23 Years of Personal Finance Wisdom Distilled Into One Final Column
Submitted by Blue Chip Financial on March 10th, 2017Jim Gallagher started writing his column for the St. Louis Post-Dispatch in 1994. After all that time, there are a few things he knows about how people and money mix. Here are some excerpts from his last column - just some basic smart, down to earth advice.
Crack a book
It’s smart to study money. It will make you richer and harder to fool.
Personal finance is not tough stuff. There’s nothing beyond high school math. With some basic backgrounding, and a handy reference book, anybody can make good money decisions.
Crooks are calling
Don’t be too trusting. In our daily lives, most of us deal with nice people — neighbors, co-workers, friends. We let our guard down. Con artists in St. Louis sometimes meet their victims in church.
Smart people make dumb mistakes. A couple of years ago, I wrote about a work-at-home scam that nabbed a retired Air Force colonel — a bright man — for $20,000.
Scammers are practiced manipulators of the psyche. They use greed to overwhelm sense.
So, it’s good to have friends and talk to them about money. A worried friend can break the crook’s spell.
Don’t believe anything you hear in a cold call over the phone or an unsolicited email. Email addresses, social media messages, webpages and caller ID systems can be hacked and phonied up.
Debt is bad — and good
Don’t borrow money for something that won’t pay you back. Education pays you back. A house might. A car won’t.
Drive an old beater until you can afford something better, and buy it with cash.
Before taking out student loans, look at what your likely career will pay, and don’t overborrow. Engineers make a lot more than social workers.
The money benefit of college goes to those who finish. If you think you might not, start at community college. You can swing that without borrowing.
If you can’t beat ’em ...
A good investor is humble. I’m dumber than those geniuses on Wall Street. I can’t beat the Street, so I don’t try.
In fact, most of the geniuses can’t beat the Street. Nearly 9 out of 10 percent of managers of actively managed mutual funds trail the dumb stock indexes over time, according to Dow Jones Indices.
So, favor dirt-cheap index mutual funds for your stock investments. Pick a total-stock-market fund for the big piece, and total-international fund for the small piece.
But beware — stocks are not the place for money you’ll need in the next six years. Use bonds and bank accounts for that.
Shun individual stocks unless you really know what you’re doing. The big boys have smart analysts picking stocks. They’ll know to bail out before you do.
Don’t read this column
Listen to investment gurus, but be skeptical. Humans have gotten pretty good about predicting the weather. On most other things, we’re terrible.
No one knows what the stock and bond markets are going to do. Really smart people are often surprised.
Economists should use Ouija boards. They’d be right about as often when predicting the overall economy beyond a year or so.
Don’t put too much faith in financial columnists like me when we write about investment markets. We’re always quoting the gurus. When they’re wrong, so are we.
My wife pays more attention to finance stories written by people other than me. She knows my foibles. She doesn’t know theirs.
Hang in there
Don’t panic. Take courage. The stock market takes scary dips and sometimes crashes. Sell out during a slump and you’ll regret it. Consider buying instead.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. Investing involves risk including loss of principal. No strategy assures success or protects against loss.
Jim Gallagher retired from the Post-Dispatch on Feb. 20.