Index Card Investing

Investing doesn’t have to be complicated.  It shouldn’t be complicated but bankers and financial planners want to complicate things so you need to go to them for advice. Here’s the newest thing I’ve heard of with respect to simplifying investing, something I’m trying to do with my blog.

The index card you see above came from a University of Chicago professor who was being interviewed on how the financial industry tries to overly complicate investing.  The index card was his brilliant response.

To translate for a Canadian audience:

  1. Accept any employer matching contributions to your RRSP
  2. Invest in low cost index funds
  3. Save 20% of your income
  4. Pay off all credit cards in full every month
  5. Maximize your government assisted saving programs (RRSP and TFSA)

My only issue is the 20% savings rate.  This is very high and will mean you will have more income in retirement than you had while working and raising your family.  Our Canadian experts recommend a savings rate of between 6 and 10%  to achieve to same standard of living in retirement that you had while working.

If you are planning on retiring before age 65, then increasing your savings rate makes sense.   Your spouse and kids may not support you here, but that’s a decision that is up to you and your family.

One disagreement aside, this index card advice really does do a great job of visually showing that you can do it alone.  Take a few moments to review the blog postings from December  and consider how doable it is to become a DIY investor and how much money you will save over your working life.

I hope you will find it in you to go this route.  Happy DIYing!!

To see a clearer version of the index card:

https://www.washingtonpost.com/news/wonk/wp/2013/09/16/this-4×6-index-card-has-all-the-financial-advice-youll-ever-need/

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