You might be wondering, why write a whole book about finance if you’re just going to tell me to see a financial advisor at the end anyway? Couldn’t I have skipped the book and let the professional tell me what to do?
You see, there are all sorts of problems with this industry. Consider what happened the three times I’ve received professional financial advice in my life:
On the most recent occasion the advice was good. The advisor explained how my investments would be taxed in my case, being a foreign resident, and this helped to confirm that the path I was pursuing was appropriate for my situation. However, this advisor didn’t bother recommending his usual products to me as he realized from our conversation that I was canny enough to know that my existing investments Read More
Imagine this: your toilet is blocked and you can’t fix it yourself so you call a plumber. The plumber has a look and says, “Hmm . . . I’ll have a go. I can probably fix it. My fee is $250, or $350 if I succeed.” Are you happy with this deal? Most people would expect to pay only once the plumber has fixed the problem, though if it requires more time, personnel or machinery than first thought, then the expense will necessarily be higher. But one would not expect to pay a plumber who messes around with a plunger for a while, sighs, gives up and goes home.
Or how about a taxi driver who expects a $30 bonus if he actually finds your destination? Or a dentist who wants extra if he manages to pull out the right tooth? Or an air traffic controller who reckons he should get an extra fifty bucks for every plane that doesn’t crash?
That’s how it is with actively managed funds Read More
The trouble with people living in WEIRD countries is, we don’t know how WEIRD we are.
WEIRD stands for Western, educated, industrialized, rich and democratic. Many countries have some of these characteristics, but only a few have them all, which makes them . . . weird.
The map above shows where 90% of psychological studies come from, adjusting country size by population. These WEIRD countries account for only about 15% of the world’s population. Some researchers are starting to think these studies must be culturally biased, and that broader studies are needed to understand human nature more fully.
This is because WEIRD countries are different. They have certain Read More
In the case of a stock market crash, your actual losses will depend on what you do next.
Imagine Aida and Thad both invest $100,000 in the share market, in a broad and identical way. There’s a terrible, 30% downturn across the board and the value of their investments declines to $70,000. Oh, no! What are they to do?