Best Financial Advice I Received and Followed

[Car-Guy]

What was the best financial advice you ever received and followed? Yes, I know, buy low and sell high. But other than that.

I'll go first.

A relative, who worked for the same mega-corp as I did, told me to join the company's 401k plan and contribute the max amount that I could and invest it in the company's stock as soon as possible. To be honest, I think I would have done this anyway, since the company matched 100% of employee contributions up to the legal limits. Well I did (however I did diversify in some of the other plan investment options after about 10 years, rather than just buying the company stock) and before I retired the account was worth well over a million. As I recall, I never even missed the money coming out of my checks after the first year or so.

The company allows retirees to stay in the plan (no more contributions allowed) and investment options have increased dramatically over the years so I probably won't touch it until I'm 70+ when RMD's kick in.

YMMV but it was the easiest million I ever made.

 

[rodi]

For me it wasn't one snippet of advice - but figuring out - the more you save = the less you spend... so you can get by with a smaller nest egg when you retire.

If you earn 100k/year- and invest 30k/year of it, not only are you increasing your nest egg by 30k+ the gains of the nest egg... you're spending 70k, instead of 100k... that means you can retire with a smaller nest egg than if you need 100k/year in retirement.

Figuring that out really snowballed my savings the last 10 years pre-retirement.

 

[JustCurious]

Live within your means.

 

[FI by 2024]

Put at least 50% of all raises into savings/investments. You still get to increase your standard of living and (hopefully) keep up with inflation, but the amount you are putting aside seems to grow exponentially over the years.


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[Tortoise]

I have been maxing out my retirement savings every year for the past 30 years. I didn't have a good investment strategy, though, until I learned from the Bogleheads to invest in low-cost index mutual funds using an asset allocation that's right for me, and stay the course.

 

[easysurfer]

Start at an early age. The magic of compounding.

 

[gauss]

"When looking for a wife, look for one with at least as high as education and earning potential as you. Twice the income will make a world of difference in your life."

Spoken by the father of a college friend from the dorm while we visited their home for dinner and "a gin and tonic in the living room with the boys" during a cross country road trip. I will always remember that phrase, and the associated advice.

I took the advice (the candidate already fit the profile) and it has worked out very well for us.

-gauss

 

[JustCurious]

"When looking for a wife, look for one with at least as high as education and earning potential as you. Twice the income will make a world of difference in your life."

The problem arises if you have a doctorate level education, and you realize that 97% of the population does not, then your possible dating pool becomes a tiny puddle. If you add earning potential, then that tiny puddle becomes a glass of water.

 

[kaudrey]

I learned from my parents to LBYM.

My dad, when I started my first job out of college, said, "max out your 401(k) every year, starting as soon as you can" (that was 6 months after I started).

I have been doing both, as an adult, for the last 23 years. Can't complain about the outcome.

 

[eytonxav]

If everyone is going in a certain direction, go the other way. Its another way of saying, buy when there is blood in the streets, and sell when there is too much greed.

 

[aja8888]

I grew up poor and my teen years were in a housing project. No one ever gave me any financial advice because they barely could pay the rent. I just decided I would do what it takes to not put myself in a position my parents were in. So I got an education on my own (the only college grad in the family) and went from there.

 

[Major Tom]

I don't think I have received much financial advice from others in person, other than a fellow employee urging me to take advantage of the company 401K, and at the very least, to contribute enough to get the maximum amount of company match.

What did help me a great deal was to have parents who were skilled in the art of LBYM, and to happen to have a psychological make-up that favors ER/FI-type habits.

 

[MRG]

A co-w*rker telling me never to touch my profit sharing and contribute to get the max match on 401k.

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[travelover]

Best advice I got was to contribute to MegaMotor's retirement plan. When I hired in back in 1981 things looked shaky and I followed peer's advice to stay out of the plan ("the company will just go broke and you'll lose your investment"). Ten years later someone pointed out how foolish it was not to contribute 1%, given the payout ratio. So, I started contributing and when I got a buyout at 26 years, I got a nice boost for leaving. If I'd continued to not contribute, I've have gotten about $1000 a month at age 65.

 

[frayne]

My grandfather told me a man should only go into debt to buy two things, a house and a car, and if you could, don't go into debt for a car. I've never paid a penny in credit card interest and have bought my last two houses with cash.

 

[Cassie]

Back in the early 80's the Federal government introduce the defined contribution plan and tried to entice us in the define benefit plan to switch. (the DBP was then phased out). An old timer told me "don't switch", you'll regret it when you retire. He also told me to accumulate sick leave, "it's like money in the bank". I listened to him on both accounts.....and the rest is history. Love getting my pension the 1st of the month like clockwork....and it covers all expenses plus money for saving and investing. I haven't had to touch my TSP (Thrift Saving Plan).

 

[Walt34]

Live within or below your means. My parents taught me that by example, or rather, not following the advice. My father got into a load of cc debt and it took years to pay it off. I resolved to never do that.

Later it was the soon-to-be-ex who seemed to think that the solution to every "I wanna..." was charge it or take out a loan. Oddly, I didn't see that behavior before the wedding but I guess she wanted The American Dream right now. When I flat-out refused to even discuss taking out a loan to go on a trip it was over. We had a 20 year old house that was in decent shape but it was coming up due for some major maintenance issues - furnace, A/C, roof, windows, stuff like that. I just didn't see any future in living paycheck-to-paycheck for the rest of my life.

 

[Ronstar]

1) Bosses told me to max out my 401k.
2) Parents and grandparents told me to LBYM.

The combination of these two - With a max 401k deduction, LBYM was tougher and resulted in even less unnecessary spending.

 

[Bestwifeever]

For me (not true for everyone necessarily), go to college.

For me ( and probably everyone), get most of that money out of company stock asap.

Those two things together made all the difference.

 

[H2ODude]

My grandfather told me a man should only go into debt to buy two things, a house and a car, and if you could, don't go into debt for a car. I've never paid a penny in credit card interest and have bought my last two houses with cash.

Same but got from my Dad, and he didn't consider a car borrowing-worthy. Think he only bought one new car in his life. When I got my first real job I was skeptical and asked a well respected boss about borrowing for a car and he said it was OK in moderation. So I did and found it not to my liking; paid it off within the year. I did it one other time 3 years ago to get a $2,500 rebate and it was pretty modest interest. The dealer requested I not pay it off for three months, which I honored, and paid it off.

 

[RonBoyd]

What was the best financial advice you ever received and followed? Yes, I know, buy low and sell high.

But that is only half of the formula. The rest is "Collect early, pay late." (or put another way -- "A dollar today is worth more than a dollar tomorrow.")

Therefore the best financial advice I ever received was indeed; "Buy low, sell high, collect early, pay late."

 

[Dash man]

My former father-in-law taught me it's better to be paid rent than it is to pay it, and the benefits of claiming depreciation. Too bad his daughter had no financial sense.


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[RonBoyd]

On the other side of this coin, the advice that I seem to end up giving the most often is:

"It's not how much you earn that's important, it's how much you spend."

 

[Greencheese]

I was taken to a finance class by my parents at the age of 10. Factored in with my love for making excel sheets and it was quick to see that saving tons of money early in life could grow into an exponentially larger amount later on. After getting established after college I've come out swinging and hope to hit the 6 digits within 3.5 years of the real world.

 

[athena53]

Parents were mostly a very good example of LBYM. Dad started investing in individual stocks in his 30s, so I got interested early. Best piece of specific advice: "A car is the worst investment you'll ever make." We've both bought stocks that have done worse, but anyway... I've always placed a fairly low priority on cars. Buy something average and dependable, take good care of it, drive it till it's no longer dependable. Rinse and repeat. I've avoided a ton of expenses by not buying (or, heaven forbid, leasing) a new car every few years.

I'm also grateful that I took an actuarial exam that required me to learn compound interest inside and out.