Smart money moves aren’t more complicated than you think.
They’re simpler. Cut through all the jargon and pontificating and technical
stuff, and everything you really need to know about personal finance fits into less
than 1,000 words—no more than three to four minutes.
Ignore “expert” stock
picks. The stocks that Wall Street experts like most generally fare no
better than those they like least—or stocks picked at random.
Keep it simple.
A simple, diversified portfolio of low-cost index funds, rebalanced yearly,
will do fine.
Invest globally, not
just in the U.S. Foreign stock markets are no riskier than U.S.
markets and offer terrific diversification.
Buy Treasurys, too:
These are likely to hold their value, or even go up, when stocks crash.
Know thyself. Don’t
pursue complex financial or tax strategies if you’re not a details person.
Protect yourself from
disaster. Have disability insurance, either through work or directly.
Save early, save
often. Time and patience are the investor’s best friends.
Use those free
shelters. Contribute as much as possible to your company’s 401(k) plan
or equivalent and at least enough to get the company match.
Make the most of what
you have. Don’t pin too much hope on the next pay raise or stock windfall.
Plan for a long life.
Try to pay off your mortgage, and save at least 10 times your annual salary, by
the time you retire.
Cut the waste.
Few habits bust the budget more than eating out regularly.
Beware of buying your
employer’s stock. Your job there is probably financial exposure
Tune out advertising. If
you consider it all to be a pack of cynical lies designed to steal your money,
that’s about right.
Protect your nest egg. Don’t
drain your retirement savings to pay for your child’s college education.
Likewise, don’t empty your 401(k) or IRAs to start a business.
Value your money. Work
out how much you take home, after-tax, for each hour you work. And remember
that number—especially when you shop.
Click here to access the full
article on The Wall Street Journal.