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Friday, February 13, 2015

More simple financial advice

I've posted financial rules of thumb before on this blog.  http://mikekr.blogspot.com/search?q=thumb

There's a nice set of them in the WSJ article (free) by Brett Arends. 

These are great; I'm only going to comment on a couple.

Keep it simple. Complicated financial strategies and investments are mostly designed to enrich managers and salesmen. A simple, diversified portfolio of low-cost index funds, rebalanced yearly, will do just fine—if not better. 
If you don't understand it, don't buy it.

Never buy a lottery ticket. The lottery runs a profit, which means the players run a loss. And a study once found that the people who won ended up no happier than those who lost.
What never?
No, never
Well, hardly ever.  (to paraphrase Gilbert and Sullivan).

The occasional bit of fun is OK, but the lottery is basically a tax on those who don't understand math. Unfortunately, it's a voluntary regressive tax, primarily on those who can least afford it.