Links and Minifeatures 07 12 Thursday

Popular Advice You Shouldn't Take



Four pieces of advice. I mostly agree with the writer's take on Amassing Cash and Buying Big. The time when most people take to amass an emergency fund is precisely the time of their lives when what they save now, correctly invested, will return the maximum return. At that stage of your life in particular, you should be living well beneath your means. Fund your 401k if you've got one, fund a Roth IRA, regular IRA and/or SEP, and then worry about your emergency fund. At that stage of your life, you should be earning and socking away well over 10% of your pay - 25% is a target to shoot for when you start your real career. If you get used to it right away, it becomes a lifelong habit. You get used to the fact that that money is going elsewhere, and you don't get used to spending it. I think regular readers will agree I've said quite a bit on the downfalls of buying too much house.



His advice on go for growth, which is basically don't, at least not right away, is situational. Things like not panicking in a downturn are part of what good financial advisers are for. You shouldn't overload on growth, but market downturns in every sector are a part of life. If you're not ready for it before you put your money on the table, something is wrong.



His advice on cash value life insurance, however, is just plain wrong. It's planning for a couple of decades rather than the rest of your life. It utterly fails to take into account that a twenty-year old has approximately six decades of remaining life expectancy, and today's twenty year old may have eight or even ten. It fails to take into account that someone who starts planning early and works at it is going to have one heck of a nest egg - and all of the better tools to do for indefinite tax deferral, as well as passing it on to the next generation, involve cash value life insurance - the older and more mature, the better. If there's an existing policy, you're not going to get rated for the fact that you just got diagnosed with cancer, or have been diagnosed with cancer, are now old and fat, or any of the reasons people get flat out turned down.



2-1-1. Not a bad batting average for a journalist. Completely unacceptable in a financial planner, but not bad for a journalist.

The White House showed no signs of backing down, pointing out that Bush was willing to make Miers and other administration officials available for interviews, but only behind closed doors and without a transcript. Democrats have rejected the offer.