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I am doing a bit of an investing/finance 101 class for a friend. It's easy to forget that the people on these boards are not representative of the general pubic when it comes to investing and preparing for retirement, and both she and I were stunned at the gaps in her knowledge. We are talking entry level knowledge here, as basic as money market accounts. Don't know that she will ever get to the point of investing on her own, but she needs to at least understand when the professionals who look after her money are not doing things in her best interest, and the basic retirement strategies since retirement is just around the corner for this couple.

Can anyone point me in the direction of good basic links, not only on investing but retirement planning? I am trying to keep it very basic and fear compounding the problem by overwhelming her with too much too fast.

TIA and Happy Holidays!

IP
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No. of Recommendations: 4
I am doing a bit of an investing/finance 101 class for a friend. It's easy to forget that the people on these boards are not representative of the general pubic when it comes to investing and preparing for retirement, and both she and I were stunned at the gaps in her knowledge. We are talking entry level knowledge here, as basic as money market accounts.

My boss at the job from which I retired knew that I was pretty good at finances, and that I had been teaching my kids as well. So she invited me to dinner at her house a couple of years ago so that I could do some sort of crash course or conversation on finances with her daughter who I did know since she interned at our company. Her daughter is about 2 years younger than my kids. So I went, and was shocked at how much she and her husband had not done in terms of financial discussions. This kid didn't know the most basic things like how interest works, having a savings account, etc. I'm talking stuff that I had started to explain to my kids by the time they were 5!

It was a huge reminder to me on how many parents don't do any financial education with their kids, so it does not surprise me that your friend was also lacking in some basic knowledge.

On these boards, I think we tend to take it for granted that "everyone knows how to do this" and that simply isn't true.

Good luck teaching her, and at least you do have a willing student.

Merry Christmas to all!
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No. of Recommendations: 4
Dilbert creator Scott Adams has everything you need to know on one 8-1/2 x 11 sheet.

Scott Adams’ Financial Advice
https://www.mattcutts.com/blog/scott-adams-financial-advice/...

</snip>


I've found that financial planning can be reduced to three numbers.

The 4% rule
http://www.retireearlyhomepage.com/four_percent_2016.html

Everyone here is familiar with it.

The 2% rule
http://www.retireearlyhomepage.com/twopercentrule.html

If you can hold on to most of the 2% per year or so that the average mutual fund and financial advisor skim from their clients annually, you'll only need to save about half as much money for retirement.

Income required for a $0/month Obamacare Plan
http://www.retireearlyhomepage.com/obamacare_2017r3.html

There's a big difference in health insurance costs between the Red States and Blue States. If you live in a Red State that hasn't done the Obamacare Medicaid Expansion your state isn't getting billions of dollars per year in Federal Funds and your private insurance premiums are being jacked to make up the shortfall. In my zip code in Washington State you can now get a $0/month Bronze Plan with an income of more than $40,000. That's a 4% withdrawal from a $1 MM+ portfolio.

If you live in a Blue State with strong, consumer-focused insurance regulation you can get likely get an unbelievable bargain on health insurance. When I lived in Texas, I expected to be paying about $20,000/yr for health insurance at age 60. My 2019 Obamacare premium in Washington State at age 63? The princely sum of $1.63/month -- less than $20/year.

</snip>


intercst
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No. of Recommendations: 1
2gifts: My boss at the job from which I retired knew that I was pretty good at finances, and that I had been teaching my kids as well. So she invited me to dinner at her house a couple of years ago so that I could do some sort of crash course or conversation on finances with her daughter who I did know since she interned at our company. Her daughter is about 2 years younger than my kids. So I went, and was shocked at how much she and her husband had not done in terms of financial discussions. This kid didn't know the most basic things like how interest works, having a savings account, etc. I'm talking stuff that I had started to explain to my kids by the time they were 5!

When my FIL gave each of his 2 daughters $10,000 to invest, I realized that they were not capable of understanding what they were expected to do, so I gave them each a copy of The Motley Fool Investment Guide. I asked them to only read the first six chapters - which gets up to Mutual funds, including Index funds. Neither has been read, or even cracked open. I have tried to get them to buy ETF's. SIL bought Amazon (Her Dad's input.) The Countess has her part sitting in cash. She mentioned going to the same mutual fund salesman we have been using for years. Wonder if she would offend her dad by that? (He is easily offended, and usually blames me.)

I'm depressed.

CNC
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CNC it is possible to offer a fool advise.

As yet nobody has learned how to give a fool wisdom - which is a point too many parents have not learned.
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Don't know that she will ever get to the point of investing on her own,

Most people will not be competent or interested enough to invest completely on their own. At best understanding enough to know how little they know and to properly select and supervise a financial adviser or know to invest in some index funds is a reasonable expectation.
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I suspect the basic info about budgets is a good place to start.

https://financialbestlife.com/budgeting-strategy/

Howie52
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No. of Recommendations: 4
You can lead a horse to water, but you can’t make him or her drink.

I’ve only taken advice from those I trust and from whom I asked advice from. Someone telling me what I should do or think without my asking for their opinion or advice didn’t go anywhere. No one wants to be told what to do in this way.

I dunno how it happened for me but I will tell you this I have an older brother and we are exact opposites in every way. Our personality types, spending, the way we think, values...whatever, and we grew up in the same household with the same parents. The difference perhaps is that I was always a reader, I’d educate myself in all sorts of things, with books and magazines and novels....everything in print. I was interested in saving money, somehow, I knew it was important to have some savings. I didn’t make much money starting out so I didn’t spend what I didn’t have. I didn’t use credit cards because I had read that that was a major problem for folks in accumulating debt. I didn’t live the highlife...well there was a period where I was smoking and selling dope to my friends...that was high and a brain waster...but I did buy in bulk because I knew it was cheaper to do so. :).

I like some material things, I’m not a bag lady, thank goodness, I don’t have habits like smoking and drinking and gambling that can certainly eat away at savings. I don’t have to have the newest car, or cellphone, or bauble.....but that’s not to say I haven’t gone through periods like that....such as buying a car every 3 yrs. or so, buying a gold Rolex because I could......I learned that a car is a mode of transportation, nothing else, I want it to work all the time and be dependable. I also learned that wearing a Rolex is problematic in three ways....first, it didn’t keep time well, like my Seiko, second, it was a shiny target for a thief, thus I didn’t feel comfortable wearing it, and most importantly, I found it didn’t fit my personality to wear an expensive watch at my company where all the blue collar employee could see it. It’s not me. I find it very superficial to wear one’s wealth around. People who brag about this and that that they own are shallow people and just because someone has money and the things they ever wanted and more doesn’t mean they are better than me or have the values I seek in a friend or mentor.

It takes time to learn all these things but it starts with wanting to learn it in the first place and then it takes action on their part to do it.

Words without action is fantasy.

Lucky Dog
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No. of Recommendations: 7
Can anyone point me in the direction of good basic links, not only on investing but retirement planning? I am trying to keep it very basic and fear compounding the problem by overwhelming her with too much too fast.

Don't make it too complicated because it doesn't need to be.

Start with a spending plan - where is the money going now ?

Financial goals should be set - these may not be the same as yours.

Ease into LBYM - next raise goes to any place where matching is available; if no matching, then whichever IRA(Roth or Trad) is appropriate. My experience is if anyone can hold spending down for two raises(or however income increases - job changes), it can cover quite a bit without feeling like it's much of a sacrifice. Kind of like converting child care spending to college savings.

I suggest using a MM ETF so that a novice investor doesn't get seasick with the current market. Something is better than nothing and seeing something grow helps the cause.

After that, there's time to learn about investing and there are plenty of books out there. I don't know if there are many out there but I learned quite a bit from being in an investment club.

For me, I now have benefits I never expected. My youngest lives nearby and we talk about finances now and again. He tells me he's broke but that's because his retirement accounts are definitely like the Hotel California as is his MM fund. He doesn't have much in a taxable brokerage account because he sold a house, is currently renting and will eventually buy again(he relocated 1800 miles across the country for work and wanted that solid before he bought again).

One of the tenets that came in the teaching years ago was know where you are putting the money before you sell an investment. I am in the process of reducing real estate holdings and he threw that one back at me - I had to laugh and was happy that it had stuck. (Hmm, he has a promotion and large raise coming in the spring, so turnabout could be coming)

We had a late Christmas dinner last night(he worked on Christmas) and had planned to go to Fogo de Chao*. Both of us enjoyed the fact that I got a $25 off code in an email yesterday morning and then when we got to the restaurant, it was 1/2 off bottles of wine from South America.

*He eats ton of meat and I like the variety of everything.
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I’ve only taken advice from those I trust and from whom I asked advice from. Someone telling me what I should do or think without my asking for their opinion or advice didn’t go anywhere. No one wants to be told what to do in this way.

I've been asked. And hearing us discuss it at Christmas dinner now the group has expanded to include one of her adult kids and I'm putting both of mine on there too. She's been coming to me for a few months now to answer questions about an inheritance that is being transitioned to her, and that was how we both realized that her "professionals" were not taking care of her assets properly. Right now she conference calls me in when she talks with her financial planner so I can make sure the right questions are being asked. As I said in my OP, I don't expect her to take over the management of her own assets, but hopefully she will at least know enough about things like tax loss harvesting, tax efficient investing and even more basic what a money market is and how it is and isn't like cash. We are not talking puts and calls, here.

Budgeting on the other hand is not an issue. She lives well below her means. Impressive woman, but one who realized the importance of understanding finances a bit late and now wants to correct that deficit.

IP
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After that, there's time to learn about investing and there are plenty of books out there. I don't know if there are many out there but I learned quite a bit from being in an investment club.

Thanks for the suggestions but I am looking more for good articles than books. I think the approach of giving out appetizers rather than main courses is better at this point. Since my list of people interested has grown, I'm thinking along the lines of email an article for them to digest and we can do a group email discussion on questions. We are too spread out to do this in person.

Two of the "attendees" are still in college, one with a friend who pays for school by playing in the market, (which is not what this "course" will be.) When he asked about retirement planning, I suggested this was more basically about Financial Independence, which is of course required for retirement but could also be used as FU money if he and his employer didn't see eye to eye, or he wants to head out on his own after building a reputation within the working world. That piqued his interest.

We had a late Christmas dinner last night(he worked on Christmas) and had planned to go to Fogo de Chao*.

Fogo de Chao is awesome. Amazing salad bar even if you are not into meat, with lots of proteins like smoked salmon or vegan alternatives. Been to the one in Atlanta and NYC, but sadly too far away from home for a quick trip for dinner. We did a buffet with hot passed appetizers, which was great for the diverse crowd we had and a relaxed nature that I will definitely repeat over a formal sit down dinner. Since DH retired and I have so much less time alone I find we gravitate towards the motto of "More Fun Less Stress." Perhaps in a few more years the novelty of having so much time to play together will wear off, but for now the renovations to the house are on hold, and there are rooms full of unpacked boxes that have not been touched since the move was completed last June. Clean the house? Bah, I'd rather play Pickleball!

IP,
fully appreciating how lucky she is, and how fleeting this precious time together can be, in no small part due to cautionary tales like that you've shared
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Thanks for the suggestions but I am looking more for good articles than books. I think the approach of giving out appetizers rather than main courses is better at this point. Since my list of people interested has grown, I'm thinking along the lines of email an article for them to digest and we can do a group email discussion on questions. We are too spread out to do this in person.

Applicable to all ages, but certainly an easy to read and follow 16 page "article" worth discussing for your group.

https://www.etf.com/docs/IfYouCan.pdf

BB
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BruceBrown posts,

Applicable to all ages, but certainly an easy to read and follow 16 page "article" worth discussing for your group.

https://www.etf.com/docs/IfYouCan.pdf

</snip>


That's an excellent article, but at 16 pages it's too long for 95% of its intended audience who's attention span is geared to "tweets".

That's why I favor some kind of "one-click shopping" fail safe advice of a 60/40 portfolio or a Vanguard Life Strategy fund.

intercst
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Thanks for that link, Bruce. I may use parts of it over a course of time but hesitate to throw the whole package at them. 16 pages is in and of itself a lot, but there are also several homeworks of books to read at each section. I really want to encourage an interactive nature of questions and comments to the material presented. Might not happen that way but IMO that would be the best way of understanding the material.

IP
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"but at 16 pages it's too long for 95% of its intended audience who's attention span is geared to "tweets""

***********************************************

You don't engage a student by keeping the sights lowered. A
challenge is almost a necessity to growth of the eye and of the
mind.

Howie52
Dick and Jane works for a terribly short time.
Repetition only develops rote habits.
Learning is kinda like avalanche.- starts with a gentle slide and glide.
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Have them check out the 13 Steps to Retiring Foolishly:

https://www.fool.com/retirement/index.aspx

Fuskie
Who thinks if you can hook them with an easy to read introduction and then turn them Foolish, you'll be doing a great service...

-----
Ticker Guide for The Walt Disney Company (DIS), Intuit (INTU), Live Nation (LYV), CME Group (CME) and MongoDB (MDB)
Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate advice
Disclosure: May own shares of some, many or all of the companies mentioned in this post (tinyurl.com/FuskieDisclosure)
Fool Code of Conduct: https://www.fool.com/legal/the-motley-fools-rules.aspx#Condu...
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No. of Recommendations: 15
1. Spend less than you make.

2. Max out your 401(k)

3. Max out your IRA each year

4. Invest in low-cost index funds
__________________

That's about 92% of what you need to know. The rest is inside baseball.
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ReallyAllDone wrote
Start with a spending plan - where is the money going now ?


For some even this step is too difficult or intimidating. Also plans are not really "facts"

I say start with facts -

Where are you spending money?

Get a receipt for everything. Cram them in your pocket. At the end of the day sort them out - Food, entertainment, personal care, household supplies, etc. Use broad categories.

Total them up.

But the date and the daily total on a line of a tablet.
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Maybe the Harold Pollack's index card is a place to start.

https://www.npr.org/sections/alltechconsidered/2016/01/08/46...

He and Helaine Olen expanded it out to a book if more details are needed. Your library probably has it.

https://www.amazon.com/Index-Card-Personal-Finance-Complicat...
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https://www.npr.org/sections/alltechconsidered/2016/01/08/46......

Thanks. This will probably be the next installment with the qualifier "If you do nothing else..."

But I confess I've never been one to blindly follow rules and IMO people will be more motivated if they understand the reason why these things are important, so more detail is necessary in follow ups. Otherwise, particularly for the 20 somethings, it's just another adult telling them what to do. Motivation is important.

IP
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my local library has a book on DVD called "Understanding Investments". It is part of "The Great Courses". I've only finished a few of the lectures so far, and have not learned anything new. But I want to learn more about bonds, and there are some upcoming lectures on them.

The instructor is an Economics Professor at Duke, and he is real easy to listen to and follow along with. He is most definitely not trying to be a hi-brow intellectual, but he is obviously very smart.

He says he chooses index funds in his own personal portfolio, says he has lot's of other things he likes to do, does not want to spend his free time analyzing companies. But future lessons include analyzing financial statements, for those who want to go that way. He says he has had some students who have taken his courses and invested in individual companies and done very well. But they work very hard at it, it's not easy finding undervalued stocks.

So far the lectures would be about perfect for a new investor.
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All of that is worthless without:

1. Get started now. Even if it is nothing more than opening a Roth IRA and putting $25/mo. into a simple index fund.

2. Now. Today.
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Dave Ramsey's book "Complete Guide To Money" and his "Baby Steps" (https://www.daveramsey.com/baby-steps) are good places to start. After that, some of the suggestions previously mentioned and the list of books provided on this website (https://www.fool.com/premium/rule-breakers/coverage/1069/abo...) are good tools.
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That's an excellent article, but at 16 pages it's too long for 95% of its intended audience who's attention span is geared to "tweets".

That's why I favor some kind of "one-click shopping" fail safe advice of a 60/40 portfolio or a Vanguard Life Strategy fund.

intercst


It's actually only 14 pages of reading as page 1 (the cover) and the final page, page 16 (the author's signature), are left blank.

I was going to have my two Millennial children read it this week while they are home for the holidays to get their honest feedback on the writing of the subject matter that Bill Bernstein used. They are both voracious book readers, so I know 14 pages won't trouble them. The books that Bill suggests they read beyond his 14 page document obviously would take more time, but the document remains an excellent short resource.

BB
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For some even this step is too difficult or intimidating. Also plans are not really "facts"

I say start with facts -


I was trying to avoid the word "budget."

Total them up.

That only works for recurring expenses. It's the other stuff that derails a plan - car maintenance; insurance, etc.

But the date and the daily total on a line of a tablet.

Tablet ? You mean a spreadsheet on an ipad ? Actually there are free apps for tracking that do a much better job. I am 64 and haven't used paper for this in at least 10 years.

Plans actually are facts and goals are important. Not everyone wants to get married, buy a house, have kids, retire early, send kids to college, etc. For a couple, making a list of financial goals is even more important to be sure they are headed the same way.
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Most people will not be competent or interested enough to invest completely on their own. At best understanding enough to know how little they know and to properly select and supervise a financial adviser or know to invest in some index funds is a reasonable expectation.

I know people who are bad at something--investing, auto repair, home construction--that they hire someone else to do it. But, there's something called the Dunning-Kruger Effect where a person is terrible at something but they think they're quite good. In investing, their bad results come from bad luck, unfortunate timing, not being in on the secrets that some others are privy to, or the rest of the market being "wrong."

You have to know enough to at least understand when an advisor is leading you down a bad path.
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