My Financial Advice

My Financial Advice

This article post provides some of my perspectives on investment and finances in general, primarily directed towards my children, and especially those that will remain living in the USA.

Originally posted to: https://deliverystack.net/2025/11/23/my-financial-advice/

I have not reviewed this and I know that it's disorganized and incomplete. There are many things that I want to write about and I just don't have time or patience to do my best at any of it.

To be clear, I don't know anything about finance or economics. I have terrible investment instincts and timing. In other words, do your own research. But then again, some common quotes (I'm too lazy for more attribution):

  • "Economists have predicted nine out of the last five recessions."
  • "The market is now so high that it will only be a matter of time before it begins its downward spiral. Or it could go up."
  • "The only function of economic forecasting is to make astrology look respectable." --John Kenneth Galbraith
  • "If you call a number of investment counselors, you get a number of different answers, even if they're all looking at the same statistics." --Bernard Baruch
  • "If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions." --Winston Churchill
  • "In finance, everything is cyclical. The pundits forget this, which is why they get paid to make predictions, and why their predictions are so often wrong."
  • "A financial advisor is a man who tells you what to do with your money, and when you lose it, you don't even know where to find him."

And so:

  • "Don't take me too seriously, because I am just one of those people who gives advice. I am not an expert."

Therefore, here is my financial advice.

While there may be some financial advantages, for example around taxes, I strongly recommend against marriage, as both financial and non-financial tradeoffs may not be wortwhile. I especially recommend against an expensive wedding. All or part of down payment on a house would be a better use of the funds. The only practical reason for marriage is the potential to reduce taxes, as the government may promote marriage, partly because they want you to have children, which lowers labor costs and who will pay taxes too.

If you do get married, demand a strong prenuptial agreement to protect your assets and that you maintain separate accounts from your spouse. If you can trust them, then they will understand and support your interest - if you never divorce, they will never lose. If you buy things together, contribute equal funds or keep track of who contributes what, so that when you split up, you keep what you started with and earned. Note that I did not write if, but when. Everyone always thinks at first that they have met the perfect partner, but more than half of marriages end in divorce, and the main reason for some people to marry is financial.

The earlier you invest, and the more that you understand investments, the more wealthy you will be. This is one reason why it's so stupid to buy expensive things that you don't need when you're young, especially as things like fancy cars generally lose value quickly.

Little things add up, especially over time -- even things tiny things such as streaming services or a daily visit to a coffee shop. If you instead invest the money, it will gain in value.

If you certainly will not need the money soon, invest aggressively. As you move closer to needing the money, reduce your risks.

Whenever possible, live below your means. In other words, try to spend less than you earn, and invest what remains. There are times when you will need or deserve to spend more than you earn.

Avoid buying cheap crap. Buy quality things that will last. Buy what you need early in order to get the most value out of it. Don't spend much money on decorative things that do not serve a functional purpose.

None of this means that you shouldn't spend money to enjoy life, especially when you're young. What it means is that you should try to spend less than you earn through both wages and investment income. It really helps to have a budget -- to have some idea of what your income and expenses are.

Excluding dental, or if you have some permanent condition, or some kind of accident, you should only need minimal healthcare until you're relatively old. This shouldn't be a concern until you can't stay on a parent's policy, which in the USA I think means when you are 26.

While real estate can be part of a diversification strategy, and owning rental property can drive passive income, buying a home may not be the best financial investment, especially if you don't have a family. One advantage of renting is that the landlord should be responsible for major repairs. Another is that you can move easily - you generally sign a lease for a year and it converts to a month-to-month after that year, though the rent may then go up. A lease locks in rental rates. Owning a home can also lock you in place, which can be a problem if you lose your job and need to move, especially when the housing market is down. Don't buy more house than you need. Real estate generally goes up in value, but when it's down, it can be down for a long time. There may be tax advantages in leveraging debt towards a home through a mortgage, although personally, I avoid debt. Another real estate strategy could be to borrow money to buy property to rent to others, as long as the income from the rental units exceed the borrowing and other costs.

Whenever possible, buy low and sell high. If you buy a home, do so when the housing market is down. If you buy stocks, buy them when the stock or the market is down. If you have money to invest when the market is high, consider index funds. Preferably, let professional money managers manage your investments, but take part in their strategy. Historically, the US stock market has been one of the best investments, and I recommend megacap stocks (things like oil companies and Proctor and Gamble that aren't going anywhere). Bonds become more relevant when you're aging.

Note that the stock market is basically a casino driven by human psychology, not by reality. Most stock prices aren't based on anything real. Beware irrational exuberance.

In general, do the opposite of what might be your investment instinct. When everyone is elated about the market, that's when you should be scared. When the market is crashing, that is when you should be buying.

Try not to be too generous. Nobody is going to take care of you, so you will need to take care of yourself. To me, the economy of the future looks increasingly difficult. Try to take advantage of emerging trends, such as if Artificial Intelligence (AI) ever becomes real, but more importantly, robots and automation.

If you only read one book about investment, I recommend:

The Internet is saturated with misleading investment information. When someone suggests that you buy something, there's a good chance that they're selling it. Beware of things like “pump and dump” scams, where someone uses misinformation to drive up the price of a stock that they are selling.

Unless you are a professional investor, avoid things like shorts and margin trading.

Avoiding taxes should not be main consideration for investment, but they are certainly a consideration. As part of your diversification strategy, consider tax-advantages bonds and funds. There are several types of taxes to consider:

DO NOT cheat on your taxes. There is no statute of limitation on tax fraud, the penalties and interest can be high, and you almost certainly don't want to face an IRS audit. This is one reason to use a CPA or a tax service that provides some kind of audit guarantee.

One way to mitigate taxes is to maximize your retirement investments.

Keep an eye on your credit report. If you ever need to borrow money, such as to buy a home, a better credit score will result in a lower interest rate. Your credit report is a general indicator of your trustworthiness and can affect your ability to rent a home, get a job, and so forth. In renting, you may be able to prepay the lease in cash to increase the chances of getting the lease and possibly to negotiate a lower rental rate.

EVERYTHING is negotiable . It's generally not a good idea to accept the first suggested price for anything, especially things like cars and homes. Avoid purchasing on the first day, and always be prepared to walk away from any purchase. It's a good idea to bring a salesperson or other seasoned expert with you to any significant negotiation. There is always another opportunity if you have cash. Cash is king.

Sometimes, you can use the fact that you have cash to trick vendors simply by pretending you don't have cash. For example, they might sell you something at a lower cost with a high interest rate, thinking that they will get the money back on interest. Always make sure that you can pay off the entire loan without any penalty and without having to pay the interest.

Keep up with relevant news, for example about tax law, both federal and state. Nothing is ever set in stone; the government always wants more money over time.

DO NOT count on Social Security. Avoid paying into it if you can, as you are unlikely to ever get any of that "investment" back. If you can work as an independent contractor (1099) instead of a regular employee (W2), you can avoid social security tax, and you may also be able to claim home office costs (space, Internet service, etc.) to reduce your taxes.

Hire a CPA to do your taxes, at least for the first few years, until they are relatively consistent over time and you are comfortable doing them yourself. Even when you use a CPA, be closely involved so that you understand the process.

Hire a tax attorney to help you with investment and tax avoidance strategy.

Some stocks are considered growth stocks, meaning they go up in value and you get the gain when you sell. Others are considered value stocks, which pay a dividend. While you should have some of both, value stocks are better if you need cash coming in.

Avoid get-rich-quick schemes. If something sounds too good to be true, it is almost certainly false.