2008-07-23

The “Smartest Advice I Ever Got” Was…

New?

Innovative?

Life-changing?

Earth-shattering?

The August 2008 issue of Money included an article about “The Smartest Advice I Ever Got,” featuring “the favorite money lessons recalled by 35 of the most successful, knowledgeable people around.” The 35 included a range of well-known financial pundits, economists, professors, authors, actors, and miscellaneous celebrities. Among them: Maria Bartiromo; Bill Miller; William Bernstein; Steven Levitt; Burton Malkiel; John Bogle; Richard Branson; and various directors or professors from institutions such as the Wharton School, Leavey School of Business, Cornell University, and Harvard University.


So I thought I would compare the “smartest advice” against my early summary of what I thought I’d learned in reading several bushels of personal-finance books. To refresh, the Cliff Notes length version was:

  • Get out of debt—stay out of debt.
  • Start saving earlier—as early as possible
  • Save and invest more.
  • You can’t beat the market.

And I had broken the last point down further into:

  • Stick mostly to low-cost index funds (or in some cases ETFs).
  • Diversify your portfolio.
  • Check your portfolio regularly (some folks saying annually is enough) to rebalance it back toward your desired diversification.

By my rough count, 15 of the 35 people consulted for the article reported a “money lesson” that more or less fit into one of these high-level points. I think that’s quite a lot!

For the rest of the 35, I am loosely categorizing them like this:

  • Personal-finance advice on spending (“Be frugal but not stingy”)
  • Personal-finance advice on investing, including at least some suggestion that you can beat the market (e.g., “Don’t follow the herd”; “Take risks when you can”; “Buy low, sell high”; and a few variations on the idea that companies have intrinsic value that can and should be assessed)
  • Personal or career advice (e.g., “Do what you love”; “To excel at something, immerse yourself”; “Don’t get too good at the wrong stuff”; “Be humble about what you don’t know”)
  • Miscellaneous other advice for which I wasn’t able to come up with a pithy category description (e.g., “Money doesn’t make you happy”; “Careful of people you trust”)

Check out the article for a little more explanation of the advice. (At the time of this post, it’s only shown without a link or full text on the Money website—so it appears only to be available in the print copy right now.)

I didn’t feel that I really learned anything all that new. In other words: most of “the smartest advice I ever got” was… old news and repetitive (though this underscored that it was tried and true).

This was comforting and actually quite valuable. It reinforces for me that:

  1. Personal finance isn’t rocket science.
  2. Figuring out what you are supposed to do isn’t hard.
  3. The trick is all in actually doing what you are supposed to do.

Articles like “the smartest advice,” the books in the crowded personal-finance aisle in your local bookstore, and the myriad personal-finance blogs out there that sometimes seem to be saying the same thing over and over again stop giving you revelations at some point. But when you get positive reinforcement of what you think you know, I think it helps you execute or act based on that knowledge. It helps you do what you are supposed to do.

And I don’t know about you, but I can always use that kind of help!


Related Posts:

What Do I Supposedly Know About Personal Finance?

Market Plummeting! Recession! Plague!

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