I have always enjoyed Scott Adams, convinced that he worked for the same company I do in my day job. (He doesn’t, by the way) When I read this, I was impressed and thought I’d pass it along.
- Make a will
- Pay off your credit cards
- Get term life insurance if you have a family to support
- Fund your 401k to the maximum
- Fund your IRA to the maximum
- Buy a house if you want to live in a house and can afford it
- Put six months worth of expenses in a money-market account
- Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement
- If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio
I wasn’t planning to make a habit of quoting other author’s advice, but this was too good to overlook. This is from Scott Adams’ book “Dilbert and the Way of the Weasels.” As Scott Adams states, “Everything else you may want to do with your money is a bad idea compared to what’s on my one-page summary. You want an annuity? It’s worse. You want a whole life insurance policy? It’s worse. You want to invest in individual stocks? It’s worse. You want a managed mutual fund instead of an index fund? It’s worse. I could go on, but you get the point.”
I might put a caveat on the 401(k) advice (see my article), but these rules are worth reading and following.