Scott Adams' Financial Advice

Today, I was listening to Scott Adams daily video blog. As the creator of Dilbert, Scott Adams is well-known through that cartoon for highlighting the stupidity often found in the corporate world. In this video (episode 1233) he mentioned that he had outlined a list of financial advice and suggested we search for it. He said that he wanted to write a book about financial advice but gave up since it really boiled down to just these ten things and the rest of the “financial advice” industry is more-or-less a fraud.

Here is his list of recommendations:

• Make a will
• Pay off your credit card balance
• Get term life insurance if you have a family to support
• Fund your company 401(k) to the maximum
• Fund your IRA to the maximum
• Buy a house if you want to live in a house and can afford it
• Put six months’ expenses in a money market account
• Take whatever is left over and invest it 70% in a stock index fund and 30% in a bond fund through any discount brokerage company and never touch it until retirement
• If any of this confuses you, or you have something special going on (retirement, college planning, tax issue), hire a fee-based financial planner, not one who charges you a percentage of your portfolio

I would make one suggested change. Buy a house once you find yourself in a fixed location. Regardless of whether you are renting or buying, you are paying for a place to live. If you are renting, though, you are essentially buying somebody else’s home or business.