All the financial advice you need fits on a 4x6 index card
Sometimes, less is more.
Amid the ocean of personal finance books published each year (not to mention all the digital ink spilt in blogs and articles dedicated to the topic), one of the best reads in recent months was a scant 96-words long.
Hand-written on a 4脳6 index card, a photo of University of Chicago social scientist Harold Pollack鈥檚 cheat sheet on the basics of personal finance has been bouncing around the Twittersphere for the past six months, and its legs shows no sign of wearing out. His advice:
- Max your 401K or equivalent employee contribution.聽
- Buy inexpensive, well diversified mutual funds such as Vanguard Target 20XX funds.
- Never buy or sell an individual security. The person on the other side of the table knows more than you do about this stuff.
- Save 20% of your money.
- Pay your credit card balance in full every month.
- Maximize tax-advantages savings vehicles like Roth, SEP and 529 accounts.
- Pay attention to fees. Avoid actively managed funds.
- Make financial advisor commit to a fiduciary standard.
- Promote social insurance programs to help people when things go wrong.
Pollack explained the origin of the card (where Pollack is a contributor to the newspaper鈥檚 economics and policy site, ):
The card came out of an RBC chat I had聽with Helaine Olen regarding what I view as the financial industry鈥檚 basic dilemma: The best investment advice fits on an index card. A commenter, Alex M, asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter鈥檚 note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history. (Here鈥檚 the聽picture and post.)
People have been wowed by the brevity of the advice. 鈥淭he most notable personal finance writing of 2013 鈥� was a handwritten 4脳6 index card,鈥� .聽Rank-and-file tweeters followed suit. 鈥淏est advice for the New Yr!!&follow @haroldpollack /This 4脳6 index card has all the financial advice you鈥檒l ever need,鈥澛�.
Diane Harris, executive editor of Money magazine, was inspired to make her own list,聽:
10 things every woman needs to know about $$鈥攐n an index card. Created w @donnarosato1 inspired by
鈥� Diane Harris (@dianeharris)
Still, there has been some criticism of his short-hand. 鈥淢y biggest criticism relates to No. 3 鈥� which is bad advice in my opinion,鈥� , who notes the premise of the website is built on 鈥渢he merits of picking individual stocks.鈥�
鈥淭he first part of the statement 鈥� Never buy or sell an individual security 鈥� implies that individual investors can鈥檛 succeed by picking individual stocks,鈥� he writes. 鈥淏ut that鈥檚 just not true, as Warren Buffett argued in his classic 鈥淭he .鈥�
鈥淭he second part of the advice 鈥� The person on the other side of the table knows more than you do about this stuff 鈥� is equally flawed in my opinion. If the person on the other side is a hedge fund manager, does he or she really know more than an intelligent, ordinary investor? Remember, the U.S. stock market, according to the Financial Times, has returned eight times as much as the average hedge fund since 2009.鈥�
But every blockbuster read is bound to have critics 鈥� even when the work is less than 100 words long.
