should you do that? It turns out that there's a large gulf between the advice given by the authors of popular finance books and academic economists.," the Yale financial economist James Choi rummages through 50 of the most popular books on personal finance to see how their tips square with traditional economic thinking. It's like a cage match: Finance thinkfluencers vs economists dueling over what you should do with your money.
So, who's right in this financial royal rumble? The authors of self-help finance books or the stalwarts of traditional economic theory? While Choi doesn't always provide definitive answers, this debate might spark some ideas on how you can more effectively handle your finances.
Reading through popular finance books, however, Choi finds that the vast majority of popular authors offer advice that contradicts this approach: throughout your life, the thinkfluencers say, your goal should be to live within your means and save a consistent percentage of your income. It doesn't matter if you're 20 or 30 or 50; they implore you to stash money away immediately and invest it for your future.
So who wins on this point?"I'm actually agnostic about it," Choi says."On the one hand, I do have a lot of sympathy for the view that you might be unnecessarily depriving yourself in your twenties and even thirties when, very predictably, your income will likely be much higher in later decades. That being said, I do think that there is something to this notion of being disciplined and learning to live within your means at a young age.
Choi says both popular financial advisers and most economists are pretty clear: don't do this! Don't buy a house you can't really afford. That can be super stressful and potentially ruinous.Choi says that popular advisors and economists also generally agree that when you're young, you should invest most of your money in stocks and only a little bit in bonds.
"For almost all working people, the major economic asset they have is their future wage income," Choi says. In other words, think of your work skills as part of your financial portfolio. It's like the biggest form of wealth you own, and it's generally safer than stocks or even bonds. When you're young, this safer form of wealth is a huge part of your portfolio, so you can balance it with risky stocks.
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منبع: KPBSnews - 🏆 240. / 63 ادامه مطلب »
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