Pound Foolish?

[Robert742]

Has anyone read this book yet? I've heard the author interviewed on the radio several times recently. Her book is a critique of the US personal finance industry. What piqued my interest is, rather than only going after the usual suspects, like commissioned sales people, Jim Cramer, & Robert Kiyosaki, she criticizes all of the popular personal finance experts, too: David Bach & his "latte factor," Dave Ramsey, & Suze Orman for enriching themselves by selling the false expectation of the simplicity of creating wealth over time.

The author has an interesting perspective.

In a society with flat wage growth for decades, but with wildly escalating health, housing, and education costs, the tone of the personal finance industry is it's your fault if you are broke, or fail to get rich.

Can someone, investing 20% of their income in index funds since age 21, be confident they will have a fortune by age 65? What about a person in the year 2000, expecting to retire in 2015, depending on getting the long term average return of the stock market, only to see their retirement account has little more money in it for 2013, than it had in 2000? Significant wealth growth through compounding is really achieved in the later years. I think we all know, given enough time, the stock market provides a good return. But we don't live & invest in the long term. We're stuck with the investing environment of our finite earning years. Are we kidding ourselves we can manage risk wisely, to win in the end, without luck being on our side?

Those of us who have built significant wealth over time by passive investing, were we simply fortunate to be investing in the 80s and 90s? Can skill overcome luck?

[silvor]

I've read articles on her.

The jist is EVERYONE is wrong, your screwed no matter what and she offers no advice to overcome this.

Oh, and buy my book.

[Robert742]

I've read articles on her.

The jist is EVERYONE is wrong, your screwed no matter what and she offers no advice to overcome this.

Oh, and buy my book.

Yeah, I haven't read the book, but its message seems to be a disincentive to invest and do nothing. She even criticizes financial education for children, because it won't be remembered in the future, when they need it, and she sees it as mainly a branding opportunity with impressionable minds, which may be true of company-sponsored financial education programs.

The book might be good to understand the cons of the financial advice industry, but with all the doom and gloom, solutions should be presented, to avoid influencing people to give up.

[elessar78]

I saw her on Daily Show. Even if she's right, living within your means, living frugally, and saving for the future is still better than not.

She probably got paid, in some back alley manner, by the big investment firms as a counter-vailing voice to financial sanity. She doesn't have to win the war, she just has to plant that seed of doubt in the Dave Ramsey/Suze Orman listeners.

Not many Americans save and invest as it is, so even if they pull back 1% of that audience away from fiscal sanity, that represents a big amount of money.

[Kircheis]

I have read the book and disagree with some of the posts here. The book is simply an exposé of the financial industry, pointing out the inconsistencies and failing of the firms and individuals involved. She does not state that one should not save or invest. She just points out that there may be multiple reasons why people cannot save as much as they want to for retirement (and not just because of the Latte Factor). I do think that most people could live more frugally and save more, but I think that she makes good points too (and her work agrees with some of the findings by Elizabeth Warren).

The main point of the book that I took away was that one should save and invest (as people really do not have a choice with the pension system becoming less and less available), but the outcomes may not be as good as stated by the financial industry (such as Dave Ramsey who talks about 12% annual return on a growth stock mutual fund). She does not give any concrete suggestions for improvement, but I am not sure that's a totally fair criticism (try to fix the entire financial industry? Fix the retirement system?). I suspect that could be an entire book right there.

[elessar78]

I have read the book and disagree with some of the posts here. The book is simply an exposé of the financial industry, pointing out the inconsistencies and failing of the firms and individuals involved. She does not state that one should not save or invest. She just points out that there may be multiple reasons why people cannot save as much as they want to for retirement (and not just because of the Latte Factor). I do think that most people could live more frugally and save more, but I think that she makes good points too (and her work agrees with some of the findings by Elizabeth Warren).

The main point of the book that I took away was that one should save and invest (as people really do not have a choice with the pension system becoming less and less available), but the outcomes may not be as good as stated by the financial industry (such as Dave Ramsey who talks about 12% annual return on a growth stock mutual fund). She does not give any concrete suggestions for improvement, but I am not sure that's a totally fair criticism (try to fix the entire financial industry? Fix the retirement system?). I suspect that could be an entire book right there.

Thank you for this perspective on the book. Like I said, I only saw her on the Daily Show and she seemed smug AND did not try to correct the idea that the whole personal finance guru thing was a scam. A point was also made that Ramsey and Orman are basically avenues to hock their various financial products. Maybe, but doesn't make it any less true.

[Kircheis]

Thank you for this perspective on the book. Like I said, I only saw her on the Daily Show and she seemed smug AND did not try to correct the idea that the whole personal finance guru thing was a scam. A point was also made that Ramsey and Orman are basically avenues to hock their various financial products. Maybe, but doesn't make it any less true.

Well, she does criticize all of the main stream financial "gurus" in the book (Ramsey, Orman, Bach, Cramer...), stating that they often give simplistic, sometimes contradictory advice to people. As you stated, she also criticizes how the gurus make their money (and that they have a signficant financial motive for people to buy their products). I have seen the Suze Orman show and do think that she does help people, but she does mention her books and her products very often on the show. I also had a lot of doubts when she came out with her debit card (which has a fee...)