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Sunday, October 15, 2006

Scott Adam's Nine-Point Formula for Financial Planning - The Big Picture: Dilbert's Unified Theory of Everything Financial'

Good comments (as usual) on this from Metafilter:

John Chow makes a good point in this post: http://www.johnchow.com/index.php/buying-vs-renting/ that it doesn't always make sense to buy a house.
posted by age at 8:21 PM PST on October 15

The advice I've heard and am following is to invest in high risk (stocks) and low risk (bonds) in a proportion correlated to your age. To elaborate, a 26 year old (like me) should invest 26% in low risk and 75% in high risk. A 40 year old should be 40% low and 60% high. The closer you get to retirement, the more secure you should want your investments to be in case of a big stock market calamity.

Maybe a bit too conservative for some, but food for thought, and a decent way to stay safe without sacrificing THAT much potential income - a sacrifice some are willing to make.
posted by evadery at 7:59 PM PST on October 15

More at the link.

"Fortunately for America's 95 million investors, Adams' secret nine-point formula was finally revealed in "Dilbert and the Way of the Weasels." Notice its simple brilliance in the exact reproduction of his formula:

1. Make a will

2 .Pay off your credit cards

3. Get term life insurance if you have a family to support

4. Fund your 401k to the maximum

5. Fund your IRA to the maximum

6. Buy a house if you want to live in a house and can afford it

7. Put six months worth of expenses in a money-market account

8. 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

9. 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"

The Big Picture: Dilbert's Unified Theory of Everything Financial'

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