I wonder how applicable that advice is to other countries, especially those that tax investment income. Also, how does currency risk factor in? If I don't use USD in my daily life, how good of an idea is to hold all my savings in USD denominated equity?
Good point, this PDF is very U.S. specific. As long as the taxation is progressive, it would seem to make sense to put your money in a tax sheltered account during your peak earning years. And also to get any company match. Other than that, I don't know.
As for home country vs foreign investment, from bogleheads:
"The relative percentage of domestic and international stocks is a subject of intense discussion in the forum. One sensible option is to hold domestic and international stocks in the same proportions as they represent in the total world economy. As of October 2014, that would be about 50% U. S. and 50% international. ... Other authorities suggest holding less than that."
Is your currency more stable than the USD? I.e. do you live in Switzerland?
If not, the currency risk will tend to be in your favour. As a Brit, I've put half my investments into US funds and therefore accidentally done well out of Brexit dropping the £.
This kind of ignores the people in their twenties are often in massive student debt and likely to be unemployed or have employment that barely makes a living wage.
Save/invest 15% is not helpful advice to somebody with no job, or somebody who is struggling to make rent cheques.
The author addresses that. He suggests using this time to gain financial literacy. From the booklet:
"[Doing all the reading] may take you up to a year, but you’re in no hurry, since you are just beginning to think about your
retirement and you likely have little in the way of assets; you may even be in hock up to your ears with
debts from school and car loans. So there’s plenty of time, and the months you take to complete the
course laid out in the booklet will be the most profitable reading you will ever do; it may not be too
much of an exaggeration to suggest, in fact, that your financial life depends on it. "
and
"eliminate your credit card debt, followed by your car loan. What about your educational loans?
Since your long-term investment return on your retirement savings will be around 5%, which is likely
lower than your loan interest rate, you should make paying off those your next priority. When, and only
when, you’ve gotten rid of all your debt are you truly saving for retirement. "
Go to a local community college for the first 2 years, then you can transfer to a UC or State college. Take the easiest/least time consuming classes you can find and try to work during those 4 years. Don't allow a useless college degree to make you broke. For most jobs/careers, You just need the certificate ~ at least in the long term.
> Take the easiest/least time consuming classes you can find and try to work during those 4 years. Don't allow a useless college degree to make you broke.
If you take the easiest/least time consuming classes you will likely end up with a useless college degree. Go to a state university that has a solid co-op or intern program and major in something difficult. Take hard classes and focus on those (EE, CompSci) because they will open up high paying internships during school and an entry job after graduation.
Don't burn yourself trying to balance school and work concurrently, don't waste your time taking easy classes that will leave you struggling after graduation!
> For most jobs/careers, You just need the certificate ~ at least in the long term.
That may be true, but your courses/GPA will matter for the first job... or to get the MS degree required for many jobs in engineering today.
For example: a computer science degree teaches you a lot of stuff, covering an enormous diversity of CS topics, but 80% of it won't have anything to do with a career in Software engineering. The stuff you really need to learn, you'll need to learn on your own. That's why I'm saying, take the easy classes, then spend the extra time on an actual software engineering job or internship where you can learn what you really need to learn. The degree is required for a lot of SE jobs but that doesn't mean it's useful (as in applicable to SE).
This is good advice but I think it downplays the seriousness of government insolvency and the repercussions with respect to investing.
The worst case scenario for millenials is not just getting 3/4 of our promised social security; it could be far worse.
To wit, the national debt increased from ~$5 trillion to about ~$10 trillion on GWB's watch (doubled). It increased from ~$10 trillion to ~$20 trillion on BHO's watch (doubled). DJT has promised massive new spending on infrastructure, increasing funding for border patrol etc, a massive military buildup, no changes to SS or Medicare, and massive tax cuts - so it is reasonable to believe we are still on track to double the national debt again within the next 8 years. That is something not unlike exponential (and BTW that "national debt" is just the level of outstanding treasury debt; the actual unfunded future liabilities are much much higher).
To cover the massive debts of the government (and maintain the stability of the economy and society) massive amounts of new money will need to be created to monetize government debt. This has already started, as the base money supply in the US has quadrupled since 2009. Velocity is low so we don't see the inflation (except in things like stocks, bonds, fine art, and tech startups) but DJT's Keynesian wet dream should get velocity up at least long enough for inflation to start showing up in the real economy, and even that doesn't get the snowball rolling, it is unreasonable to believe that velocity will stay so low forever and that the new money will not start flowing through the economy.
In any case, in such an environment bonds will get savaged and there will be great economic dislocations. A simple index-fund based asset allocation between US stocks, bonds, and international stocks is not necessarily going to work in the next 30 years as it did in the past 30. Past results are not guarantees of future returns.
That said, I think taking 15% of your income and sticking with a strategy that you are comfortable with is great advice. The best way to get rich quickly is to do it slowly indeed. But investing in the near-to-medium term might get interesting, just sayin ;)
This honestly just annoyed me to read. To put it bluntly, I'm sick of old people telling people in their 20s that the reason why they are having a lousy time is because they dare to get a fucking smartphone plan and a decent pair of shoes.
You don't have enough money? Well give up your phones, car, vacation. Wear those old shoes. Live with a roommate, no wait that's too expensive just live with your parents until your 30. Kids? No you don't need those. Massive student debt? Why did you do that, I put myself through school working at mcdonalds. You can't even get a full time job, what's wrong with you? Millenials are so entitled.
>You don't have enough money? Well give up your phones, car, vacation. Wear those old shoes. Live with a roommate, no wait that's too expensive just live with your parents until your 30. Kids? No you don't need those.
Network as much as you can. Build your personal brand. Basically be authentic and you will be a billionaire by roughly 35. It's a sacrifice; but anything less wouldn't be true to your genuine self.
My point is you can only tell people they can just make do with less and less for so long before you have to admit that maybe lifestyle isn't the real problem.
Man those links are illegal and can get someone into trouble especially if they download it (unknowingly) from a corporate VPN. Just link the books on Amazon and leave out the dropbox referrals
