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23 years of personal finance wisdom distilled into one final column

23 years of personal finance wisdom distilled into one final column

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I started writing this column in 1994. After all that time, there are a few things I think I know about how people and money mix. Since this is my last column, I thought I’d leave them with you.

Crack a book

It’s smart to study money. It will make you richer and harder to fool.

For the beginner, the best overall personal finance book I’ve seen is Jane Bryant Quinn’s “Making the Most of Your Money Now.” It’s filled with good information.

Don’t drop it on your foot — it’s 1,200 pages.

Personal finance is not tough stuff. There’s nothing beyond high school math. With some basic backgrounding, and a handy reference book, anybody can make good money decisions.

The book needs an update to include changes made by the Affordable Care Act in health insurance and changes in Social Security claiming strategies.

Crooks are calling

Don’t be too trusting. In our daily lives, most of us deal with nice people — neighbors, co-workers, friends. We let our guard down. Con artists in St. Louis sometimes meet their victims in church.

Smart people make dumb mistakes. A couple of years ago, I wrote about a work-at-home scam that nabbed a retired Air Force colonel — a bright man — for $20,000.

Scammers are practiced manipulators of the psyche. They use greed to overwhelm sense.

So, it’s good to have friends and talk to them about money. A worried friend can break the crook’s spell.

Don’t believe anything you hear in a cold call over the phone or an unsolicited email. Email addresses, social media messages, webpages and caller ID systems can be hacked and phonied up.

Debt is bad — and good

Don’t borrow money for something that won’t pay you back. Education pays you back. A house might. A car won’t.

Drive an old beater until you can afford something better, and buy it with cash.

Before taking out student loans, look at what your likely career will pay, and don’t overborrow. Engineers make a lot more than social workers.

The money benefit of college goes to those who finish. If you think you might not, start at community college. You can swing that without borrowing.

If you can’t beat ’em ...

A good investor is humble. I’m dumber than those geniuses on Wall Street. I can’t beat the Street, so I don’t try.

In fact, most of the geniuses can’t beat the Street. Nearly 9 out of 10 percent of managers of actively managed mutual funds trail the dumb stock indexes over time, according to Dow Jones Indices.

So, favor dirt-cheap index mutual funds for your stock investments. Pick a total-stock-market fund for the big piece, and total-international fund for the small piece.

But beware — stocks are not the place for money you’ll need in the next six years. Use bonds and bank accounts for that.

Shun individual stocks unless you really know what you’re doing. The big boys have smart analysts picking stocks. They’ll know to bail out before you do.

Don’t read this column

Listen to investment gurus, but be skeptical. Humans have gotten pretty good about predicting the weather. On most other things, we’re terrible.

No one knows what the stock and bond markets are going to do. Really smart people are often surprised.

Economists should use Ouija boards. They’d be right about as often when predicting the overall economy beyond a year or so.

Don’t put too much faith in financial columnists like me when we write about investment markets. We’re always quoting the gurus. When they’re wrong, so are we.

My wife pays more attention to finance stories written by people other than me. She knows my foibles. She doesn’t know theirs.

Your adviser is conflicted

Wall Street and the investment business is one great conflict of interest. Remember that when you hire a “financial adviser,” which is what stockbrokers and a lot of insurance agents are called these days.

You must always wonder whether the advice you’re getting is what’s best for you, or what’s most lucrative for the person pushing it.

The self-dealing nature of the financial services industry was on full display last year as it pushed to derail the “fiduciary” rule for investment advice on retirement accounts. The rule would force advisers to put their clients’ interest above their own.

Guess whose interest the industry put first.

As a reporter, I quote a few advisers that I’ve come to trust. But there are more that I don’t.

Before stepping into a broker’s office, check his disciplinary record at, the website of the Financial Industry Regulatory Authority. Look for a “certified financial planner” designation. It means training, experience and a fiduciary ethical standard that is actually enforced.

But he may still be tempted to sell you an investment with a fat sales commission.

Hang in there

Don’t panic. Take courage. The stock market takes scary dips and sometimes crashes. Sell out during a slump and you’ll regret it. Consider buying instead.

Target-date funds are wonderful things in 401(k) plans. They adjust investments automatically to maximize the payout on your retirement date. Unless you’re really savvy about money, grab the target date fund.

Jim Gallagher retired from the Post-Dispatch on Feb. 20.

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