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A Look At Typical Financial Advice And Why I Started This Blog

4 June 2008 3 Comments

Doing my usual web surfing of the big financial sites such as Yahoo! Finance, I came across a headline for retirement advice for 20-somethings. After reading the article, it was confirmed for me just how necessary a website like 20s Money is for our generation.

The article gave five tips for 20-Somethings to save for retirement. The author writes that people our age should start early, make retirement a priority even if its far away, and to balance your risk. Let’s look at each piece of advice.

Starting Early

This is obvious. The earlier you start, the more time your money has to grow. Can we stop writing articles about starting early? The people that need to hear such advice are probably not the ones reading financial articles on the web.

Make Retirement a Priority

This is similar to starting early. Obviously retirement has to be a priority to even start early. Again, weak advice in my opinion.

Balancing Risk Through Diversification

When it comes to active investors, I couldn’t disagree more. Again, I am assuming those that read financial blogs are, in fact, active investors. I have written before that diversification is not the path to financial prosperity for people in their 20s. Unfortunately for young Americans, there are too many factors working against your money to simply diversify. As I mentioned in a previous article talking about why you won’t have enough to retire and what to do about it, issues such as inflation and a weak currency are eroding retirement savings.

Why I Started This Blog

I believe that you, the young investor, are responsible enough to handle actual financial advice; advice that goes further than simply telling you to start early. My advice to you is to outperform the market. Outperform the market this year and next year and the next. Accomplish that and your retirement will be beautiful. Once you’re a believer that it’s possible, then it’s time to learn the skills and the knowledge that it will take. I am committed to helping you develop the skill set and understanding of the market to be an extremely successful investor.

If you’re like me, you are in your 20s and you have a desire to build immense wealth. Make 20s Money your home and let’s move forward towards this dream together. Ignore the internet “experts” that repeat the same vague and dumbed-down financial rhetoric over and over. I’m tired of it, and I’m sure you are too.

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  • GM said:

    The reason you have so many articles about “Starting Early” is because its easy to write them. You can put non-technical garbage that the ordinary Joe can understand.

    Unfortunately, the diversification issue is not that simple. You can’t just say, “Don’t Diversify.” That would mean you are an economic expert, a great financial analyst, and a wonder stock picker. There aren’t too many 20 year olds that are looking to put in that time and effort to be one.

    Have you done any backtesting on just some simple portfolios? I’ve done a little, not a research paper worth, but a pinch. Look at the SPY for the past 8 years and take a look at any 9 or so Spider family various asset ETF’s. Its not comparing apples-to-apples, but just to give one a rough idea. You can do the same comparison with DIA/QQQQ.

    Granted, for every portfolio that I create, you can give me a stock like SOLF that made over 100% for the past three years to back up your point, but like I said, we can’t all be stock-pickers.

    Remember, long run.

  • kevin duffey said:

    Great comment… I agree with your points. I think when I talk about not diversifying it’s more geared towards those who own stocks in sectors simply for the sake of diversification. If you have stocks that you love and it results in a diversified portfolio, then that is great. But simply adding a home builder stock right now for the sake of diversification is ridiculous.

    My desire is to find the winning areas/sectors/stocks and bet significantly on them. Sure, there’s more risk. But I’ll learn from my failures and win big on my successes.

  • GM said:

    I’ve come to learn (at age 23) that people on CNBC and places and many investors are just as clueless about the market as I am.

    I wonder how that Billionaire investor felt after loosing almost a billion dollars in Bear Stearns? Someone didn’t do their homework….or is just plain clueless.

    -Keep up the great blog