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Dad's (lack of) advice on investing

November 16th, 2008 at 08:11 am

I have mentioned before that my dad used to be a stockbroker with a full-service brokerage, and now works for a mutual fund company. You'd think I would've gotten a great education in investing from him, but I find I'm having to go out and read books to educate myself like everone else.

In the past when I've asked him to teach me about investing, I'd get a 5 minute lesson that involved comparing this year's year-to-date (or was it 1-year?)return to the 10 year average for that fund. Once he sent me a book by Jane Bryant Quinn that defined bonds and mutual funds but didn't explain how to pick a particular fund.

Recently I asked him about asset allocation and he said he doesn't believe in rebalancing -- it was just a way for authors to sell books and advisors to look like they're doing something.

Dad doesn't believe in index funds -- he once told me that their popularity had driven up the price too much. And of course he believes that you're getting the value of research by buying loaded mutual funds.

I once asked him at what point would I have saved enough for retirement and could enjoy the present a little more. "Save every penny you can," was his answer.

To be fair, Dad always did tell me which funds to pick in my 401k, and will periodically tell me that a particular fund at his company is "on sale" compared to its historical price. He explained the basic concept of a mutual fund and dollar cost averaging when I was in high school.

Despite all this, Dad did pass along some core bits of advice that have made a big difference in getting where I am today:
* live below your means
* save as much as you can
* start your 401k the day you are eligible
* max out your 401k
* long-term owners do better than long-term loaners (ie stocks outperform bonds and bank accounts in the long run)
* don't put all your eggs in one basket
* start investing in your 20's
* send $50 or $100 to a mutual fund every month(unfortunately I didn't keep following this one)
* mutual funds (at least the ones in his company) will on average go up 3 out of 4 years, and lose money 1 out of 4 years.
* don't buy the most expensive house on the block

2 Responses to “Dad's (lack of) advice on investing”

  1. Broken Arrow Says:

    Did your father elaborate on why on some of these things? Can you get him to elaborate. Seems to me that he might be holding back, but if so, why?

  2. zetta Says:

    Ha! I've had no luck getting a discussion going.

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