There is a continuous debate that goes on in the context of investing through mutual funds.
Should I choose funds which are actively managed or choose Index funds which simply mirrors an index?
Some experts are strongly opinionated in favor of Index funds, whereas investment firms will always tout active investing for obvious reasons.
So what should we as investors choose?
Let’s see the different reasons why Index Funds are better choice for most investors.
Index Funds simply cost much lesser yet gives you the returns of the market.
Index Funds provide instant diversification from flavors such as Total market Index to specific themes and international market indices.
Index Funds do not have the need to reward performance and compete with other funds.
Index Funds do not need to trade very often, thus saving unnecessary tax liability due to capital gains.
Index Funds are simple to understand and follow.
So in an efficient market like the US, where information about good companies is widely available, beating the benchmark indices is not easy for fund managers. There are star fund managers who may have done that, but the percentage is very less, typically < 5%.
The simplest and most convenient in the US is the proverbial Bogleheads’ Three fund portfolio.
However the story may be different in other parts of the world, for example, emerging markets like India.
There are evidences of active fund management overtaking Index returns and in the short to medium term, even with the high costs of management, beat the index fund often.
However this is slowly changing and in recent years, the Index Fund is tilting to be the better choice for long term investors.
With more institutional money flowing into Index Funds as well, Fund managers will find it difficult to beat the index returns and the market efficiency will move towards that of developed markets like the US. To quote an article, it clearly shows the trend.
Over the last couple of years, many investors have increased exposure to index funds as returns from several categories of actively-managed funds failed to beat the Nifty 50 returns. In the past one year, the Nifty 50 has returned 12.51%.
In the last few weeks the world has changed quite a lot. With no sight to an end to the corona-virus spread, cities after cities are going into lock down and people are forced to stay at home.
This will impact the economy in a very bad way and many businesses like entertainment, travel and food will be severely affected or shut down. In these unprecedented times, the current situation of the stock market and its decline is understandable.
Since this blog is concerned with personal finances, let us look at the impact this black swan event can have and how to get over this crisis.
We will examine 5 adverse scenarios and how my previous posts (in good times) suggested recession proof way of managing personal finance.
This has been enforced in many cities and people are not allowed to be meet each other face to face.
This will impact people and their livelihood when it depends on teams and network. For example, direct real estate investing like house flipping, buying houses, wholesale deals and likes.
Financial, insurance advisors and their clients who depended on face to face interactive sessions. While this can still be done over video conferencing and online communication, the personal coaching sessions may be less personal after all now.
Investments which depended on a broker or branch are impacted since offices are shut down or low on staff.
The key to solving these issues is to setup systems that enables you to transact virtually from anywhere in the world, including your home. If you have automated your financial systems using FinTech, those systems are not affected by the current situation.
Your stomach will have a strange feeling when you look at your stock, ETF or mutual fund portfolios under 401k and Taxable accounts.
Almost all portfolios are beaten down 25-30% and may go further down to 50% or more.
With the risk of financial institutions and other companies going out of business, even fixed income portfolio is not safe. There may be large scale defaults in the bond market, as companies struggle to meet their short term debt obligations.
The key to solving such challenges is to remain invested and not panic sell out of it at this time.
While there had been virus spread earlier, the scale of the COVID-19 is unprecedented and growing.
This type of lock down has never happened before, and after what happened in Italy and China, we are gripped in a fear of the fatality rate caused by the virus.
This has stopped us from behaving rationally and with our investments, people may be reacting with the same fear. I have read many discussions on Quora where people are predicting a long recession and advising others to pull out investments or completely stop investing more.
Fear is the worst enemy and negativity is biggest killer of future prospects.
The key is to remain calm and take necessary precautions (staying at home, frequently washing your hands etc.). Similarly for finances, do not take up unnecessary debt at this point but just remain invested and keep your monthly investments ongoing.
One of the questions all investors consider is how to spread their investments. This is super essential in a volatile economic environment that we are now being forced by coronavirus.
Coronavirus is already sending stock markets across the world in a downward spiral, companies may find it difficult to service debt and hence affect bonds, and interest rates going downwards put cash and money market funds into useless investments.
How do we then allocate our funds and make sure we are not into an all-or-none, boom-or-bust kind of situation?
There are essentially 4 kinds of investments that a simple investor like us will hold over time.
Cash and cash equivalents – CDs, money market, timed deposits etc.
Debt – Fixed duration and fixed income products like bonds bought and held till maturity.
Market Linked – Index Funds, Mutual Funds, ETF, direct stocks, REITs.
Real Estate – Properties (homes and rentals), Private REITs.
The 4 Quadrant approach
The below table shows how these investments fit each quadrant of a time horizon vs. liquidity.
Q1 – Cash and Cash Equivalents
Q2 – Debt (Bonds till maturity, other lending investments)
Q3 – Market linked (funds and stocks)
Q4 – Real Estate
For example, cash and debt instruments are typically short term reserves. While cash in savings account is highly liquid, bonds typically have a fixed maturity duration unless they can be traded in the secondary market.
On the contrary, stocks and funds may be liquid but typically yield best results only over the long term, due to short term market volatility. Real Estate is both long term and highly illiquid since it may take months and years before a property investment can yield profit or get sold.
If we allocate our resources with the 4-Quadrant principles in mind, then the short term market volatility or conditions will not bother us much. Each of the Quadrants will have enough invested/saved to go through the current phase.
For example, if I need immediate cash or want to maintain an emergency fund, Q1 is the place. There is no need to panic sell Q2, Q3 or Q4 investments.
Similarly for a medium term (2-4 years), the required funds can be maintained in fixed duration bond products (Q2) matching the maturity to a goal horizon.
At last, stocks and real estate are for the long term (> 10 years) and should be left to grow on their own. We can keep adding to them in a well defined proportion. But we do not need to panic sell them if the Q1 and Q2 are in place.
Simplest Asset Allocation
Another advantage of this approach is automatic asset allocation. Sometimes without realizing we may be overweight in one Quadrant. For example, some people may be just lazy to invest and keep their money lying in savings accounts, hence Q1 heavy.
While others may be so overweight in Stocks and Real Estate that in case of an emergency or reaction to market movements, they may sell or trade unnecessarily and hastily. Worst is premature withdrawal from retirement funds and paying penalty and taxes.
A balanced allocation to each Quadrant based on goals is the right approach.
For example, lets say I have $200,000 net worth. I can allocate the following after estimating my monthly expenses ($3000) and near term goals (Education, buying a house etc.).
Q1 – 6 * $3000 = $18,000 in money market fund
Q2 – $40,000 for a new house in 2 years – Treasury Bond Fund
Q3 – $42,000 in 401-k and Roth IRA
Q4 – $100,000 in present home equity
Lets analyze few scenarios here.
I suddenly lose my job – Assuming it will take 4-6 months to get a new job, I can withdraw from Q1 my monthly expenses and tide over this crisis.
I need to save for a new house in 2 years – I keep saving every month in Q2 and buy investments maturing in about 2 years.
Whether the above events happen or not, the Q3 keeps growing as the funds remain invested in the market. In fact, as long as there is no crisis, I can keep making dollar cost averaged investments every single month into 401-k and Roth IRA accounts.
Q4 is even longer term and can be one’s own personal residence and additional rental properties. If Q1 and Q2 are in place, there should not be any hurry or knee-jerk reaction to sell or lose these valuable assets.
The actual amounts or assets can vary depending on a person’s goals and needs.
Overall this framework will also avoid a person to go into debt unnecessarily. Similarly paying off debt or mortgage can be considered money invested in Q2 and Q4 respectively.
The 4-Q is thus a simple financial planning framework. Sticking to this 4-Q framework and directing one’s monthly investments to the relevant quarter helps build wealth in the long run, as well as take care of short term obligations.
Safety in financial world is an oft-repeated word, and is mentioned in contrast to risk and growth.
We talk a lot about risk-return trade-off, safety of invested principal in long term and short term investments.
There is another way of looking at Financial Safety. The SAFE plan described below is a way of setting up financial life that is SAFE by design, not in the traditional sense of Safety vs. Risk but automatic habits that ensure you don’t stray from common sense.
Common Sense and Simplicity in Financial Plan is hard to achieve. True it is counter intuitive, but most people land into financial trouble due to complicated behavior – be it spending recklessly, chasing high unrealistic returns or simply throwing caution to the wind.
The SAFE Plan
Let me first present the 7 steps to SAFE plan.
Invest in pre-tax accounts like 401k and HSA.
Set up a direct deposit of the remaining taxable income to a checking account.
Set up credit card payment to be auto paid from the checking account on the 30th of every month.
Set up an auto-invest plan where 10-20% of the taxable income is diverted to a brokerage account or another IRA account (like Roth IRA).
Spend your monthly expenses on the credit card. Keep an eye on the credit card balance with the money left over in the checking account.
Save the left over surplus, if any.
Continue and repeat next month …
The above steps are nothing new. They have been suggested by numerous financial coaches and gurus. However the importance of the SAFE plan is how the steps are stitched together and flows through a seamless automation.
Since we have established the Simplicity of the SAFE plan, lets look at the Automation part and how to set this up.
You just need to figure out the % you want to put in 401k or HSA, and inform your payroll department. This can be decided based on the following factors.
Your cash flow needs after this deduction.
How much to invest to capture any employer provided matching contribution.
Max limits of the 401k or HSA.
Direct deposit of the taxable amount to checking account.
This is handled by your payroll department automatically.
Setup credit card auto-pay from your bank account for the 30th of every month.
This one if not done, can prove to be dangerous as missed payments are very costly.
The trigger will also help you pay-off something even if you have amassed a debt.
You can configure to pay off the entire balance, minimum payment or a fixed amount.
Setup auto invest for 10-20% of the taxable income. The exact % can vary as it will depend on your household expenses.
Even if your budget does not allow this today, find at least a small amount ($50-$100) to divert automatically to an investment account.
This will build the habit and set you up for regular investment.
The amount can be increased over time as the budget frees up extra cash.
Live within your means. This is again a cliche, but very difficult to be consistent month after month. You can manage it with some automation and discipline though.
setup a notification when your credit card balance crosses 90% of your projected expense for the month (or simply the money left in the checking account).
Put a Level 5 tornado/hurricane warning when it is crossing over the money left over in your checking account.
Typically the projected expenses can be simply set to the money left over in your checking account. You cannot spend more than that without incurring consumer debt or dipping into other savings/investments.
Save the surplus – If you have surplus at the end of the month (that is, Credit card balance < Money in checking account) you can save it for future goals, short term and mid term.
I wish banks provided this facility, but it can be set up to transfer a fixed amount once you have an idea of your monthly expenses.
Some apps like Acorns or Digit automate this although in more complicated way.
Do not leave the money in the checking account otherwise next month it will create an illusion that you can spend more.
Let the automation run month after month.
Once setup correctly, the basic version of the SAFE plan is low maintenance and enables an almost debt free living.
Of course, we have not taken into account mortgage payments, prior debt pay down, saving for education – but these can also be fit into the plan. In the step where you are investing 10-20%, you will break that into smaller chunks of various debt pay down and remaining amount can be invested for various goals.
Thus the plan is also extremely flexible to adapt to individual situations.
The last part of the SAFE plan is that it is efficient in managing money.
The following good principles are built-in into the plan.
Pay Yourself First – Pre and Post Tax investments are deducted in the beginning.
Low maintenance – no coupon cutting, daily budgeting etc.
Keeps you debt free – just keep tab that your credit card balance is below money left over in checking account.
Encourages more savings at the end of the month – creates a healthy race to increase it, by reducing your spending.
The efficiency is evident if you do this for even one year. You will see the difference in your credit score, savings balance, net worth and above all, peace of mind.
This plan has been working for me for a long time. The simplicity and automation helped me manage it seamlessly without getting distracted from my main job – which is not finance.
And the in-built savings and investment discipline in the plan has helped me invest and accumulate cash for emergencies, short term purchases or just a cash cushion.
Here is my version of the 7 steps of the SAFE plan (the % are approximate and rounded)
Invest some in the Roth-401k and H.S.A.
Direct deposit first paycheck. (50% of monthly)
Use the credit card from same account. Set up auto-pay on 30th of every month.
10% to mortgage account
10% to savings for property taxes, insurance and maintenance
20% invest in mutual funds via brokerage account
10% to a 529 Plan
Next paycheck direct deposit on 15th of month. (50% balance monthly paycheck)
Living expenses capped to 40-45% of monthly total.
Pay off credit card balance within this limit – I make sure it is $0 as it enters following month.
Sometimes it is hard to stick to the limit, then I have the cash cushion (from previous months’ savings, step 6) to dip into.
5-10% savings for vacation/travel, fun, cash – diverted to a high-yield online savings account.
Even my 10 year old kid has been taught about Dave in elementary school mathematics.
Dave Ramsey is America’s trusted voice on money and business.
Well he is popular for a solid reason. In this post, I will describe why he makes perfect sense to me.
When I immigrated to US in 2017, I did not know who he is. I was trying to quench my thirst for new personal finance books, especially on the US system. Then I stumbled upon Dave’s Total Money Makeover.
As I read the book, initially his rant against debt was a bit overwhelming to digest. However thinking deeply, I realized that coming from an Asian country, I have unconsciously followed the same principle for decades.
Why this coincidence? Because the principles are universal and extremely healthy for personal finance, no matter which economy you come from.
If you do not know yet, here is a recap link to the 7 steps from his website.
Here are few points where I found an one-one match with how traditional Asian (India) household finances worked.
Have an emergency/contingency fund (Dave’s baby steps 1 and 3)
There are many names to this – emergency fund, contingency fund, rainy day fund. In many Asian households, it goes by the simple name of savings. Savings is in-built into the culture and an emergency fund is a default choice.
In a way, if you don’t have debt instruments (HELOC, Credit card) available to you, how else will you pay up for maintenance, car breakdown, education etc.?
Answer is simple, money socked off into a separate bank account – lo and behold, by end of the year, you have an emergency fund.
Use Cash – or debit card at the most (Dave’s baby step 2)
Before moving to US, my only credit card was a HDFC Bank Premium card. I was sold this card citing lots of benefits like reward points, airline miles, premier lounge access etc.
The truth is that I used it only for big purchases like appliances, electronics or vacation. And that too, because I knew I had to pay it off at the end of the month and just deferred the money being taken out of a CD (Fixed Deposit as named in India).
If I look back, except for getting a few discounts at clothing stores, I did not reap the reward points. Never had the idle time or need to figure out how to access the premier lounge. Once I tried to book a holiday trip through the miles, I found that I could get it for lesser by buying a cheaper economy ticket. Yet I paid an annual fee (or had to spend a minimum on the card to avoid the fee) for those unseen benefits.
Credit cards may work better in the US, but it is also a double edged sword. Americans are saddled with trillion dollar credit card debt. (source: Dave Ramsey)
All my household daily expenses ran on either hard cash (lots of places in India do not accept any cards) or debit card.
Simply put, I never felt the absolute necessity to hold a credit card. Some people say its good for emergency situations, but then the previous step already solved that problem.
Oh there is one more reason – online shopping. In India, Flipkart has a C.O.D (cash on delivery) option. If that doesn’t work or not offered, you can pay using NetBanking which all online vendors provide with major banks. It is equivalent to using debit card, but without the card number. You are redirected to the bank website and you can authorize the transaction from your account, using login and password.
Retirement savings (Dave’s baby step 4)
There are government retirement plans like Provident Fund (equivalent to 401k), Public Provident Fund (equivalent to Roth IRA) and now the NPS (National Pension System).
The first two are effectively tax exempt with the Provident Fund being tax E.E.E (exempt on contribution, growth and withdrawal). The only drawback is that the investment options are traditional – debt based with an interest rate guaranteed by the Government. The option of Equities has only come up as an option in NPS.
The Provident Fund or the NPS is now mandatory in most organizations for their employees. The amount you can invest from your paycheck typically hovers around 12% (with matching grant from employer), and is close to Dave Ramsey’s recommended savings of 15%.
There are of course private options from brokerages/banks to invest in mutual funds and stocks, as also R.E.I.Ts are now coming up.
There is hardly any concept of student loans. Education is still affordable, though it is becoming expensive each passing year.
And despite the huge competition (owing to large population), there are no Ivy League schools to lose your shirt on getting a degree. Even the premier institutes like Indian Institute of Technology, or Indian Institute of Management are well affordable with their excellent career prospects.
I don’t have all the education expenses data, but I have not heard of any student saddled by student loan debt or carrying it well into their adulthood and married life.
Moreover in recent years, the growing start-up culture in India has also made an expensive education pretty much irrelevant.
Pay off your house (Dave’s baby step 6)
In US, people hold their mortgages for 30 years, and do not need to pay back earlier.
And it is more helped by the low interest rate regime that is sweeping the news everyday.
However in India, average mortgages survive for 3-5 years, before they are completely paid off. Both my mortgages in India were paid off in less than 5 years.
What is the reason for this? There are several factors.
Interest rates are higher – typically 8.5-10%. This causes people to take mortgages with lower than 80% Loan-to-Value, to avoid big E.M.I (equated monthly installments).
Higher down payment earns good discount from builders. One of the main sources of home buying in India is from builders.
Floating rate mortgages – The interest rate by default is floating. Fixed rate mortgages have a much higher interest rate, typically 1-2% higher. Carrying a floating rate mortgage is risky, hence the tendency is to pay it off as soon as possible.
Last but not the least – its a debt-averse culture. You don’t feel good till you actually own your home, free and clear.
Buying a house in India is stressful owing to the sector’s corrupt practices, less regulation and random mismanagement of funds by builders. Hence keeping low to no debt is prudent not to add on to the crisis.
Building wealth and Giving (Dave’s baby step 7)
The last baby step in Dave Ramsey’s plan is the absolute bliss.
This is where a lot of well to do families will be. With the above steps explained and if followed properly – they will be living in paid for houses, driving paid for cars (some with chauffeurs), have a good retirement corpus that is growing, children graduating from college without student loan debt, and an emergency fund stashed out in some savings account.
Now they can buy more investment assets like real estate, stocks and entire businesses.
You start building serious wealth and enjoy true Financial Freedom.
As Dave says, “If you live like no one else, you will live like no one else”.
Now the last part is Giving. This may not be traditionally so popular in India, due to many factors. However lot of new initiatives are now trying to organize charity and reach to the real needy.
The huge wealth inequality throws up a lot of opportunities of giving. However if you are not careful and the non-profit organizations are not well researched, you will end up making some fraud people rich. I have ended up donating to NGOs (Non Government Organization), who started showing a suspicious pattern of corruption (sometimes irritating me with calls and messages for more). It becomes clear they want to milk you in the name of charity.
However with little diligence and online/offline research it is possible to select meaningful giving opportunities.
Thus Dave Ramsey’s 7 baby steps are definitely a recipe for success with personal finance. I have only drawn a comparison with what I have lived and seen in India.
Dave’s success in getting millions of Americans out of debt and living their dream life is a testimony to the sound principles that the 7 steps represent.
Live like no one else. If you are not forced by the system, be intentional about the 7 steps.
There are many articles on how to be frugal, how to save more, earn more and invest for high returns.
All this is good advice, and the Internet is full of such articles, blogs, videos, courses.
However the key to saving money and investing for growth is action and the discipline to implement the good practices.
If you go through most of the articles, some common themes emerge such as:
Pay yourself first
Do a proper budget or at least allocate money to your various expenses
Big tax refunds are not cause to celebrate
Get out of debt
Regularly invest a little
Use Robo advisors
and so on…
Yet lot of people (some say 78% of Americans) live paycheck to paycheck, and will not be able to cough up $400 cash in times of emergency.
With so much of good advice and technology out there, why then we still have the problem with more than 50% of the population? What is different with the 10-20% who manage to create and keep wealth?
I think the answer lies in being organized, intentional and disciplined. As Dave Ramsey said “Personal Finance is more behavior than numbers”.
It requires a system to be organized and manage your money. Once the system is in place and you get into the habit of it, you will automatically resist impulsive behavior.
In this post, I will highlight some of the systems that I follow to organize this area of my life. And remember, the more organized and intentional you are on personal finance, it impacts rest of the areas of your life as well. Cliche, right? Yes but difficult to implement.
There are 5 parts to the system:
Just for fun, lets rearrange and call this the CARLA system (Cap, Automate, Remind, Learn and Archive). Really the order does not matter.
Automation is the heart of any system. And with most of the financial products employing high end technology, there is no reason to avoid automation.
A simple automation makes the “Pay yourself first” a breeze like operation.
For example, in my case, the first bi-monthly paycheck (pre and post tax) simply goes to my mortgage and investments (retirement, 529 plan, HSA, investments). I just cannot see it in my checking account by the 2nd or 5th of the month.
How do I run my expenses and pay my bills then? Another automation.
All my bill payments are set on the one and only credit card that I use. It is completely automated so I don’t need to remind myself to pay electricity, water or phone bills. The same credit card is used for first half of the month to buy essentials.
By the same system, the second bi-monthly paycheck pays off the credit card bill in full.
A portion of that also goes into savings for short term goals (provided the credit card was not overused – we will talk about caps in next section).
Naturally implements the Pay Yourself First.
Automated bill payments, so no chance of forgetting and running into credit problems.
Earn points on the credit card, as all expenses are charged to the one.
The credit card is automatically paid off within the month.
Need to control expenses as the credit card balance should not overshoot the projected amount.
Unexpected debits to the checking account (checks issued, or charged by institutions) may cause overdraft scenarios if not careful or kept track of such expected transactions.
One of the toughest part of personal finance behavior is to cap your spending. No amount of technology or automation can address this adequately. There are budget apps, reminder apps, envelope system but at the end of the day, if you are armed with a credit card, there is no stopping you.
There are two ways to address this:
If you are using a credit card, then absolutely you will need a budgeting and expense tracking app. I use YNAB (You Need a Budget) but I have heard people liking Mint or Personal Capital. In these apps, you can set limits for spending under each category like Food, Transportation, Utilities and Fun. Here is a referral link to YNAB.
However a more effective way and not to run into debt, you can automate to transfer the estimated monthly expenses to another checking account, and use the ATM/debit card of that account. As soon as you see the account is drying up, you know you have to rein in your spending. As you do this more, you will slowly understand the pattern and be able to make or adjust estimates.
Having a cap of expenses is non-negotiable in the pursuit of good personal finance habits.
You know exactly where each dollar is going and how to optimize or reduce the outflow.
The first approach definitely has the risk of running into credit card debt, and not able to pay in full.
The second approach is safer but if you are not keeping track, can hit you with overdraft fees or embarrassing card decline at the checkout counter.
A good archiving system is also key to good personal finance habits. Not only habit, but it keeps you stress-free. Remember the scrambling during tax filing season, looking for bank statements, dividend results, interest certificate etc.
Moreover we have multiple sources of information, statements coming through email, snail mail, website downloads, or even previously archived repositories.
A simple system I follow consists of a uniform folder structure across multiple sources of information.
There are 4 aspects of personal finance that you need to keep track of.
Bills and Receipts – Miscellaneous bills and receipts if they do not fall into above categories.
With the above organization, you can simply create the archival system in all your information sources.
Gmail – create these as labels or email folders.
Evernote – you can create notebooks and store documents as notes under each notebook.
Google Drive – create folders. You can save attachments from gmail directly to these Drive folders.
Laptop local drive – Sometimes it is best to store in the local drive than cloud. That is, if you are uncomfortable storing documents containing sensitive information (SSN, date of birth) into the cloud. Be sure to periodically back this up into external hard drives.
Physical documents – Paper statements can be either scanned and stored in above places, or simply dropped into file cabinet drawers, with appropriate labels. The labels should follow the same categorization.
Once you have the uniform structure across all these platforms, storage and finding information is easy.
Easy to file and find.
Following same structure in all systems that you use.
None at all.
So you have automated, capped and archived personal finance. But what about still those actions to be taken, follow-ups to be done and making sure time sensitive things do not fall through the cracks?
I don’t want to describe personal productivity or time management here, but an essential part of managing personal finance is timing. There are taxes to be paid quarterly, investments to be made, or simply a phone call to be made.
Choose whatever system works for you as reminders, be it an app on your phone, or calendar on the laptop.
For me, plain gmail works as it has a snooze facility, by which I can redirect any email to come back to my Inbox at the time I need to take action. In my opinion, it is an important tool in time management as now I can remember to take action at the right time. It just pops in my Inbox on that Sunday prior to the week I need to take action on that.
Another good platform for keeping track of your laundry list is Trello. I use it quite extensively and the concept of board and cards, helps keep things visually clear.
Even if you automate everything, there will be things for which action needed to be taken timely.
Remain stress free and auto-magically respond or follow-up with people at the right time. Sometimes this surprises people as they may have promised to do something (or get back to you) and you follow up on the agreed date.
Unless you stick to one system (Trello or Gmail), you run the risk of multiple apps keeping track of your to-do lists and confuse you enough not to take action or update new items.
You may run the risk of irritating some people who do not like to be followed up, especially if they wanted to forget what they promised.
I cannot emphasize this enough and with the plethora of information on the Internet, whatever I say will sound like cliche.
However as with any field, it is important to keep yourself up-to-date with advances in personal finance topics.
One of the simplest ways is to dedicate a couple of hours every week, to read about different topics, blogs and videos of personal finance. You can subscribe to magazines like Money or Kiplinger. Or simply come back to this blog as I normally post every week.
Learning is always good, and opens up new opportunities for you.
You build your own system and strategy as you read and learn techniques others have used.
Don’t get obsessed by personal finance reading, as it can get repetitive very easily. You may end up wasting lot of time reading the same message in different ways.
You may take wrong action or jump into investments without fully understanding the consequences, or simply following some author’s thumb rule from a book.
These are the Five essential elements of a good system that can be setup with minimal infrastructure. It worked for me and I hope you find it useful.
My CARLA system (Cap, Automate, Remind, Learn and Archive) – a system to automate, manage and grow personal finance.