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jarhead

Has Anyone Read "lies About Money"?

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Not sure if this belongs in a 403(b) forum but it is related to retirement plans. Recently I started listening to Ric Edelman's weekly radio show and currently reading his book "Lies About Money". Chapter 9 on retirement really caught my eye where the author recommends to place all your contributions into a diversified stock mutual funds if you're at least 7 years from using your money. Has anyone read tis book and what do you think about this advise?

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Hi Jarhead,

 

We always welcome recommendations for books on this site. I have heard Ric Edelmond's show and generally like what he says. But he never mentions the important word that we mention frequently around here, Indexing. No once on his website. Thats a major concern.

 

In my opinion, if an investor is 7 years away from retirement and Edelmond says to put all of your contributions in stock mutual funds, thats a horrible idea. An person over 50 years old should have at least 50% of their retirement in an variety of bonds or fixed assets.

 

I have not read his book. I am only reacting to who you said about the part that "caught my eye." Have you read some of the other books we recommend, Bogle's, Otter's, Ferri, Swedroe, Bogleheads Guide to Investing?

 

Steve

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Not sure if this belongs in a 403(b) forum but it is related to retirement plans. Recently I started listening to Ric Edelman's weekly radio show and currently reading his book "Lies About Money". Chapter 9 on retirement really caught my eye where the author recommends to place all your contributions into a diversified stock mutual funds if you're at least 7 years from using your money. Has anyone read tis book and what do you think about this advise?

 

100% in stocks when just seven years away from using retirement money? That seems extremely aggressive.

 

However, I like the point about considering when a retiree will actually USE the money. It's important to note that the year a person retires is not necessarily the year that a person will actually use the money. It may be that a person would not need to USE the retirement money at the year of retirement. If the need for the money is further down the line, then an investor may be able to take a more aggressive equity position.

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Hi Jarhead,

 

We always welcome recommendations for books on this site. I have heard Ric Edelmond's show and generally like what he says. But he never mentions the important word that we mention frequently around here, Indexing. No once on his website. Thats a major concern.

In this same book (chapter 5) he says that traditional index funds are a foolish investment. He says that in his previous books he explains why. I have read Richard Ferri's book where he says just the opposite.

 

 

In my opinion, if an investor is 7 years away from retirement and Edelmond says to put all of your contributions in stock mutual funds, thats a horrible idea. An person over 50 years old should have at least 50% of their retirement in an variety of bonds or fixed assets.

Steve,

I understand it as if you're 7 years or more from using your money (not retiring - you may retire and not use the money in your retirement account), place all of your contributions in diversified stock mutual funds. I'd hate to take something as important as these statements out of context. If someone has this book or takes it out of their local library, please browse through these 2 chapters and confirm.

 

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Chapter 9 on retirement really caught my eye where the author recommends to place all your contributions into a diversified stock mutual funds if you're at least 7 years from using your money. Has anyone read tis book and what do you think about this advise?

 

 

 

Its always important to understand the statement in the context of the times. Would he be saying it now?

When was the book written?

 

Actually when you put the statement in the context of the current financial environment it might well make sense to put money in a Total Stock Market Index at the moment. These types of funds are 50% down from their peak at the moment. Certainly a good time to start investing if thats what your plans are.

 

 

I get a kick out of Dave Ramsey on Fox Business. He tells everyone to "Put their money in a good growth fund"

Thats all he ever says.

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Jarhead,

 

Obviously you like Mr. Edelman. IMO, any pro who says index investing is "foolish" contras many authors, academicians and legendary investors starting with Benjamin Graham and his mentees, Bogle and Buffett. Buffett would never say such a irresponsible remark as indexing is “foolish.” I am with the index crowd because unlike Edelman, all of these other authors do not attempt to sell newsletters, tapes and programs to get clients (click here).

The authors and thinkers I respect only sell books with a simple idea that costs matter and those books show you how to stay away from the newsletters, tapes and seminars and learn to invest on your own with low cost indexes as a major part of your portfolio. Nothing wrong with that.

 

Regards,

Steve

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Jarhead,

Obviously you like Mr. Edelman.

Steve,

I didn't say that I like him... just that I started listening to his radio show and decided to read his book. I did read in other books that investing in index funds is the way to go and wanted to get opinions here on Ric Edelman's contradiction. Since I am still learning the ins-and-outs of investing, who am I to argue. That's why I asked. :-D

 

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Hi Jarhead,

Sorry if I projected something that was not true. You write as though you have knowledge of the active passive debate. Based on what you mentioned about Edelman and what I have see on his website, he is on the active management side of the debate. We are more on the passive side with legendary John Bogle as our guru, and others. For me, active management increases risk to an investor’s portfolio because the higher fees requires that the manager must beat the indexes. Research says that about 80% of all active managers fail to beat the averages (indexes). So why not invest in the 20% you might ask. Simple enough and I would absolutely, but nobody can tell you in foresight which manager will beat the averages in the future. What kills me is that every manager professes on a stack of Bibles that he alone will beat the averages and they have contempt for indexing because they do not get compensated. If you are lucky and get a h o t manager, that h o t manager may not last very long and then you are left to search for the next h o t manager. This is generally called “performance chasing” required that you trade in and out of funds which is very costly. Indexing does not require a manager. You have very broad diversification, extremely low costs and the investor is invested in the broad economy. Have a bond equity mix that is appropriate for your age, rebalance once a year to maintain your bond equity allocation and that’s it. It’s pretty simple.

 

I say clear of the pros who say that indexing is foolish. However, if you are learning from his radio show, that’s fine. Bob Brinker has a show also. He uses and encourages people to use index funds, specifically the Vanguard funds, but he sells a newsletter. I listen to his show occasionally when he doesn’t get so political, but I would never buy his newsletter. Newsletters are a waste of money.

Regards,

Steve

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Hi Jarhead,

Sorry if I projected something that was not true. You write as though you have knowledge of the active passive debate. Based on what you mentioned about Edelman and what I have see on his website, he is on the active management side of the debate. We are more on the passive side with legendary John Bogle as our guru, and others. For me, active management increases risk to an investor’s portfolio because the higher fees requires that the manager must beat the indexes. Research says that about 80% of all active managers fail to beat the averages (indexes). So why not invest in the 20% you might ask. Simple enough and I would absolutely, but nobody can tell you in foresight which manager will beat the averages in the future. What kills me is that every manager professes on a stack of Bibles that he alone will beat the averages and they have contempt for indexing because they do not get compensated. If you are lucky and get a h o t manager, that h o t manager may not last very long and then you are left to search for the next h o t manager. This is generally called “performance chasing” required that you trade in and out of funds which is very costly. Indexing does not require a manager. You have very broad diversification, extremely low costs and the investor is invested in the broad economy. Have a bond equity mix that is appropriate for your age, rebalance once a year to maintain your bond equity allocation and that’s it. It’s pretty simple.

 

I say clear of the pros who say that indexing is foolish. However, if you are learning from his radio show, that’s fine. Bob Brinker has a show also. He uses and encourages people to use index funds, specifically the Vanguard funds, but he sells a newsletter. I listen to his show occasionally when he doesn’t get so political, but I would never buy his newsletter. Newsletters are a waste of money.

Regards,

Steve

 

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