James you are wise beyond your years! It's too bad everyone your age doesn't know what you do.
@wildtill92 жыл бұрын
LOL - totally agree with the mortgage payment thought process Made far more sense to invest the money and keep making the monthly payment, but nope - paid that sucker off as soon as possible Yep. illogical but sure felt good doing it
@BadPhD777 Жыл бұрын
I paid off my mortgage when I was 50 and after that I felt like I was rich! No regrets doing it and now I'm putting about 27% of my income into my retirement accounts.
@Mexicobeanpole2 жыл бұрын
#4. It’s something I’m learning. You can’t deny yourself ALL the time. Then it can feel like, what’s is all for?
@RootFP2 жыл бұрын
Exactly
@Davewhipped2 жыл бұрын
I love this channel and The Money Guy Show
@thegrimmperspective2 жыл бұрын
Love The Money Guy Show as well but their numbers tend to fluctuate towards the upper class IMO. Very few people that I know can afford to max out their 401(k)s.
@RootFP2 жыл бұрын
Thanks Dave!
@METVWETV8 ай бұрын
I enjoy your videos so much but I admit that I do forget to upvote you. So now, I upvote you first, then watch the video.... DON'T LET ME DOWN YOU!
@Patrick-xo8ht2 жыл бұрын
You have some of the best personal finance content on the web. So natural and smooth, minimal editing/cut-offs, and great insights. Keep up the great work.
@RootFP2 жыл бұрын
Thank you!
@margaret46962 жыл бұрын
Your critical thinking is refreshing.
@RootFP2 жыл бұрын
Thank you, Margaret.
@neilcook16522 жыл бұрын
Simple, clear, direct and succinct guidance regarding multiple common finance ‘rules’ - excellent advice, thank you.
@RootFP2 жыл бұрын
Thanks, Neil!
@MrGoodaches2 жыл бұрын
I will be sharing this vid. My reasons for sharing are not particularly about the strengths or weaknesses of each Rule of Thumb. My reasons for sharing are all about his clear, sensible and informative narrative on the topics surrounding each rule of thumb.
@RootFP2 жыл бұрын
Thank you!
@SantaBarbaraAlberto2 жыл бұрын
Excellent! Really good. Congratulations! Be prepared, be ready. Learn how to make decisions. Don't look back, don't hesitate as you can't change the past and only plan for the future.
@PH-dm8ew2 жыл бұрын
another very good show with a ton of great info.
@RootFP2 жыл бұрын
Thank you!
@jpturner1712 жыл бұрын
Great advice especially your breakdown of the 4% rule which I’ve never understood since we seem to spend less as we age. Semper Fi👍🏽
@RootFP2 жыл бұрын
Thank you!
@anascoinquest11212 жыл бұрын
I agree with your #1. That is an incredibly conservative allocation. Personally I prefer a bond tent. Everyone doesn’t have the same risk profile so it’s crazy to give every single 30 year old a 70/30 split. I’m sure it worked for some people but I can’t help but wonder how many people it set up for failure.
@kimturner10702 жыл бұрын
Thanks for listing your points to the right or left. Nice touch!
@RootFP2 жыл бұрын
You’re welcome, thanks for watching!
@kennycrump2 жыл бұрын
As far as the #1 useless rule, I’ve actually heard it use “120 - your age” . Much closer to what is recommended, but I still agree with your points on why it’s not the best. Thanks for the content!
@thegrimmperspective2 жыл бұрын
120 - age is a very good rule of thumb for those that don't want to get too far into the weeds or involve the assistance of a financial planner up until say around age 50. :)
@trumpisaconfirmedcuck58402 жыл бұрын
@@thegrimmperspective 41, over 95% equities here.
@baldilox49532 жыл бұрын
Excellent. I had to listen twice so I could take notes. Thank you.
@RootFP2 жыл бұрын
You’re welcome!
@jimbox8762 Жыл бұрын
Thank you. People first.
@x_270rr_s32 жыл бұрын
I didn't grew up in USA and I didn't have a lot of knowledge about the retirement. I do invested thru the years.... your knowledge is brilliant and you are my free teacher and very well spoken and easy to understand...
@RootFP2 жыл бұрын
I'm glad the videos are helpful!
@PH-md8xp Жыл бұрын
Excellent points.
@KMarik2 жыл бұрын
I appreciate the advice here.
@RootFP2 жыл бұрын
You're welcome!
@BraveSirRoland2 жыл бұрын
Optimally, financial decision making would consider all the relevant variables specific to your situation, but this causes analysis paralysis, especially for those just getting started. It’s easy to just throw up your hands and just not think about it anymore. Rules of thumb are great for those who just need to get going. Once the wheels are turning and the basics are in place using rules of thumb, then you can refine as needed.
@gregorymcmahan39142 жыл бұрын
Jim, This is quite possibly your best video. As you mentioned more than once, the rules of thumb serve best as starting points, but for too many of us, personal finance and investment begin and end with the rules of thumb. Sure, they are simple and easy, but all too often, they are not right and not wholly applicable to our own unique personal situation. You made a great point about the behavioral side of personal finance. I totally agree. Keep up the good work, and please keep the videos coming!
@RootFP2 жыл бұрын
Thank you, Gregory!
@fredswartley9778 Жыл бұрын
Great video. Finance is very personal and we should never make hard and fast rules that apply to everyone. The first 6 rules of them are helpful guidelines, but they need to be adjusted for each person's specific circumstances.
@RootFP Жыл бұрын
Thank you. Certainly need to be customized.
@pensacola3212 жыл бұрын
Every or any "rule of thumb" is just that. A place to start, food for thought... not an absolute.
@RootFP2 жыл бұрын
Exactly right
@jmcampbell05 Жыл бұрын
EXCELLENT, EXCELLENT CHANNEL!
@jameswitte56762 жыл бұрын
Good video, but I completely disagree with your statement that it totally makes sense to invest rather than payoff your mortgage. With the higher standard deduction and SALT limitations many people no longer itemize. The 3% you’re saving on your mortgage is guaranteed. The only guaranteed investment is US treasury obligations and they’re paying way less than 3%. Regarding stocks for people in retirement or about to retire, can they afford (financially and emotionally) a 25% decline that lasts for a few years? And finally, would you take out a mortgage (your home is the collateral) and invest it in the stock market? If I had the money I would payoff my mortgage. I do realize that everyone is different and your advice may work for a select few.
@BadPhD777 Жыл бұрын
The feeling of knowing nobody is going to evict me is priceless! I'M DEBT FREE!!!
@KrishnanV9 Жыл бұрын
Morgan Housel in his book “Psychology of money” explains this point beautifully. Every financial decision need not be academic, as long as it’s rational it’s fine. Clearing off housing debt is one. If it allows one to sleep better, makes sense to pay off the home loan instead of trying to invest that money loking for higher returns.
@brahmmauer743711 ай бұрын
Paying off a 3% mortgage rather than investing that money is very very stupid use of that money.
@MusicalXena11 ай бұрын
@@brahmmauer7437On a scale of "very very stupid" to "very very smart," I would consider things like high stakes gambling and purchasing 10,000 lotto tickets to be "very very stupid." Paying off a house is not mathematical maximization, but it does have positive financial and psychological implications, and it still increases net worth while lowering monthly bills. There are far worse things people can do with their money.
@davidmetzger67035 ай бұрын
It is good advice on low interest loans but some people feel so much better.. your investments were saved to last many years or you didn’t,t save enough. Stock market is still good for many.
@williamhamblin47398 ай бұрын
Thank you very educational🙏🏾🙏🏾
@bryanseverino36742 жыл бұрын
Enjoyed the "Rules of Thumb" video. This is one of the first times I have heard that keeping the mortgage payment (if your rate is low) might be a the best solution of someone. Individually based.
@RootFP2 жыл бұрын
I’m glad you enjoyed it.
@betsylatham50232 жыл бұрын
There should also be life insurance on the stay at home spouse. The breadwinner is likely to be shocked at how much it costs to replace what the stay at home spouse does.
@betsylatham50232 жыл бұрын
@Jee Vang So when your spouse dies and you need someone to take care of the children, make the meals, clean the house, etc. you are going to be able to maintain the same standard of living for your family? Income is not the only way to financially contribute - you also have to consider the value of not having to spend money for those “free” services.
@bernie9728 Жыл бұрын
Truth be told you leaned everything you need to know about how to be ready for retirement when you were in grade school. Back then it was called math. I retired 7 years ago debt free. My wife retired 2 years later. To date, we have not tapped in to our retirement savings. At this rate of withdrawal, how long will our money last?. Grade School level math. Never complicate things that are not complicated.
@kylebebout31572 жыл бұрын
Very helpful. Wisdom beyond his years.
@RootFP2 жыл бұрын
Thank you.
@METVWETV8 ай бұрын
I agree with you Re: Life Insurance, However, If a young couple is planning on starting a family, Purchasing Life Insurance sooner will not only reduce their premiums but It will also "Guarantee that they have Insurance in place even if one of them becomes uninsurable due to a medical condition." None of us know what life has in store for us just around the corner! Even a smaller policy to hedge against the risk of disease (Heart Condition, Cancer, or any of the other 600 Million diseases in store for all of us!) should be obtained as soon as they are married and as kids come along, it can be replaced or added to....
@lroberts41622 жыл бұрын
Really good video.
@everlastingarms30654 ай бұрын
It's as if you're in my brain. I've watched quite a few of your videos now, and you just get it, both lifestyle-wise, and math-wise. There's so much nonsense out there that may or may not apply to every situation.
@stevecooper35792 жыл бұрын
thanks
@CheckThisOut77 Жыл бұрын
The 4% Rule for portfolio withdrawal gets trumped by RMDs (which you must start at 73).
@thevaughntestkitchen60452 жыл бұрын
I have always felt that the 30% house payment rule is much too high once you hit a certain income level. It makes sense as a maximum in low to mid range income. For example, a gross income of $75,000 would mean a maximum mortgage of about $1,900. Makes sense. But at a gross income of $150, 000, that max mortgage doubles to about $3,800. Yes, you can afford that large expensive home. But do you really need it? Why not buy a nice home in a nice area that costs less, and put the extra money in other places, like retirement savings, travel, etc.? My mortgage is roughly 18% of my gross income. I live in a high cost state, so my income is higher but so are housing and other costs. I choose to buy a house in a good area, good size but not huge (2,100 sf) that is nice but not brand new and luxurious. I’d rather use the extra 12% of gross income toward other financial and personal goals than sink it into a big expensive house. I see so many people who, despite having a nice income, end up “house poor” and not able to save enough or do other things they want to do because they have gone with the 30% rule and/or accepted the largest mortgage that a lender will approve for them.
@BadPhD777 Жыл бұрын
Excellent point! Buy what you need no matter what your income.
@Deem572 жыл бұрын
I really liked the Rule of 10 and wish that I had heard of it years before. However, now that I know it, I plan to use it in my future decisions (not just my financial decisions). Thanks!
@RootFP2 жыл бұрын
Glad you liked that!
@elmateo772 жыл бұрын
If you're more than like 15 years from retirement you should have 0% in bonds. If you want to diversify go for a mix of US/international stocks and REITs, the return from bonds these days is so low it doesn't even counter inflation.
@elmateo772 жыл бұрын
@Jee Vang I take it you have a problem with REITs?
@BadPhD777 Жыл бұрын
I have zero in bonds and I'm two years from retirement. I don't plan to change that. I'm willing to ride the stock market roller coaster even in retirement.
@deanthornby20262 жыл бұрын
IL give you a good rule of thumb ...if someone says ..."everybody knows that you should ....." ...what ever follows that sentence will be wrong
@suz65932 жыл бұрын
What does that mean “ you are leaving a lot on the table”? You say that a lot.
@romanromanowski90382 жыл бұрын
Number 1 rule, spend less than you make and you will be fine. Nr. 2 pay off your mortgage for a piece of mind.
@Stevenfrijol2 жыл бұрын
Here is a guy old enough to be my grandson and giving advice on retirement.
@michaelv772 жыл бұрын
I am against life insurance all together. I suspect that having life insurance just shortens life. The very idea that your death can benefit somebody that you love leads to less resistance of your body and brain against the disease. There is better way to secure your loved one’s future. It is to increase your wealth while you are alive and well. And hey, Rule #0: Invest in a healthy lifestyle and exercise.
@CoastFIREisawesome2 жыл бұрын
6 rules of thumb labeled "totally useless" and then described as not totally useless... that's not how language works
@Serf_dumb2 жыл бұрын
For those relying on stocks & especially bonds need to wake up. CPI numbers are cooked by the same shysters selling inflation as "transitory". The real rate is around 15%. $30 trillion in debt & $164 trillion in unfunded liabilities will guarantee that inflation moving forward will be anything but transitory. So 10% return means you're losing money. Want perspective on purchasing power? $1million @ 15% inflation buys $232k in 2030.
@Agent77X2 жыл бұрын
Put it all in on bank savings account and CDs. Safe! No risk! Low income taxes. Best investment for those who are near retirement or are already retired.
@BadPhD777 Жыл бұрын
Do that and you'll slowly fall behind as inflation eats away at it
@dancalmpeaceful39032 жыл бұрын
Sorry - I disagree. 30 years of financial slavery to a home IS not worth it. I would go with your mortgage payment being 20% or less of your NET monthly income. When we bought our house - we made sure that JUST one of us could work at Burger King and STILL keep it. Look at as this way - the less pistons you need to run a engine the better. If you ABSOLUTELY need 2 pistons to keep your financial "engine" running...you're taking your chances...especially for 30 YEARS. We structured our life to so that we ONLY needed ONE person to work at Burger King to keep the house. The biggest screw-up I ever saw was this DOLT at work. He bought a house with his wife that was SO expensive, he had to work overtime at his regular job....AND work part-time in the evenings at Pizza Hut AND his wife also had to work as a Nurse. That was 3 PISTONS to keep his financial engine running. Guess what happened? He was so exhausted, he was hurt in a bad accident AT work that crushed his head. He nearly died. He did live but it was catastrophe after that for the rest of his life. Our company found lawyers to show that it was his own fault because he was exhausted due to working two jobs (also known as "moonlighting") - he also was more focused on playing fantasy football as workers had to admit ON THE STAND in court. The company did end up settling but it wasn't all that much. I have no idea whether he was able to keep his house...but from I hear, his medical bills were devastating and as I say - he was screwed for life after that. As for myself, I and my wife killed the house mortgage in 11 years total. We put every bonus, tax return, garage sale proceeds, etc ONTO the principal.....and also insured that my son's college education was TOTALLY paid too. He's completely debt-free and able to start his life REad this everyone and LET this be a lesson. The main secret....put down a MASSIVE down payment.
@BadPhD777 Жыл бұрын
At least 20% down or you're throwing away money on mortgage insurance.
@kurtbilinski17233 ай бұрын
#7 Useless advice: "Collect social security at age 62." Everyone's situation is different. #8 Useless advice: "Investing beats social security." Cherry-picking data then presenting it as always true is misleading.
@dancalmpeaceful39032 жыл бұрын
YOu want to get out of debt? Dump the ENTIRE windfall onto the principal of your mortgage or pay off that incessant CREDIT CARD bill that comes EVERY month that you've been trying to pay off. YOu played and had fun...NOW PAY FOR it. Sorry....but that's how I got OUT of debt. Now I have fun all the time and every paycheck is a windfall..... I know, I sound like Ramsey...
@BadPhD777 Жыл бұрын
Right on! I'M DEBT FREE!!!
@igoryurchenko95696 ай бұрын
Spend less than you earn
@motokokusanagi78592 жыл бұрын
You forgot to mention that the 4% rule cannot work due to "sequence of returns".
@johngill28532 жыл бұрын
Can not work? It has worked over 90 percent of the time
@johngill28532 жыл бұрын
@Jee Vang ?? Really
@CheckThisOut77 Жыл бұрын
Small grammar issue: “There’s too many…”. Should be “There are too many…”
@kurtcaramanidis57052 жыл бұрын
It's all common sense.
@BadPhD777 Жыл бұрын
Must be a lot of uncommon people in the world then :-)