Personal Finance, Part 6 — The First Question

I should have started out with this question when I began this irregular series, but somehow it slipped my mind. When I talked with my Mom this evening, it came back to me. People come and ask me for investment/financial advice. My first question is:

How much are you willing to learn, and how much work do you want to do?

Depending on the answer, I have several different solutions that I offer my friends. For those that want to do nothing, I tell them to hire a financial planner, and give them a few bits of advice on how to evaluate the planner. For those that want to do a little, I give them a list of things to consider, how to pursue those, and what a reasonable asset allocation would be at Vanguard. For those that want to make it a hobby, I tell them what they need to read and learn in order to choose their own investments, and plan their own financial future.

My advice varies. Most don’t want to do much, and really, they don’t have the temperament for it. For them, finding good advisors and good mutual funds is a must. For the minority, education is where it is at. That is a big part of what my blog is about: learning about the markets. Those who read me know that I have a wide set of interests in investing and related topics. You won’t get personal tailored advice from me, but you will learn a lot about how the markets work.

Once I learned the “first question” my life got easier advising my friends.