Comments on: The Importance of Education

By: jejar

jejar — Mon, 16 Feb 2009 03:34:48 +0000

Thanks for taking the time to explain this in a way thats so easy to understand.

By: Financial advice is…..

Financial advice is….. — Fri, 30 Jan 2009 02:27:02 +0000

[...] [6] http://baselinescenario.com/2009/01/19/financial-advice-robert-shiller/ [7] http://en.wikipedia.org/wiki/financial_advice [8] [...]

By: The illogic of financial markets « Thinking About Technocracy

The illogic of financial markets « Thinking About Technocracy — Sun, 25 Jan 2009 14:29:09 +0000

[...] Here’s a statement of the issue succinctly put by the very good Baseline Blog: [...]

By: Ted

Ted — Fri, 23 Jan 2009 14:10:49 +0000

As mentioned in the original article, the main problem with most “financial advisor’s” and most “financial advice” is that it is geared toward selling products to clients. It really has nothing to do with what the individual wants. People want and need unbiased advice provided on an hourly basis. The National Association of Personal Financial Advisors (www.napfa.org) has preached this for years. The time has come to reform the financial services industry away from product sales. People don’t need products, they need advice!

By: Asset Reconstruction

Asset Reconstruction — Fri, 23 Jan 2009 12:36:39 +0000

Education is very necessary in Financial sector. Because half knowledge is very risky.If you want to build your career in that field first go for better financial institutes and fulfill all basic requirements.

By: Young Children Learning How To Handle Their Finances

Young Children Learning How To Handle Their Finances — Fri, 23 Jan 2009 02:38:06 +0000

[...] The Importance of Financial Education « The Baseline Scenario The need for basic person financial education is critical in this country and elsewhere and it includes having the knowledge to determine when you are getting duped by the pros. [...] [...]

By: Sean C

Sean C — Thu, 22 Jan 2009 00:39:25 +0000

Are people who earn less than 45k a year who take on 400k mortgages to by exerb McMansions really making “poor investment decisions”? The vast majority of low-income Americans make few financial decisions at all let alone anything that could be characterized as an “investment decision”. Spare me. An enormous real estate bubble and easy credit allowed a bunch of people in the 30-45k a year income range to live briefly like six-figure earners. And then the bottom dropped out. Having a 30 year fixed mortgage (as opposed to some alice in wonderland sub-prime concoction) on a home worth 100k less than when you bought it a year ago is still swimming underwater. Surely one doesn’t need to consult an expert to figure that out.

By: Jim Davis

Jim Davis — Wed, 21 Jan 2009 05:17:15 +0000

I would describe what most financial planners do as “Financial Chiropracty”

Works fine as long as there is no REAL problem to deal with.

By: spinnakerjksc

spinnakerjksc — Wed, 21 Jan 2009 00:31:31 +0000

We must all be educated. But we don’t need just more Information, we need access to change and transformation. We need to know how the world works, and what innovation is. We don’t just need dates and formulas, we need to be taught how to Live.

Jordan.
http://www.theriverjordan.net

By: Dan

Dan — Tue, 20 Jan 2009 19:51:40 +0000

On average, actively managed money underperforms the market by the cost of active management. Throw it all into IWV. Most financial planners are incapable of performing simple algebra.

By: Jack Parsons

Jack Parsons — Tue, 20 Jan 2009 01:37:24 +0000

About the 3% deal: this, sir, is why they are called financial “products”.

By: Independent Accountant

Independent Accountant — Tue, 20 Jan 2009 01:05:04 +0000

I am a CPA and have many stories to tell similar to yours about the product with reinvested dividends and a 3% fee. I’ve seen such junk out there it’s amazing. Tax shelters with phony tax shelter opinions, you name it. One point of disagreement, TIPS. I wouldn’t touch them with a ten-foot pole. Who determines the inflation rate, what is their taxability? You’re much better off with “Stocks for the long-run”. Interest is something the government pretends to pay you to steal your principal. Bonds, bah humbug

By: engineer27

engineer27 — Mon, 19 Jan 2009 21:57:45 +0000

Michelle Singletary of the Washington Post has been attempting for years to educate her readers in the basic rules Personal Finance — essentially for free (or, at least, for the purchase price of a WaPo subscription).

http://www.washingtonpost.com/wp-dyn/content/linkset/2005/03/24/LI2005032400142.html

Evidently, there are many Americans she was unable to reach. It is hard to imagine how additional money is going to improve the financial IQ of the general public.

By: Mark Wolfinger

Mark Wolfinger — Mon, 19 Jan 2009 21:13:38 +0000

I agree with your thoughts.

One reason financial advisors are so useless (on average) is that they are fairly ignorant. They may know about diversification and ‘don’t panic’ – but the former is not good enough and the latter is meaningless.

They don’t grow. They don’t think for themselves. They never suggest that individual investors use conservative option strategies to protect their holdings against any significant loss. They are afraid to think outside the box.

By: Charles R. Williams

Charles R. Williams — Mon, 19 Jan 2009 21:10:30 +0000

What complicates financial planning is taxes and inflation. What would vastly simplify financial planning for the average person is shifting to consumption based taxes (VAT) and preserving the value of the dollar. The average guy saves up a down payment for a house, pays off his mortgage over 30 years accumulates maybe one or two years salary after the kids leave the house and relies on Social Security and assistance from his kids to support himself through retirement. This does not need to be complex. The tried and true rules of thumb work well: borrow to buy a house, try to pay cash for your car, avoid borrowing for consumption, work hard, save what you can in government insured bank accounts, stay married.

This works for about two-thirds of the population.

Another 25% of the population needs to understand the principles of systematic risk, diversification and market efficiency. These people have enough saved to justify more complex investments like mutual funds.

Finally, there is the small number of people who need to understand more and could possibly benefit from financial advice. Generally, they don’t need this knowledge until their thirties at the earliest.

Inflation and our tax system turn everyone into a potential sucker for the people who aggressively market financial products.