Unified Theory of Everything Financial
Paul B. Farrell of MarketWatch.com makes a funny but well-grounded case for Dilbert winning the Nobel Prize in economics for his “Unified Theory of Everything Financial”. Dilbert’s creator Scott Adams outlined 9 points in cartoon that he claims is “all you need to know about personal investing”. The points are short and surprisingly simple (unlike everything else financial):
- Make a will
- Pay off your credit cards
- Get term life insurance if you have a family to support
- Fund your 401k 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 worth of expenses in a money-market account
- Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement
- If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio
Farrell opines:
The truth is, most investors have little or no interest in Wall Street’s casino action; all the time-consuming research, the sophisticated stock-picking tricks, the costly trading necessary to play in a market drowning in 10,000 stocks, 18,000 funds and more than 100,000 bonds. Most investors have jobs and kids as their top priority. Moreover, Dilbert’s simple two-fund portfolio compares favorably with our other lazy portfolios.
Awesome. I don’t think I’ve ever read such a simple take on being financially sound.