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Short Money Rules Paper
Old 10-28-2020, 07:36 AM   #1
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Short Money Rules Paper

I’d like to thank all the people who posted positive comments on my long-term care insurance paper. That response encouraged me to post another one of my papers. This one is entitled Short Money Rules.

I wrote it for my sons who are 25 and 26. It includes the financial stuff I want them to know before I kick the bucket. I wish I knew this stuff when I was their age. Although it’s primarily targeted at a 20 to 40-year-old audience, there’s a good chance anybody with an interest in financial matters may enjoy it as well.

The paper weighs in at 20 pages, but it consists of many short and digestible rules. I tried to make it a fun read so my kids would actually read it. I suggest you try the first page to see if it’s worth your time to read the whole thing.

Lastly, I try very hard not to write in such a way that offends anyone and how they view financial matters. In the course of writing these rules, there’s a chance I did just that. If so, that was not my intent. If you have a different opinion, that’s great. One size does not fit all.

Here’s a link to the paper.

https://www.dropbox.com/s/hgrrafvbvo...Rules.pdf?dl=0

I hope you like it.

Rick

About me: I'm a retired former CPA and CFO with an MBA in Finance. I am not a financial advisor or salesperson of any sort. I just enjoy writing about this stuff.
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Old 10-28-2020, 12:53 PM   #2
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Wow! That's pretty comprehensive. Great job!

I agree with you that lack of financial education in schools borders on malpractice.

I consider myself lucky that events conspired to make me educate myself on money & investing. Also lucky that I made my mistakes early.
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Old 10-28-2020, 01:36 PM   #3
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Very good. I downloaded it.

I read the first few pages, skimmed most of the rest for now (will read it all). The title here mislead me, I almost didn't click. I read "Short Money Rules Paper", as being about something like "Short term investments are better than (rules over) 'paper' " (CD's? Bonds? Commercial 'paper')? But now I see it is a short paper with some rules about money management (I'm sure there are shorter ways to say that).

It is similar to what I try for, to give people information so they can decide for themselves. One line I'd don't fully agree with - "My admonition to think for yourself applies to these short money rules. I encourage you to reject any rules you: i) disagree with; or ii) think are inappropriate or inapplicable to you."

I'd say that if you disagree with information coming from a source with some credibility, you should ask yourself why you disagree. Maybe they are right and you are wrong, so keep an open mind. I guess the same applies (maybe more so?) to information you agree with. That can be a confirmation bias trap.

I'm a cynic/skeptic, so having only one nit pick from me is high praise! Well done, thanks for sharing.

-ERD50
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Old 10-28-2020, 04:22 PM   #4
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Great paper. I would like to share with young adult children. Thanks.
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Old 10-28-2020, 04:27 PM   #5
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Btw, this seems a lot like w*rk. You write very clear and concise which promotes the understanding you’re trying to convey. But you must really enjoy doing this. Give me a margarita and an Adirondack chair
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Old 10-28-2020, 04:37 PM   #6
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Atlas,

Impressive in the amount of ground covered. Anyone that starts by quoting Zig Ziglar certainly gets my attention.

My quick assessment is I think most of it is right on. Some of it seems factual, and some seems like advice/opinion. Not sure if you were trying for anything different.

I could give you some specific feedback separately if you wish.

I like it.

Thanks
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Old 10-28-2020, 04:38 PM   #7
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I wrote something like that for my son too (now 30). It gets pretty specific in places and I wouldn't want to share it to others without a lot of cleanup, which I'm not inclined to do. This paper is probably more clear and organized--I haven't had time to do more than a quick browse. I'll have to save this and see about merging the two.
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Old 10-28-2020, 04:48 PM   #8
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Quote:
Originally Posted by ERD50 View Post
The title here mislead me, I almost didn't click.
I had similar confusion. I recently watched "The Big Short" movie and was thinking this was a related topic.

If you're up for suggestions I would probably use the term "financial advice" or "investment advice" instead of "money rules", and perhaps "overview" or "summary" is a better word than "short". I suppose if the reader is one to bristle when they see "rules" they could also have the same reaction to "advice". Maybe "guidelines"?
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Old 10-28-2020, 04:50 PM   #9
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Thank you! Excellent work!

I read it and downloaded it. I will share this with our young adult grandchildren.
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Old 10-29-2020, 04:22 AM   #10
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Oddly, over 70+ years, I've stumbled upon most of this myself. I wish I had read this at, say, 18 or even 25. It would have saved me a lot of grief. Having said that, I had some intuition that served me well. The biggest advantage I had was that I just "knew" that saving was the key to financial freedom. The couple of times I "forgot" that, I quickly regretted it.

Thanks for the paper. I'll send to my kids, though the youngest is in early 30s. I've tried to get them started by opening and funding Roth accounts in their names. I sense that these funds are still their biggest assets - even bigger than house equity, though I'm not certain of that.

I appreciated your paper on LTCI and I look forward with anticipation to future papers! YMMV

Aloha
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Old 10-29-2020, 06:22 AM   #11
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Very nice! I, too, downloaded for my sons.

One comment: I thought the explanation of the 4% withdrawal method should have included an explanation of adjusting the first year 4% w/d by inflation for subsequent years.
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Old 10-29-2020, 06:22 AM   #12
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Thanks Atlas, great paper I am sending to all my kids!!

VW
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Old 10-29-2020, 09:08 AM   #13
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Very comprehensive and well written, saving to share with my kids.
Thanks.
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Old 10-29-2020, 09:32 AM   #14
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Great paper!
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Old 10-29-2020, 09:52 AM   #15
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I will agree with earlier comments that the title is confusing. I thought it was communicating rules for short term fixed income investments prior to your explanation.
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Old 10-29-2020, 10:11 AM   #16
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Truly excellent! Thank you.

I think I would add in Educate yourself financially something like, these rules were pertinent at the time written due to the laws in effect and market conditions at the time. Educate yourself with the laws and market in your time, so you know when these rules become obsolete. For example, there is debate going on now to change taking RMDs at 75, not 72 years old. It is not law yet, but it is being considered.

I'd love to have the Word document!
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Old 10-29-2020, 10:25 AM   #17
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Quote:
Originally Posted by ERD50 View Post
... I almost didn't click. I read "Short Money Rules Paper", as being about something like "Short term investments are better than (rules over) 'paper' " (CD's? Bonds? Commercial 'paper')? But now I see it is a short paper with some rules about money management (I'm sure there are shorter ways to say that). ...
Yeah. Agreed. I first read it as something about rules for short sellers of money. Short selling money ??!!? "Brief Rules for Your Money" would be clearer at least to me. I did download and skimmed a little bit. Looked good, especially because there is so little unbiased material out there. Good job.
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This is what I planned to write for my daughter
Old 10-29-2020, 03:27 PM   #18
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This is what I planned to write for my daughter

Rick, This is one of the best summaries of financial rules for life that I have seen. I was planning to write a similar document for my daughter but now I don't have to.

I do have one meaningful difference with your position on stocks and inflation. My in depth research says that stocks are not a strong inflation hedge. I think that inflation is used too often by the financial services business to push investors into riskier assets. There are both simple and more creative ways to hedge against inflation.

Your document is a gift of love to your children (written through the lens of a CPA ).

Thank you,

Ken
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Old 10-29-2020, 04:35 PM   #19
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Quote:
Originally Posted by sarasotacycler View Post
Rick, This is one of the best summaries of financial rules for life that I have seen. I was planning to write a similar document for my daughter but now I don't have to.

I do have one meaningful difference with your position on stocks and inflation. My in depth research says that stocks are not a strong inflation hedge. I think that inflation is used too often by the financial services business to push investors into riskier assets. There are both simple and more creative ways to hedge against inflation.

Your document is a gift of love to your children (written through the lens of a CPA ).

Thank you,

Ken

All,

I'd like to thank everyone for their kind comments and suggestions for improvement. Once this thread runs its course and I see all your suggestions, I will consider how I might revise my document for your ideas.

In the meantime, I'd like to address two comments:

1) I think Ken makes an excellent point on inflation. I should have been more clear. In the short to intermediate run, stocks can be an awful inflation hedge. They're only an effective hedge over longer periods of time. And, there other ways to hedge inflation.

2) I'm bummed that some of you got confused by my Short Money Rules title. I actually liked that title a lot. I thought it was clear, apparently not.

Rick
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Old 10-29-2020, 04:53 PM   #20
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Well, FWIW, I liked the quotes from Ziglar and Rand. Guess it only makes sense that AtlasShrugged would work in an Ayn Rand quote.
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