Monday, October 15, 2012

Calling Out Money Magazine's Investment Advice

Calling Out Money Magazine's Investment Advice

Lately I’ve been making frequent visits to my daughter Amy’s orthodontist’s office. I’m pretty sure most folks understand why – she’s thirteen, so of course we’re doing the braces/retainer thing. Personally, her teeth look fine to me, but the professionals say they’re not done yet. So obviously, I’ve got to do what I’ve got to do and go with the flow.



As many parents might do while waiting for their child’s appointment to conclude, I often thumb through one magazine or other from their huge collection, the topics ranging from home & garden to fashion to travel. Most recently, I picked up a copy of Money Magazine. Interesting, isn’t it? This particular issue was from July 2012, the Annual Readers Choice Edition.

Beyond the fact that I would naturally be inclined to pick up that magazine, the back cover said 101 Ways to Build Wealth. Hey, I am always interested in learning and researching new ideas, so I quickly jumped to page 54 and started reading. To my surprise, the very first – as in, the most important – point the article made was: “In achieving wealth, how you invest isn’t nearly as important as how much you save…”

That’s a word-for-word quote from page 54 of the July 2012 issue of Money Magazine. Please read it again – slowly this time. Now, everyone obviously has their own opinion, and I’m not even going to attempt to get you to subscribe to mine, but here’s what I’ve always thought about that statement: Seriously? You’ve got to be kidding me, right?

“How you invest” – that is, the strategy/investments into which you are pouring your hard-earned dollars – isn’t as important as “how much” you save? So when you’re pouring your money into a big black hole, so to speak, you should just focus on saving more? With all due respect to the esteemed magazine, they got this one totally backward. I know for a fact that it’s possible for someone who saved a lot less but used a better strategy (the “how” in this case) to end up with much more money in the end than the one who saved a lot but used the wrong “how.”

I could go on and on, but I’m pretty certain you get the point I’m trying to make here. I believe that how you’re saving – the strategy/investments you’re pursuing – is far more important than how much you save. You can put a whole lot of water into a leaking container, but it’ll be only a matter of time before everything drains out. Meanwhile, if you put a lot less into a leak-proof container, you’d keep everything wouldn’t you?

In fact, I have written and taught about this very point in the past. Here’s one article I wrote for the Maryland Women’s Journal about it.

I even discussed it in my book, 5 Mistakes Your Financial Advisor is Making, beginning on page 50. If you haven’t read the book, I would strongly encourage you to get a copy. You can purchase the e-book for just $2.99, and it’s readable on pretty much all the e-readers, from Apple to Kindle, Nook, Kobo, Sony Reader, and Palm. You can also get it directly from the iBook or Barnes and Noble e-stores. Or if you’re like me and prefer the hard copy, you can buy it here for just $10.36.

I’d vote for how you invest being far more important than how much. What about you?
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