And for the final Pandemic of 2020-2021 Project, I thought I would once again tackle the finance page. I was recently asked some questions about basic investing and I realized I had not revisited this subject in many years. Since I've been wanting to rewrite my Finance page anyway, this seems like a good opportunity to organize everything (again). I also noticed that it's been almost 20 years since I read the first finance books and reviewed them on my website. I never did a comprehensive review of the books as a whole which makes it all a bit disjointed, so I'll try and address that as well.
So, "Who is this page for?" Me of course. Ok, only slightly kidding. The reason I always have issues organizing this page is because I never clearly answered that question and the articles just kind of go every which way. With that being said, this time I'm going to organize this page for myself. Specifically, I'm going to organize it by questions for my own reference and so that I can easily refer others to answers to questions like "What are some good introductory personal finance books?" or "What are some simple portfolio ideas?"
If you're the kind of person that likes to skip to the end of the book, then this is for you.
Save 10% or more of your gross salary for the next 20-30 years. Invest your savings in a set of diversified index funds and preferably within a tax deferred vehicle such as a 401K or IRA. Retire and withdrawal no more than 4% of the total of your savings every year. Done.
That's pretty much it. Start Saving, Invest your Savings, and Retire. If you would like a few more details, check the link below.
If you're the kind of person that wants motivation and inspiration in a positive and upbeat style without getting bogged down in the details I would recommend "The Automatic Millionaire" by David Bach.
If you like a drier wit, some tough love, and all the gritty details then I would highly recommend "I Will Teach You to be Rich" by Ramit Sethi.
If you can't be bothered to read a book, I'll summarize them both below. And it's going to start sounding familiar. So what ideas do they both promote?
That's pretty much it. Start Saving, Invest your Savings, and Retire. If you would like a few more details, read the 101 below.
Assuming you have started saving some money automatically in a tax deferred savings plan like a 401k, where should you invest it?
The Short Answer
Choose a Vanguard Target Date Retirement Fund like the one below based on your retirement year.
|Vanguard Target Retirement 2030 Fund
Do you want more personal control? Then choose a 3 Fund option like below.
Assuming you want the following
80/20 (US / International)
|Vanguard Total Stock Market Index Fund Admiral Shares (US)
|Vanguard Total International Stock Index Fund Admiral Shares
|Vanguard Total Bond Market Index Fund Admiral Shares (US)
I'm sure anyone who has written about personal finance and investing has run into the same issue of there being only so much new information out there. Having a truly new idea is unlikely and the best you can hope for is a new spin. These are mine.