you are asked. Even if you are asked, treat it like a casual conversation topic, and don't get carried away since it is a topic of your interest. Most people will not take it seriously. For them, working hard and getting a good salary is the only way to go.
6) Having PAS is probably also a status symbol. It is like I have my hairdresser, my CPA, etc. Now that I have money, I need to use professional services to manage my personal finances.
Last edited by infotrader on Thu Jan 21, 2021 9:58 pm, edited 1 time in total.
infotrader
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by infotrader »

sergeant wrote: Thu Jan 21, 2021 3:20 pm I ran a patrol shift for the last 25 years of my career. On day one of a new officers shift I explained the benefits of our 457b plan. I had their FTO take them to city hill and accompany them to HR to enroll. As their boss I was privy to their step increases and raises. I would remind them to increase their contribution so that half the raise went to deferred comp. I had a very high success rate since I had authority that was respected. Guys stop by my home every now and then to thank me for forcing them to save.

None of my advice given to family or friends was followed.
Very interesting. This the best example to illustrate the topic.
They are very lucky to have you as their boss.
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arcticpineapplecorp.
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by arcticpineapplecorp. »

i posted this back in 2018 when someone was asking how to discuss finances with a neighbor (source: viewtopic.php?f=2&t=261331)

here's one way you could handle it (notice I said "could" not "should"):

First listen (you, not him) to Rob Berger's Dough Roller Money Podcast episode 299 (https://www.doughroller.net/podcast/dr- ... -finances/). It's titled "How to help others with their financial struggles".

Rob discusses how he had conversations with his kids and even friends. He didn't hit them over the head with information. He didn't put down his friends' advisors. He didn't give them books and so on. He didn't start the conversations, they did. But when they did...he didn't give information.

Instead, he asked questions.

Like when you friend mentions the bond fund, you can ask him how much it costs? When your friend looks at you blankly don't press. Let it hang there. The silence should be uncomfortable (for him, not you). It should force him to go back and ask his advisor (or better yet look for himself) how much it costs.

He may come back and say "You know that bond fund I was telling you my fine advisor put me in? Well it costs just 1.5% a year!" You can ask, "Do you think that's a low fee?" When he doesn't know because he hasn't compared bond fund fees or fund families, etc. let it hang there. Don't tell him it's expensive. Let him research it himself. If he can't and he wants to know how, let him ask you.

When he says he's gotten out of the market, you can ask him when the right time will be to get back in. He may not know. He may just say his guy will let him know when the time is right. Let that hang there. Don't respond.

You can ask him how he selected his advisor. You can ask him if he's looked up his advisor's background, checked him out. When he says no he doesn't need to or he didn't know he could, you can let that hang there. Don't offer for him to go to https://adviserinfo.sec.gov/. Wait for him to ask how to do that (he may not. he may not want to know).

And so on. That sort of thing. You'll see that asking questions is a better way of getting people to find the answers to questions they don't know. If they care to. Many people prefer to remain ignorant for some reason that's beyond me. Ignorance is bliss they say. It's also expensive.
Last edited by arcticpineapplecorp. on Sat Jan 23, 2021 11:21 am, edited 1 time in total.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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GerryL
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by GerryL »

snowman wrote: Thu Jan 21, 2021 5:34 pm
sergeant wrote: Thu Jan 21, 2021 3:20 pm I ran a patrol shift for the last 25 years of my career. On day one of a new officers shift I explained the benefits of our 457b plan. I had their FTO take them to city hill and accompany them to HR to enroll. As their boss I was privy to their step increases and raises. I would remind them to increase their contribution so that half the raise went to deferred comp. I had a very high success rate since I had authority that was respected. Guys stop by my home every now and then to thank me for forcing them to save.

None of my advice given to family or friends was followed.
I never felt the need to advise anyone, but like you, I ended up in hiring position at megacorp (this is 20 years back). I hired many, mostly young people in their 20s. When I was helping them with HR paperwork, I always advised them to select at least 6% salary contribution into 401k plan, since that's what company matched. I mostly got deer in the headlight look. I patiently explained that it really is free money, there is no catch to it, it's guaranteed. Well, there is a catch, I was told - you cannot touch it for at least 30 years! And this was in finance department at megacorp - all hires had college degrees!
My dad used to supervise lots of young guys who gradually moved up at Megacorp. Many years later, as my dad lay dying in the hospital, some of his old friends sent him letters, which we read to him even though he was unconscious. One letter in particular moved us to tears. It was from one of those once-young guys thanking my father for brow-beating him into signing up for a retirement savings plan all those years ago and how it had made such a difference in his life.
helloeveryone
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by helloeveryone »

avidlearner wrote: Thu Jan 21, 2021 12:28 pm I recently learned the same lesson when advising brother in law to max out 401K and sharing the index funds advice. So now I just listen and only advice when asked but with an open mind that they may or may not follow it.
I give advice when asked but then send BH links or other links to let the person read about it on their own if they wish.
Vanguard Fan 1367
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by Vanguard Fan 1367 »

livesoft wrote: Thu Jan 21, 2021 12:33 pm I don't get this "learned my lesson." I have had people follow my advice and thanked me for it. I have had others not follow my advice, but it didn't bother me at all. Why does it bother you that someone did not follow your advice?

I will also guess that you do not work in sales. I think sales people know that they cannot get every prospect to become a customer. The same goes for young people asking another person out on a date. Or a professor or researcher submitting a grant proposal to be funded or a manuscript to be published. Or ....

Rejection goes with the territory. Learn from it.
I wanted to learn from rejection. I said yes to the buddy who wanted me to join his team selling books door to door for two summers in my college years. I am glad for that experience.

I have had some accept advice on finances. Others have not.
John Bogle: "It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."
l1am
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by l1am »

SteadyOne wrote: Thu Jan 21, 2021 1:52 pm My life experience

1. Never give advice unless a person specifically asks for it
2. Other people’s problems are not my business
3. I can never give a proper advice because I never know all the details about other persons situation
4. Other people’s motivations are mystery to me (and oftentimes to themselves)
5. Never mix business and friendship and family
That's certainly a way to live life as smoothly as possible. However, I'd argue that really good friends do not follow these guidelines if a friend is clearly in trouble.
moneyzone
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by moneyzone »

I learned this way early in the life in indirect way, when I moved to another city fir studies and met many new people, i quickly realized that not everyone is like me, each person is different. your interests, ability, passion is yours. no matter how badly or genuinely you want to help someone it will not work out if they are not interested in it. parenting is kind of similar as well.
dboeger1
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by dboeger1 »

One of the main challenges with getting others to adopt BH investing philosophy in particular is that it's extremely unintuitive depending on how many people approach the issue. For most people, making money is an active pursuit, potentially involving years of study or training followed by decades of hard work and experience. Additionally, their only exposure to the world of finance is through overly dramatic Hollywood movies about stock brokers and fund managers in suits on Wall Street. They might have also heard about a local legend who made a killing during the tech bubble, or maybe they saw a headline about Tesla's share price surging beyond expectations, or perhaps they've seen any number of advertisements for stock picking and day trading services. Surely investing must be an active pursuit requiring skill to outperform, right?

It's not until you do extensive research into why passive index investing works so well that it starts to make sense. Note that's it's not enough to just understand that by definition, investors earn on average the average market returns. You also have to be convinced that managers can't consistently outperform over the long term, because average returns alone don't mean anything if you can find a manager who consistently outperforms the market. Once you are thoroughly convinced of both of those truths, along with the tyranny of compounding costs, then it all starts to click into place. The problem is, humans generally aren't born with this knowledge (although some of the more dedicated Bogleheads do make me wonder).

I remember when I first started investing outside of my 401k, which up until that point I had funded just enough to get the company match because my father told me that was the right thing to do. I started out by Googling things like "how to start investing". I got a bunch of hits for articles on how to open certain account types, or how to pick stocks. I realized I didn't really want to have to research stocks myself, so I then searched for something along the lines of "investment fund". That's when I learned about mutual funds, which sounded exactly like what I wanted. So then I did a search for "best mutual funds", which was about as helpful as you might guess. Most of the hits were for high-ER funds which had significantly outperformed the market over the past 1-3 years. There didn't seem to be any pattern among them, at least not one I understood or would be able to reproduce, so I then searched "how to choose a mutual fund". It's a good thing I did, because that's when I learned about index funds. I saw that Vanguard was supposedly a respected provider of such funds, so I did a little research, and found a recommendation for Bogle's "Little Book of Common Sense Investing". My local Barnes & Noble had a copy for sale, so I did what any cheapskate in their early 20s would do: I read the whole thing in their cafe without buying it, lol. That was when I finally understood and was convinced this was a strategy that would work for me and that I could defend against scrutiny from myself and others. I've reread that book a couple of times since, and I expect I will reread it every few years or so when I'm not feeling so hot in my investments. The last time I read it was in March 2020, and it helped me stay the course despite all the turmoil and panic in the markets.

My point is, even I, as someone who actively pursued knowledge about personal finance and investments, and had the mental and academic capacity to understand such things, more or less stumbled on the information through a chain of noobish Google searches. And let's not pretend I didn't make mistakes after that either. My next Google search was "best brokerages" because I didn't understand I could buy VG funds for free through their site. I ended up buying them through Scottrade and then transferring them out to VG once I realized my mistake. In the end, this cost me about $100, which felt like the world at the time, but in retrospect, it was a cheap lesson. I also engaged in market timing early on in my taxable account of all places. I was actually successful, but after taxes, the gains were so minimal I realized it was a silly game not worth playing.

To expect the common masses, especially in mostly financially illiterate USA, to come to the same conclusions is pretty much a pipedream. It would take at least a generation of foundational changes to our educational systems to even make that a remote possibility. And even in countries with high savings rates and general financial literacy, things aren't much better. My wife is from China, and Chinese people are historically known for prioritizing long term savings and being savvy in finance and business. I can tell you from experience that some of the investment practices over there make our high-ER front-loaded funds look like genius ideas by comparison. I won't even get into the real estate market because that one's quite controversial, but if China has anything like our SEC, you wouldn't know it by the amount of funds marketed as having guaranteed returns. Literally everyone I talk to in China is thoroughly convinced they own fixed income investments with guaranteed 13% returns AND the potential for more if the underlying assets do well, similar to our whole life insurance policies that claim to go up with the market. With products like that, surely nobody ever loses money in China, right? Well, tell that to my in-laws, because every few months, I hear about how my FIL is angry at my MIL for having bought some investment she thought was a once-in-a-lifetime opportunity that ended up losing money, or how my wife's aunt borrowed money from my FIL and bought bad investments with it. I don't know the details of what they invest in, but I find the disconnect between their expectations and results amusing in kind of a dark humor sense. Every so often, my wife asks if there's anything better we could be investing in, and I ask what she means by that, to which she responds, "Well, in China, there are funds that have a guaranteed 15% return and can go up even more with the market." To which I respond, "Yeah... We don't have anything like that, and I wouldn't trust those funds to remain solvent and be able to pay out shareholders even if they did have such terms." She then gets frustrated and goes and does research, and ultimately ends up finding out that no, they don't have guaranteed returns, but everyone seems to think they do.
dcabler
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by dcabler »

Like others, I never give unsolicited advice. And I have to admit, I hate receiving it as well - and this applies to any area of my life. On the other hand I will solicit advice and I will listen.

If asked for advice, especially in the financial arena, it usually involves me asking a lot of questions back to try and get some sort of idea of what the person is actually getting at. At that point, depending on what they've told me, I may give a very broad answer then specifically give them resources to understand details themselves. If asked specifically, I tell them what I do and why I do it and specifically state that what I do works for me but may not work for them. Then again point them to resources for education... (like our wiki pages - you know, the ones nobody reads before making their first posts on the forum) :D
sd323232
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by sd323232 »

teacher2163 wrote: Thu Jan 21, 2021 11:45 am I am a recent convert to the Bogleheads philosophy, having only spent the past 18 months reading this forum and reading a couple of Jack Bogle's books. It has been a whirlwind year and a half. I have executed my dad's complex estate, with trusts, a prenump, and step siblings. I have fixed my investments by indexing in 3 funds at Vanguard. I have dealt with an inherited IRA that my father's financial advisor screwed up. I learned a lot about taxes through carrying on my father's business. I inherited rentals and learned to be a landlord. I fired my own financial advisor. I had help from fellow Bogleheads from this forum along the way. What I didn't learn until recently is that no one wants to hear my philosophies on finances. I helped a friend set up a brokerage account and showed him how to operate it, and gave him a brief lesson on indexing. I had several conversations with him over many months. I heard that he was going to talk to a financial advisor and contacted him. It was too late. He is now paying a 1% advisor fee, plus whatever other high fees that he will likely incur, like front loads and excessive expense ratios. I told him I could have helped him set up his accounts and funds in a few minutes, but he said he wanted "someone to look out for his finances." I caught myself getting angry at him before realizing that it is none of my business. I now understand why so many people on here say don't get involved in people's finances unless they specifically ask for help. Lesson learned.
Wow, why do you think you are smarter or better than his financial adviser? Could there big a tiny chance that your friend is making a right decision? Just because you dont agree with it, does not make wrong
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HMSVictory
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by HMSVictory »

Here's a trick I learned a long time ago. Never tell other people what to do - tell them what you are doing.

Then if they open the door you ask them - do you want to know what I would do? If they say yes - then give advice if not move along.
Stay the course!
sd323232
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by sd323232 »

OP, thats why i like bogleheads, we have people like you with alot of knowledge and experience that you can share with us.

May be noone wants to listen to you in your real life, but im here to learn and get help from other people advices.

We bogleheads want your knowledge!
pgs59
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by pgs59 »

Some wise people say that "Free advice is worth the price you paid".
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teacher2163
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by teacher2163 »

There have been some great responses. I like Taylor's idea of simply sending a Boglehead book to a friend for them to read (or maybe not read). I like the person that pointed out that I may not be smarter than the financial advisor (maybe not). One poster mentioned that having a financial advisor may be a status thing for some. I think this really rings true. Another great point I saw repeated in the responses was the idea of being blamed for poor performance in the market. I had never really considered that. Also, I am fascinated with personal finance right now, but most other people are not. It just seems that way when you spend a lot of time on this site. One thing that I think was not directly discussed, especially in the work place, is the culture of the business. I am a school teacher and most of the people that work in our district do not even know what a 457 retirement account is or that our district offers it. I have a cousin who is a fireman in a nearby town, and he and most of his coworkers participate. They bring a representative in to talk to the firemen on a regular basis. The veterans encourage the new hires to participate and to get educated. A final word on this topic for me personally; I don't run around giving random unsolicited advice all of the time. I kept my mouth shut when my cousin moved all of his money out of the market in his 401k at the beginning of April. So there is that.
SteadyOne
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by SteadyOne »

l1am wrote: Fri Jan 22, 2021 1:09 am
SteadyOne wrote: Thu Jan 21, 2021 1:52 pm My life experience

1. Never give advice unless a person specifically asks for it
2. Other people’s problems are not my business
3. I can never give a proper advice because I never know all the details about other persons situation
4. Other people’s motivations are mystery to me (and oftentimes to themselves)
5. Never mix business and friendship and family
That's certainly a way to live life as smoothly as possible. However, I'd argue that really good friends do not follow these guidelines if a friend is clearly in trouble.
The points above is about giving (financial) advice under ‘normal circumstances’ not about emergencies. There are grey areas, of course, but my money did not come easy to me.
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court
SteadyOne
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by SteadyOne »

teacher2163 wrote: Fri Jan 22, 2021 8:39 am There have been some great responses. I like Taylor's idea of simply sending a Boglehead book to a friend for them to read (or maybe not read). I like the person that pointed out that I may not be smarter than the financial advisor (maybe not). One poster mentioned that having a financial advisor may be a status thing for some. I think this really rings true. Another great point I saw repeated in the responses was the idea of being blamed for poor performance in the market. I had never really considered that. Also, I am fascinated with personal finance right now, but most other people are not. It just seems that way when you spend a lot of time on this site. One thing that I think was not directly discussed, especially in the work place, is the culture of the business. I am a school teacher and most of the people that work in our district do not even know what a 457 retirement account is or that our district offers it. I have a cousin who is a fireman in a nearby town, and he and most of his coworkers participate. They bring a representative in to talk to the firemen on a regular basis. The veterans encourage the new hires to participate and to get educated. A final word on this topic for me personally; I don't run around giving random unsolicited advice all of the time. I kept my mouth shut when my cousin moved all of his money out of the market in his 401k at the beginning of April. So there is that.
One way to help other people to learn about options is to invite a plan rep to work to talk about 401k. HR can arrange that easily if you ask. You can ask pointed questions there. But you can bring horse to water...
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court
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bertilak
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by bertilak »

dharrythomas wrote: Thu Jan 21, 2021 7:59 pm I’ve given advice when asked, it is often ignored.
They don't want advice on how to invest, but on what are the best horses stocks to bet on in today's races markets. The more sophisticated are asking how best to get that information on an ongoing basis. (Best tipsters?)

No wonder you are ignored! You didn't even understand the question so how can your advice be any good?
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
MBB_Boy
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by MBB_Boy »

livesoft wrote: Thu Jan 21, 2021 1:15 pm
teacher2163 wrote: Thu Jan 21, 2021 12:49 pm I guess I realized I shouldn't be giving unsolicited advice if I was going to get upset when someone didn't listen to me.
That never stopped me from writing my congressman nor senator.
LOL
SteadyOne
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by SteadyOne »

dboeger1 wrote: Fri Jan 22, 2021 5:18 am One of the main challenges with getting others to adopt BH investing philosophy in particular is that it's extremely unintuitive
This.

That’s why few people will adopt this approach, there is no way one can explain this to anyone without spending hours and hours and having them to read books. Even then chances are low.

A lot of folks do not even understand concept of 401k matching, that those are free money. I tried to explain once this to one fellow and realised that it rung hollow and it was a time to refresh my drink.

For overwhelming majority of people it would have been so more beneficial if companies instead of matching funds, etc. would simply add some sort of payment to the Social Security system so that employee SS check would be higher. And forget all these complexities of how to match, Roth conversions, IRAs deductions, which funds to select, index based active, stocks vs bonds, taxation considerations, assets allocations, taxable vs. Non- taxable, sequence of withdrawal from multiple sources, etc etc. Try to explain all of this to an ordinary person. Accountants could not figure it out.
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court
jucor
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by jucor »

Dead Man Walking wrote: Thu Jan 21, 2021 1:45 pm
livesoft wrote: Thu Jan 21, 2021 1:15 pm
teacher2163 wrote: Thu Jan 21, 2021 12:49 pm I guess I realized I shouldn't be giving unsolicited advice if I was going to get upset when someone didn't listen to me.
That never stopped me from writing my congressman nor senator.
Livesoft,

Did either ever respond with anything other than a canned response sent by a staffer?

DMW
I also write to my representatives -- almost always get canned responses, but have gotten several calls from staffers, and in one memorable occasion about 30 years ago I was invited to have coffee with my U.S. Senator one on one to discuss my views on an issue I'd written to him about -- we spent a cordial hour discussing the issue (I'm not an expert in that issue, nor famous -- just well informed and reasonably articulate). I was amazed that he spent the time with me -- although i did not manage to convert him to my viewpoint. :sharebeer

I'm more leery about offering advice to close family and friends, though -- I do not do it at all if unsolicited, and do so very cautiously if solicited (which is fairly rarely). Those relationships are personally more important to me, and more likely to be disrupted by differences of postion or "blaming" when things do not work out.
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teacher2163
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by teacher2163 »

SteadyOne wrote: Fri Jan 22, 2021 9:18 am
dboeger1 wrote: Fri Jan 22, 2021 5:18 am One of the main challenges with getting others to adopt BH investing philosophy in particular is that it's extremely unintuitive
This.

That’s why few people will adopt this approach, there is no way one can explain this to anyone without spending hours and hours and having them to read books. Even then chances are low.

A lot of folks do not even understand concept of 401k matching, that those are free money. I tried to explain once this to one fellow and realised that it rung hollow and it was a time to refresh my drink.

For overwhelming majority of people it would have been so more beneficial if companies instead of matching funds, etc. would simply add some sort of payment to the Social Security system so that employee SS check would be higher. And forget all these complexities of how to match, Roth conversions, IRAs deductions, which funds to select, index based active, stocks vs bonds, taxation considerations, assets allocations, taxable vs. Non- taxable, sequence of withdrawal from multiple sources, etc etc. Try to explain all of this to an ordinary person. Accountants could not figure it out.
This is a great post. I never really thought about how much time and energy most of us on here have dedicated to learning the Boglehead way. Of course a 10 minute conversation is not going to convice someone!!
iamblessed
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by iamblessed »

If asked I would say a Target or LifeStrategy fund for the age of the person. I feel anything else is to hard for the average joe.
deltaneutral83
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by deltaneutral83 »

I wouldn't even begin to have a discussion with anyone who doesn't understand that equites can come down 20% in the blink of an eye and we all know 50% from Oct 2007-March 2009. The BH books are great for those people. Now people that have been around the block and understand that equites can lose a lot of value over long periods of time but know they have done fine over any 40 year stretch but don't know the mechanics of putting a plan in place, I think you can work with those while also recommending BH books.

Remember the first time you hit "submit" on an order inside an investment account and how nervous you were? Numbers (B/A) jumping around all over the place, ticker of the tape at the top of the website, some ridiculous ad of Jim Cramer or some adviser yelling at the top of your screen. "My goodness what just happened" is a logical concern. It's a hurdle we've all probably forgotten about. Like the first time you get in the driver's seat at 15 with all the knobs, buttons, controls, pedals, etc. etc. It's overwhelming. After 2 years it gets easier. After 5-10 it gets boring and hopefully you've seen a bear market with serious money in play to size up your appetite. I still never understand how people spend an hour a a week debating their spouse/family on what to eat for dinner 3 nights a week but refuse to spend a few hours getting started with their nest egg.
mptfan
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by mptfan »

deltaneutral83 wrote: Fri Jan 22, 2021 10:15 amI still never understand how people spend an hour a a week debating their spouse/family on what to eat for dinner 3 nights a week but refuse to spend a few hours getting started with their nest egg.
That's easy... people get hungry every day so eating is on all of our minds all of the time, it's something we all have to do almost everyday to live and survive. Investing for the future on the other hand...well that is a luxury and not something many or most people think about everyday or at all because we don't need to invest to live and survive from day to day. (I recall reading that about half the population has nothing, zero, saved for retirement, not sure if that is exactly right but you get the point.)
Coltrane75
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by Coltrane75 »

I can relate.
I was giving advice to someone close to me and helped him set up his funds in his 401k account.
Then some of the funds weren't doing good and he sounded pretty angry.
I then realized I was making a huge mistake and backed off from giving advice anymore.
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Scott S
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by Scott S »

Being a teacher, I'm sure this wasn't the first time your wisdom wasn't received as you might have hoped. :wink:

But I think we can honor your intentions, and it sounds like you have a healthy attitude toward helping people with their finances in the future -- if the door is already open. :sharebeer
illumination
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by illumination »

We make the mistake thinking that because we're really passionate about this, others should be too.

It is amazing to me though how lazy most people are about this topic. Way more energy put into something like a car purchase or a kitchen remodel when these decisions about long term financial planning are far more consequential.

We all have those stories of trying to help, but not being to convert them. Sometimes you just take the partial victories. I had some in-laws that had concerns about the financial planner that was managing their disabled son's trust. When I showed them the hidden fees and backtested the awful funds they had him in to something basic like a simple Total Market and Total Bond, I showed well over a six figure difference in the trailing 3-4 years, and it wasn't an enormous account. It even shocked me, the firm was Matson Money, basically a family-friend type connection. They dropped the firm and moved his account to Schwab and a more Boglehead approach, it's done fantastic...but then the parents kept their own accounts at a "premium" firm that is not much better. Easily a 7 figure amount has been lost doing it their way since they've retired, but they feel like an "expert" is watching over it. And the firm only will let them meet with the "junior" planner because their balance isn't high enough. But boy is the office grand and they are convinced this is where the well-heeled get their money managed.


I think the worst part about, it's pretty easy for a financial planner to look like he's earning his keep as the market generally goes up, so as long as people see they are making money, they think the fees are insignificant.
SteadyOne
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by SteadyOne »

Coltrane75 wrote: Fri Jan 22, 2021 11:55 am I can relate.
I was giving advice to someone close to me and helped him set up his funds in his 401k account.
Then some of the funds weren't doing good and he sounded pretty angry.
I then realized I was making a huge mistake and backed off from giving advice anymore.
Even rich and presumably sophisticated investors are unable to stay the course (their course). Remember the book and the movie ‘Big Short’ and how the genius hedge fund manager was SUED by investors cause they did not want to wait until the strategy worked its way. In the end they made 300% I recall but never said thank you to the guy. I am not talking here about advantages of the hedge fund investments of course.
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court
mptfan
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by mptfan »

illumination wrote: Fri Jan 22, 2021 12:56 pm I think the worst part about, it's pretty easy for a financial planner to look like he's earning his keep as the market generally goes up, so as long as people see they are making money, they think the fees are insignificant.
Yes, and they use the very deceptive trick of citing "change in S&P500 index" as a benchmark for their client's portfolio return and ignoring dividends so that they can mislead the client into thinking their personal return is beating the market when in fact it is not.
Last edited by mptfan on Fri Jan 22, 2021 1:27 pm, edited 1 time in total.
finite_difference
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by finite_difference »

willthrill81 wrote: Thu Jan 21, 2021 12:19 pm Many of us have learned the hard way that unsolicited advice is rarely well received and can do more harm than good.
+1.

Giving unsolicited advice seems no different than giving yourself rope to hang.

It’s probably a survival mechanism that we collectively hate unsolicited advice because it’s usually terrible or comes with strings attached?
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
Ricola
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by Ricola »

For many different subjects, when someone is talking I have learned to try and just listen and not give them my opinion unless they ask for it. In most cases, they are not interested in my opinion but only want to express theirs.
Exchme
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by Exchme »

mptfan wrote: Fri Jan 22, 2021 1:09 pm
illumination wrote: Fri Jan 22, 2021 12:56 pm I think the worst part about, it's pretty easy for a financial planner to look like he's earning his keep as the market generally goes up, so as long as people see they are making money, they think the fees are insignificant.
Yes, and they use the very deceptive trick of citing "change in S&P500 index" as a benchmark for their client's portfolio return and ignoring dividends so that they can mislead the client into thinking their personal return is beating the market when in fact it is not.
My advisor pulled that same trick and I asked to compare his stuff to the S&P 500 Total Return (where his did no better), he swore he had never heard of that before. Fired him shortly thereafter.

Another poster mentioned the layers of fees, in my case, the advisor had fees, the funds had fees and they bought other funds that had fees. Basically all the same company, just multiple levels of fees. Wish I had seen Bogleheads earlier, would have saved me a bundle.
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FelixTheCat
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by FelixTheCat »

I will have a Boglehead conversation if someone brings up the topic.

The other side of the coin is I don't tell anyone my finances. I mentioned to a friend I paid off my house. For the next two years he thought it was his job to tell me how I should buy things he wanted like a beach house or a boat. Now, I just say I'm broke.
Felix is a wonderful, wonderful cat.
Nowizard
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by Nowizard »

My motto is that unsolicited advice is often interpreted as criticism.

Tim
snowman
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by snowman »

FelixTheCat wrote: Fri Jan 22, 2021 1:59 pm The other side of the coin is I don't tell anyone my finances. I mentioned to a friend I paid off my house. For the next two years he thought it was his job to tell me how I should buy things he wanted like a beach house or a boat. Now, I just say I'm broke.
I don't tell anyone anything, nothing good could come out of it anyway. When people noticed we no longer work, I got comments from some neighbors/friends about how sorry they are and can they help in any way. They think we hit hard times and feel sorry for us. I'd like to keep it that way, so no one is coming to me asking for money. I'd rather look poor than wealthy. Plus, many people get jealous (or even angry) when they see someone not working while they slave away in the cubicle so they can pay their bills.
CoastLawyer2030
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by CoastLawyer2030 »

illumination wrote: Fri Jan 22, 2021 12:56 pm We make the mistake thinking that because we're really passionate about this, others should be too.

It is amazing to me though how lazy most people are about this topic. Way more energy put into something like a car purchase or a kitchen remodel when these decisions about long term financial planning are far more consequential.

We all have those stories of trying to help, but not being to convert them. Sometimes you just take the partial victories. I had some in-laws that had concerns about the financial planner that was managing their disabled son's trust. When I showed them the hidden fees and backtested the awful funds they had him in to something basic like a simple Total Market and Total Bond, I showed well over a six figure difference in the trailing 3-4 years, and it wasn't an enormous account. It even shocked me, the firm was Matson Money, basically a family-friend type connection. They dropped the firm and moved his account to Schwab and a more Boglehead approach, it's done fantastic...but then the parents kept their own accounts at a "premium" firm that is not much better. Easily a 7 figure amount has been lost doing it their way since they've retired, but they feel like an "expert" is watching over it. And the firm only will let them meet with the "junior" planner because their balance isn't high enough. But boy is the office grand and they are convinced this is where the well-heeled get their money managed.


I think the worst part about, it's pretty easy for a financial planner to look like he's earning his keep as the market generally goes up, so as long as people see they are making money, they think the fees are insignificant.
This is an interesting post. It reminded me of a conversation I had with my sister-in-law, who married my older brother.

She called me because they have a side business that makes about $30,000/year and asked me whether they should declare the income. My response was an adamant yes for a variety of reasons (QBI deduction, they want to buy a house, possible audit).

We got deeper into their finances and I got the entire picture. My basic takeaway was that they make about $120k/year and spend $120k/year. I tried to explain that a couple making $80k/year but spending $50k/year was wealthier than they were, and she couldn’t understand what I was saying.

Fast forward one month. I was talking to my mom, and apparently my sister-in-law talked to her dad, and they are not declaring the income. And they are going to buy a truck here soon. And they are going to buy that house.

Part of me is frustrated; the other part of me realizes that she just didn’t understand the foundational principles of what I was talking about, and thus my advice rang completely useless.

Interestingly, the next time my mom was over to babysit their daughter, they mentioned that I was “obsessed” with money. Whatever.
sport
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by sport »

Another problem related to this is that many (most?) people don't seem to understand basic arithmetic. 1% sounds like a trivial amount for a professional fee. However, if you consider a 60/40 portfolio with an average 6% total return, that 1% is really a 17% "tax" on your gain. Worse than that, that 17% "tax" compounds every year. The end result over a period of years is much larger than most people would ever expect.

In retirement, it can get even worse. If someone is going to withdraw 4% from their portfolio each year, then that 1% constitutes 25% of the distribution. Let's see, I put up all the money, I take all the risk, I get 75% and the advisor gets 25%. :oops:
DesertDiva
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by DesertDiva »

We’ve talked to certain people about investments and/or home ownership and they either have misconceptions, don’t want the responsibility, or they just don’t care.

It’s best to focus on what you can control. I get the frustration however...
diydocwifejd
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by diydocwifejd »

I've also struggled with this. You just have to let go. Focus on your own goals. Gently help people if they ask. Otherwise, just be glad you've seen the light. I wish I knew more bogleheads IRL. It would make life a lot easier!
H-Town
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by H-Town »

teacher2163 wrote: Thu Jan 21, 2021 11:45 am I am a recent convert to the Bogleheads philosophy, having only spent the past 18 months reading this forum and reading a couple of Jack Bogle's books. It has been a whirlwind year and a half. I have executed my dad's complex estate, with trusts, a prenump, and step siblings. I have fixed my investments by indexing in 3 funds at Vanguard. I have dealt with an inherited IRA that my father's financial advisor screwed up. I learned a lot about taxes through carrying on my father's business. I inherited rentals and learned to be a landlord. I fired my own financial advisor. I had help from fellow Bogleheads from this forum along the way. What I didn't learn until recently is that no one wants to hear my philosophies on finances. I helped a friend set up a brokerage account and showed him how to operate it, and gave him a brief lesson on indexing. I had several conversations with him over many months. I heard that he was going to talk to a financial advisor and contacted him. It was too late. He is now paying a 1% advisor fee, plus whatever other high fees that he will likely incur, like front loads and excessive expense ratios. I told him I could have helped him set up his accounts and funds in a few minutes, but he said he wanted "someone to look out for his finances." I caught myself getting angry at him before realizing that it is none of my business. I now understand why so many people on here say don't get involved in people's finances unless they specifically ask for help. Lesson learned.
Same with fitness and healthy lifestyle. You lead by examples. And if your family members and your friends come to you for advice, then you give them advice.
JS-Elcano
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by JS-Elcano »

arcticpineapplecorp. wrote: Thu Jan 21, 2021 3:25 pm if you think you're mad now, wait til 10 to 15 years from now when your friend realizes he got snookered in fees all those years and says to you, "Man I wish someone told me years ago to beware of overpriced fees and advisors!"

you'll have to bite your tongue until it bleeds.
I think most people will never figure out how much they would have had in their portfolio without all of these fees, high ERs and loads.
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arcticpineapplecorp.
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by arcticpineapplecorp. »

JS-Elcano wrote: Fri Jan 22, 2021 4:59 pm
arcticpineapplecorp. wrote: Thu Jan 21, 2021 3:25 pm if you think you're mad now, wait til 10 to 15 years from now when your friend realizes he got snookered in fees all those years and says to you, "Man I wish someone told me years ago to beware of overpriced fees and advisors!"

you'll have to bite your tongue until it bleeds.
I think most people will never figure out how much they would have had in their portfolio without all of these fees, high ERs and loads.
most, probably.

but there are plenty of posters on bogleheads who start out their posts with something akin to they've now learned how much their advisor was costing them (in AUM and trading, commissions, loads, etc) and now kicked their advisor to the curb.

so it can (and does) happen.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
SteadyOne
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by SteadyOne »

CoastLawyer2030 wrote: Fri Jan 22, 2021 2:20 pm
illumination wrote: Fri Jan 22, 2021 12:56 pm We make the mistake thinking that because we're really passionate about this, others should be too.

It is amazing to me though how lazy most people are about this topic. Way more energy put into something like a car purchase or a kitchen remodel when these decisions about long term financial planning are far more consequential.

We all have those stories of trying to help, but not being to convert them. Sometimes you just take the partial victories. I had some in-laws that had concerns about the financial planner that was managing their disabled son's trust. When I showed them the hidden fees and backtested the awful funds they had him in to something basic like a simple Total Market and Total Bond, I showed well over a six figure difference in the trailing 3-4 years, and it wasn't an enormous account. It even shocked me, the firm was Matson Money, basically a family-friend type connection. They dropped the firm and moved his account to Schwab and a more Boglehead approach, it's done fantastic...but then the parents kept their own accounts at a "premium" firm that is not much better. Easily a 7 figure amount has been lost doing it their way since they've retired, but they feel like an "expert" is watching over it. And the firm only will let them meet with the "junior" planner because their balance isn't high enough. But boy is the office grand and they are convinced this is where the well-heeled get their money managed.


I think the worst part about, it's pretty easy for a financial planner to look like he's earning his keep as the market generally goes up, so as long as people see they are making money, they think the fees are insignificant.
This is an interesting post. It reminded me of a conversation I had with my sister-in-law, who married my older brother.

She called me because they have a side business that makes about $30,000/year and asked me whether they should declare the income. My response was an adamant yes for a variety of reasons (QBI deduction, they want to buy a house, possible audit).

We got deeper into their finances and I got the entire picture. My basic takeaway was that they make about $120k/year and spend $120k/year. I tried to explain that a couple making $80k/year but spending $50k/year was wealthier than they were, and she couldn’t understand what I was saying.

Fast forward one month. I was talking to my mom, and apparently my sister-in-law talked to her dad, and they are not declaring the income. And they are going to buy a truck here soon. And they are going to buy that house.

Part of me is frustrated; the other part of me realizes that she just didn’t understand the foundational principles of what I was talking about, and thus my advice rang completely useless.

Interestingly, the next time my mom was over to babysit their daughter, they mentioned that I was “obsessed” with money. Whatever.
IRS will give them a lesson in taxation they will never forget.
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court
JBTX
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by JBTX »

SteadyOne wrote: Fri Jan 22, 2021 9:18 am
dboeger1 wrote: Fri Jan 22, 2021 5:18 am One of the main challenges with getting others to adopt BH investing philosophy in particular is that it's extremely unintuitive
This.

That’s why few people will adopt this approach, there is no way one can explain this to anyone without spending hours and hours and having them to read books. Even then chances are low.

A lot of folks do not even understand concept of 401k matching, that those are free money. I tried to explain once this to one fellow and realised that it rung hollow and it was a time to refresh my drink.

For overwhelming majority of people it would have been so more beneficial if companies instead of matching funds, etc. would simply add some sort of payment to the Social Security system so that employee SS check would be higher. And forget all these complexities of how to match, Roth conversions, IRAs deductions, which funds to select, index based active, stocks vs bonds, taxation considerations, assets allocations, taxable vs. Non- taxable, sequence of withdrawal from multiple sources, etc etc. Try to explain all of this to an ordinary person. Accountants could not figure it out.
I am always amazed that at a small company I helped set up a 401k for that most don’t even take advantage of the dollar for dollar match. Even after being encouraged to by the 401k fiduciary advisor.
MarkBarb
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by MarkBarb »

Rather than giving advise, I give people information. That sounds similar, but it is different. Instead of advising people to manage their own finances, use index funds, etc, I just explain the difference in costs, tax consequences, and stuff like that. The choice of what to do with that information is theirs. I don't know everything about their situation, risk tolerances, etc and so I'm not comfortable telling them what they should do. I just feed them information so that they can make the best choice for their circumstances.
sport
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Re: I have learned my lesson. No more preaching finances to my friends or family

Post by sport »

JBTX wrote: Fri Jan 22, 2021 6:22 pm I am always amazed that at a small company I helped set up a 401k for that most don’t even take advantage of the dollar for dollar match. Even after being encouraged to by the 401k fiduciary advisor.
I worked for a small company that set up a new 401K plan for 85 people. We had an advisor come to the factory. We had about 50/50 split between office and shop people. The advisor gave us a short course in investing. He started with the definition of "stock" and "bond". He explained about how the account would grow, matching money, etc. so everyone understood what it was all about. When it came time to sign up, only one person declined to participate. He said "he could not afford to". So, it seems that education is a big part of getting people to take advantage of their opportunities.
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