My 3-minute video response: What you can do about today’s economy?

95 Comments

Yesterday a bunch of you left comments and sent me emails about what’s going on in the economy. Here’s a quick video I did to answer some of them. Check it out and see my notes below.

Worst screen capture ever?

0:01 — Intro: We’re going to talk about what’s happening with the economy, asking the right questions, what you can do with your money. PS–It’s my first time doing video for this site, so please cut me some slack!

0:12 — Lots of questions: “What’s happening?” “Who can I blame?” “Why is the government bailing companies out?”

0:45 — Most of the questions are totally irrelevant!.

What do we know?
1:11 — Your money is generally safe: Money in savings accounts is insured up to $100,000 per account, and money in brokerage accounts is insured up to $500,000 (with some nuances). However, this doesn’t mean money in your portfolio is insured against losses in the stock market — if your portfolio is down 20%, it’s really down 20%. That’s why investing is “investing,” not “picking a sure thing and profiting a lot.” SIPC insurance means it’s insured against the brokerage firm going belly-up. Learn more by reading this article.

If you’re looking for a broad-based understanding of what’s going on, The New York Times has been providing excellent coverage, especially this page.

Worry about the things you can control
1:47 — We misjudge risk and worry about stuff in the news — as opposed to the real risk. Let’s say you’re worried about not having enough money. Which is more likely?

1. You’ll run out of money because you lost it all in a tumultuous stock market
2. You’ll run out of money because you didn’t save enough, spent money on stupid stuff (vs. spending consciously), and didn’t properly diversify your assets

OF COURSE it’s the second, but because of the availability heuristic, we tend to overweight what’s easily accessible in our brains (i.e., we’re all worried about what we read in the papers right now).

Remember, we are cognitive misers and can only pay attention to a few things, so take advantage of that. I’d rather focus on the very real risks that have caused millions of people before me to not have enough money to sustain their lifestyle — that is, not saving enough — rather than worry about a macro-economic topic that’s in newspapers. Sure, it’s important, but I can’t control anything at the macro level. At the micro level, I can control everything. (Note: Here’s a good book on judging risk.)

What you should focus on
2:12 — Save more — single-best thing you can do to mitigate risk

(No time stamp.) I forgot to mention this in the video, but please don’t fall prey to the myth of financial expertise: Nobody has The Answer about how bad this will get and how long it will go. Experts have been trying to predict this for years — remember in 2007 when they said it would “probably be fine by the end of the year?” — and they’re still trying. And failingDon’t try to time the market. You’ll fail too. Just pick a regular, consistent investing strategy and optimize for the long term.

2:23 — Tweak your asset allocation

2:42 — Stop asking stupid questions!

2:52 — Best things you can do: Forget about macro-stuff and focus on your own finances. Save more, do a kick-ass job at work and get a raise, or even start a side business.

* * *

Hey, what did you guys think of the video? Should I do more? Let me know if you have any suggestions or questions for other stuff you want me to talk about.

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95 Comments

 
  1. Great job on the video post, Ramit! I would definitely recommend you doing more, as your conversational style of writing lends more to verbal interaction than it does print [in my opinion, of course ;) ]

  2. I like the video feature – especially with the expanded ‘liner notes’ as it were. It gets to me twice.

    Thank you for bringing up diversifying your income, taking another job or starting a side business. My husband recently cut back on one job, the smaller paycheck for longer is more valuable than a big paycheck for a shorter period, like if they shut the doors when they can’t cover payroll. Getting a second job in a more stable company kind of hedged our bets, per say, and we’d end up okay if either company tanks.

  3. Ramit,

    I love the new video format. I think it will engage visitors in a new and novel way.

    Matt

  4. That was a great first video.
    Don’t stop! We’ll promote them!

  5. [...] Here’s my response to the questions. (2 votes, average: 4.5 out of 5)  Loading [...]

  6. Ramit, this was great. I totally agree with all of your points. I often wonder why people are babbling about the impact of the recession rather than taking proactive, personal steps like saving, investing, entrepenuership.

    This post was also far better than the last 4 or 5 snipits you’ve put up here which (like one disgruntled reader) left me ready to unsubscribe from this feed.

  7. oooo Ramit, love the video post. Sound financial advice and eyecandy is quite a nice combination. I just started reading your site and have a tinnnyyy nest of money that I’d like to use to start investing. I will definitely read up on asset allocation. Looking forward to more videos.

  8. “Hey, what did you guys think of the video?”

    Watching the video: 3 minutes.
    Reading your summary with all important stuff: 15 seconds.
    Worthy information: same ammount

    My economical thinking very much prefers reading, thank you :)

  9. About posting videos: interesting but please keep summarizing them as you did with this one (helps sintetizing and indexing).

  10. Liked the video, thanks. And, embarrassingly, it helped me learn how to pronounce your name correctly. Sorry, I’d been mentally mispronouncing it every time I read it. That’s what happens when you grow up in a predominately German-Swedish part of the Midwest!

    I agree with your comments on saving more money, at which most of us Americans are horrible. However, I don’t think anyone’s questions were dumb. I think if we as consumers are to take better control over our future assets we need to understand what happened *now* so we can watch what is happening in the future, invest wiser, vote for more competent people, etc. What’s that old saying, “He who doesn’t know history is doomed to repeat it?”

  11. As usual, I agree with with you 100%.

  12. Thank you. Your video post was short and to the point. This is smart and easy advice that people don’t practice enough (myself included.)

  13. Quick advice, and good advice. As some others have mentioned you really should do more of these – you take to the format well!

  14. Good, solid perspective to keep it (the bad economic news) in perspective!!

  15. Thanks for all the great comments! I’ll definitely do more of these videos.

    Btw, thought you’d all enjoy this. Here’s an email I JUST got:

    “Ramit, I had a quick question for you, I wanted to know what do you think of me buy some AIG stock, while it very low and government just bailed them out? I know it’s hard to give an exact answer, but I wanted to see your overall opinion.”

    KILL ME PLZ

  16. Kick-ass video Ramit. You should think about doing an introductory series of videos for people new to IWTYTBR if you haven’t already.

  17. Hi Ramit,

    You give more useful, down-to-earth advice in one minute than many financial gurus can dish out in an hour. Keep up the good work!

  18. Thanks for the great video! It definitely helped to explain some of the details of what’s going on now. Now I just need to sit down and lay out my budget to increase savings :)

  19. Fantastic job on the video, I really appreciated what you had to say. Honestly, you are a perfect example of offering something of value for free (your blog) with plans for monetary return eventually (your book, which I WILL be purchasing – not to mention attending conferences where you are a speaker).
    Kudos to you.

  20. Great job on this video! Very straight to the point, loved the notes and simplicity for all to understand. I will just add on the notes some links to go deep into the suggestions.

    Thanks for your advice.

  21. Nice work, Ramit! FYI, in YouTube if you go to http://www.youtube.com/my_videos and click on “edit” for your video you should have several options for the “video thumbnail”(screenshot) which shows before the video starts playing.

  22. Sorry to say but your videio stopped and then started running about every 3-4 seconds. However, since no one else mentioned this, it must be something caused by my system. Thank goodness you had a draft of your talk included. It was a great monologue and really made sense. Thanks for your efforts.

  23. Good job…I believe you got your point across loud and clear, which is half the battle…now people must put your knowledge into action!

    Keep up the good work.

  24. Great video response to the mass of similar questions. I like that you chose the best medium to communicate to a larger group. Seeing you put yourself out there adds all the more credibility and shows you actually take the emails seriously.
    It adds a persona and one that we look forward to seeing more of in all media.

    Excellent!
    C

  25. Well, in addition to the wonderful insights listed in this truly helpful post (no sarcasm here), we now we know two things: there IS such a thing as a stupid question and if you ask one Ramit may just publish it and make fun of you on his website.

    I didn’t submit the question but the response is nonetheless reprehensible.

    -5 points for lack of professionalism. I would have expected better.

  26. That’s true. There are definitely stupid questions.

  27. Regarding this “Money in savings accounts is insured up to $100,000 per account”, do you know how soon we’d get that money from the govt if the bank goes down? Maybe it’ll take 10 years before we get that money back?

  28. Hi,

    The video is a great idea and do more of them! So much better than an email and you get more out of them! Keep it up!

    Thanks!

  29. @ Jen- I heard from a close friend that the FDIC has up to 99 years (essentially no time limit) to pay you back. I haven’t checked to see if this is true or not.

    Ramit, can you confirm/refute this?

  30. Ramit,

    Great video, especially for your first. Important information, I think you are right on the mark, especially with the savings part. Not sure about calling questions ‘stupid’ though. Naive yes, but stupid? That’s how your readers/viewers will learn by asking you.

    Look forward to more.

  31. Not bad for a first video. We watched what happened this week and pulled everything out of our portfolios, since they were all very small and set them aside for savings, period. We wanted the funds to be ours and not flucutate. we had lost funds in 2 of the 3 investment portfolios and that was that. Right now, stuffing my mattress looks safer than leaving anything out there to chance. I’ll keep addinig to the “mattress” as I would to a savings account and wait for safer times.

  32. Good video, but I’m not sure “don’t try to understand the macro” is good advice. Really, understanding at least a tiny bit about how markets or financial institutions work would go a long way.

  33. The biggest challenge in investing in the markets is we give too much credence to the returns always being there for us, as well as assume that we can be successful as long term investors if we just throw money at a fund. Unfortunately, this attitude gets us into bad situations, and can easily be avoided.

    We need to take an active role with our investments, because we are the only ones who genuinely care enough about whether we retire wealthy or not. You can’t afford anything less.

    Here are a few steps you can take next time:
    1 – Learn when to get out. In my blogs, I discuss how by watching a simple volatility indicator, like the VIX, can let us know when to get of the market and when to get back in.

    2 – Exchange Traded Funds (ETFs) should be a primary part of your portfolio allocation. You can’t afford junk fees and management fees from mutual funds that drain your portfolio over time. This could make a difference of a few hundred thousand in your investing lifetime. Find an ETF with similar objective to your mutual find, and consider making some changes.

    3 – Always use a stop program. Another benefit to ETFs is that you can use a stop program that automatically gets you out at a set price or percentage. That way, you can set it and forget it.

    4 -Our national debt is almost $10 trillion. What that means is as the government adds more debt, the dollar becomes weaker. As the dollar becomes weaker, your money is worth less. You can counter this by investing in overseas ETFs.

    If you are scared or frustrated from big losses, it is a sign that you need to have an investment approach about managing your money. It is not that hard. The few points above and some of my blog posts should help you get started in the right direction.

    All the best.. CheapLee

  34. Reposted, because it got messed up:

    Ramit,

    I liked the video. It’s a different experience listening and seeing someone talk than reading their words. All that non-verbal communication. I went to a couple of the links about asset allocation. I have two questions.

    1. How important is rebalancing every year? Specifically, if you just invest the new money in the appropriate balance.

    2. Is it reasonable to have only stocks indices? I’m 24 and don’t mind risk.

    (Right now my contributions go 50% Vanguard Total Stock and 50% Vanguard Total International Stock. I have yet to rebalance.)

  35. i’m going to go out on a limb here and let you know you should really take care of the uni-brow before you do your next video… especially if anyone gets HD!

  36. Nice video. What would your solution be for people who have followed a savings philosophy for a while, but haven’t had it pay off because of rising commodity prices and inflation? Seems like savings these days barely keeps you afloat (tho it’s far better than living off credit).

  37. Saving money is a good start, but it’s not enough — to grow that money, invest in a well-diversified portfolio that will put your money to work for you. (In a savings account, you’re mostly treading water in terms of inflation, especially over the long term.)

  38. Ramit,

    Great job with your first video. Very precise. Keep’em coming.

  39. Congratulations on a video well done.
    I enjoyed it and hope that it is the first of many.
    Thank you for the information.

  40. I’ll add to the chorus of folks saying “liked the video.” I especially loved the way you said “leave a comment” and pointed downward–it was a funny physical representation of a digital event.

  41. Great delivery and nice use of links to supplement the video.

  42. Really like the video answers! I Short and to the point. like the mix up of video and writing too. You are a great writer. What was great was having the transcript – that is an excellent mix of media.

  43. Try using vimeo.com not youtube.com

    I do like the video portion!

  44. Good video. Clear and to the point!

    Do you really believe that saving more than the next person is the best thing to do with money?

    I have been told recently that investing in precious metals and real estate is the best thing to do with money.

    Please advise and/or give me your opinion.

  45. You can invest in different things, but they have to be part of an individual portfolio. Personally, precious metals and real estate (depends on what) seems crazy, but that’s why we can both reach the same goals by different investing mechanisms.

  46. Great Stuff!
    Work on framing your face in the picture. You may want to back away from the camera a little.

    The written synopsis is important as their are many learning styles.

  47. [...] a post about this week’s events, but then I saw that Ramit at I Will Teach You to Be Rich has done the work already! He’s created a three-minute video with tips for today’s [...]

  48. Ok, we are just supposed to throw our money in a mutual fund and forget about, right? I don’t think so. That’s how we got into this mess. We have millions of American with billions of dollars in mutual funds and they have no idea how that money is being used. So the mutual fund management is just having a field day spending your money because they know that there are not repercussions. All they have to do is collect there management fee and explain away your 20% loss by saying “diversify”, “dollar cost average” and “asset allocation”. PUHLEASE, until Americans stop and pay attention to what is happening to their $$s, these bubbles will keep happening.

  49. Great Job on the video!!! I competely agree with you about stupid questions! Especially the one about “who can I blame?”
    People can only blame themselves for being financially irresponsible with their money. You can’t blame the government or any one party. If you don’t like the way the system (government) is being ran you have to realize that there is very little and individual can do to change it, and complaining about it doesn’t help or change it! My personal thoughts are that you have to learn and teach yourself how to beat the system at their own game instead of trying to blame the system. Be more proactive vs reactive to what’s going on and learn to benefit from it!!!

  50. I know this blog is geared toward young people and few of us have had money invested when there was significant market downturn before, but try to think big picture. Today, your Roth IRA contribution is pretty much offered at a discount. Take advantage of it.

  51. Hi Ramit! I normally don’t watch many videos I come across because I am much more of a reading person, but I liked this video of yours. You come across great on camera and had a very reassuring tone, which is fantastic considering the subject and the questions you are responding to. I liked your bit about just doing what you can at work and perhaps opening a side business – I am young and don’t have a huge net worth, but I feel this is one of the better things I can do to try and brace myself against whatever storm comes along. Thanks for posting this!

    -Holly

  52. I enjoyed the video, it was pretty informative and well done. Some constructive criticism:

    -sit farther back from the camera, it feels like you are looming over me when I watch
    -talk slower, and exaggerate your annunciations
    -use an intro-body-conclusion format where you right away tell the viewer what they are going to be seeing, then give the meat of your presentation, then recap it all at the end briefly
    -this might be asking too much, but could you insert graphics (charts etc.) into your presentations? I am a visual learner and I know many others are too, it really helps people like us to grasp complex points, which might be useful for future videos.

    Keep up the good work!

  53. @Cecily: Pulling out your investments was a mistake and a more balanced asset allocation reflecting your appetite for risk is the way to go, I doubt 100% mattress is really what you want to be doing, not just because you won’t have any returns, but also because it is not as safe as you might think (dollar depreciation / inflation scenarios from all these bail-outs are equally a source of uncertainty.)

    So rather than focus and act on the things we the little investors can’t control, I think it is probably better to focus on the things we /can/ control, i.e. asset allocation, growing your income and moderately frugal habits to build up savings.

    Don’t pretend you’re smarter than the market, Wallstreet clearly wasn’t.

  54. Ramit,

    You need to invest a little bit of money in either A) collar stays or B) a good iron.

    Also realize that the policy issues are likely to have as great an impact on future generations as their saving rate and asset allocation. This is because to make any investment progress, your returns have to beat inflation.

    Other than that, thanks for posting the video, which I enjoyed. And keep up the blogging.

  55. Excellent video blog!

    I just want to throw out there that if you’re not sure how to set an asset allocation and/or rebalancing, or you just don’t care but still want to invest, there’s always Target Retirement/Life Cycle funds out there. They can do all that automatically for you.

    And yes, very good point that we are actually hurting ourselves more by our own poor saving habits than with what’s going on with the market right now. Unless you put all of your money into AIG stocks….

  56. All good points. After you go through all of the above in the video, I would only add one more thing, “Laugh”.
    Check out the video clip in “What really happened at the Fed this past week.” http://tinyurl.com/4cu69k

  57. Right on and thanks for the notes so I can revisit what you said. Thanks.
    ld

  58. I enjoyed the video portion of this post. Very informative and easy to understand. Thanks!

  59. I loved the video Ramit! It gave your personal touch to the blog.
    And you posted it at the right time! I was panicking a bit about the markets going down so much, but before doing anything to my investments I checked your blog. I realized I have a diversified portfolio, I am saving as much as I can, and now I feel a lot better. So… thanks Ramit!!

  60. Enjoyed the video — good, easy to digest information in a very conversational style. You should continue!

    As a photographer, I have to comment on a way to greatly improve the quality of the visual: Shoot against a completely neutral background, and try to keep the distance from you to the background at least twice the distance from the camera to you — that will help throw the background out of focus. (That bookshelf jutting out of the back of your head doesn’t improve your looks! :-))

    Take care!

    Geoff

  61. I too like the video format and the synopsis below it. But I also agree with Geoff, the background’s a little distracting. I noticed the sticks in the corner and started questioning your decorating scheme instead of listening intently to your words of wisdom…

  62. [...] For his full post on the matter, go here. Possibly related posts: (automatically generated)Great ArticlesHealth and Money IssuesTop 6 Ways to Teach Your Kids About Money [...]

  63. Ramit,

    I liked the video, but I just wanted to point out one small issue.

    You said “as we know, over 90% of our returns come from asset allocation”.

    I’m guessing you got this from the Brinson, Hood, and Beebower study, or from someone quoting that study. Most everyone gets the results of that study wrong. What they actually said was 93.6% of the VARIATION in your returns comes from asset allocation.

    Now Roger Ibbotson and Paul Kaplan did a subsequent study because they realized everyone was misquoting Brinson, Hood, and Beebower. They looked at what portion of your total return is due to asset allocation. Interestingly enough, they found that nearly 100% of total return is due to asset allocation and NOT timing or stock picking.

    Just thought you’d find the second bit interesting! :)

  64. Love the video, Ramit! And the links with more explanation are great. Do more! But finish the book! Bet you love the comment about ironing….

  65. hey rammit,
    i liked the video and i really liked how you wrote a breakdown of what you covered. thanks for the advice!

  66. [...] because your stocks went to zero, or you didn’t save enough in the first place?  (from a recent article by Ramit at iwillteachyoutoberich.com).  Take a look at your savings % and spending habits if you [...]

  67. I like how you kept it short but sweet. Plus, your quite nice to look at.

  68. save your money on savings account

  69. Indian media is making a lot of fuss about recession in US and you are asking us to mind our own biz. Great advice ramit. not an expert to comment on quality of the video; great idea

  70. Linda’s comment just gave me an idea for re-branding this site: “A blog on personal finance… for the ladies!” Then just do video posts and idly strum an acoustic guitar the whole time. I think you’ve really got a solid niche on your hands here.

  71. Ramit!! You’re awesome. Loved the video post.

  72. Thank God Ramit! I’m so glad to see some quality, insightful content on the site. I used to read your blog several times a week, but then stopped when I just felt like every post was welcoming yahoo readers, advertising your publications/upcoming interviews etc etc. I thought I would check in today in light of today’s activity in the markets and I am super pleased to see that you are back to posting some content worth reading/watching.

  73. Great Video. Next time use more light on your face. 1/2 your face is lite and the other side isn’t. I like to see facial inflections when someone is speaking… it helps make the presentation more vivid and captivating. You already have good on screen presence and charisma. Light it up so we can see the subtle nuances of your communication!
    Thanks and Keep it coming!

  74. Good job on the video and the links. I loved when you said stop buying dumb stuff. I’ve seen too many people whining on various TV news clips about how they can’t afford the basics when they have a massive big screen TV in the background a 3-5,000 SF house and a Cadillac. I am not rich by most people’s definition, but I have saved and lived within my means. What’s happening on Wall Street is disturbing and speaks to the greed on some and ignorance or gullibility of others, but I’m not that worried. Politicians and the media and put the fear of death in everyone so they can pass a ‘bailout bill’ without informing the public of the facts. Now everyone is hysterical because they fear what they don’t understand.

    Ok. I’ll stop my rant. Good job. Congratulations on the book deal too.

  75. [...] Orman, Ramit Sethi, Dave Ramsey, Bill Bartmann and JD Roth – what you’ll hear is that there are opportunities to [...]

  76. [...] I was surfing some of my favorite personal finance blogs.  I came across this short video at “I Will Teach You To Be Rich”.  It’s only about 3 minutes long and worth [...]

  77. Great video! I love the interactive approach to convey your message. Definitely keep doing them!

  78. [...] about it. If you do this in the spirit of sharing good information with others — like this video about the current economic situation that Ramit Sethi, a personal finance blogger, distributed via Twitter and other tools — [...]

  79. [...] about it. If you do this in the spirit of sharing good information with others — like this video about the current economic situation that Ramit Sethi, a personal finance blogger, distributed via Twitter and other tools — you’ll [...]

  80. That was an excellent video on a pretty free flow thought on this economic situation. I would like the opportunity to disagree with you sir, if you or any other readers disagree with my point please post your feedback, thank you. You mention that putting money into a savings account and starting a business would protect against “hyper” inflation, as said in the end of your video. I would like to focus primary on this statement and the accuracy of it.
    If you where to place your money in to a savings account and the economy did experience a hyper
    inflation rate of lets say around eight percent (low). Now with the way current rates are today your savings would earn four percent interest a year and your greenback or dollar would lose eight percent per year because of hyper inflation. This would come out to -4% per year on your return for the savings account, fixed income accounts, and your money market accounts as well. This is a loss and that could be acceptable given the fact that we are in a declining economy, but it does not have to be…..
    Onto the issue of starting a business in an economy that is hyper inflating or experiencing the
    recession that we currently are in. Starting a business in the environment of eight percent inflation is what we would be doing, this is still pretty low for hyper inflation as seen in Japan. You would turn around and assume an automatic loss of eight percent due to inflation of your greenback annually. Add this to the budget of a business in a failing economy and i see a box of dynamite, kaboom! The economy is right now is like a lake that is chemically imbalanced and yes a bacteria or inflation could spread rapidly in the lake, turning it into a cesspool.
    I’m not just sitting here preaching doom a gloom, where there are down turns there are upturns. The
    market works to balance itself out. This is the human nature of things, so whats the upturn in this screwed
    economy? Now that you braved to the bottom of my response the answer is gold, Plain and simple and here is why. On the date of January fourth of 2005 gold was trading at 428.80, then on March second of 2006 gold
    was trading at an astounding higher rate of 563.75. How can this be an the collapsing economy well how about
    February twenty-first of 2007, gold was trading at 658.60. What about right now, Gold collapsed with stocks
    right? Gold closed at 817.00 on November twenty-sixth of 2008 and was even affected by the stock crash.
    Some say the economy follows random patterns but there is always a inverse, this time being gold
    continued to gain value as the global economy collapsed. I would even say that due to the economic collapse gold
    gained value at a more rapid rate. So as the economy continues to collapse (and it will) gold continue to gain value. The investment in gold does not only protect against inflation, it also help you gain significant capital return. I would even be as bold to say that gold will see 1200 in 2009 or even 1600 in 2010 as the economy continues to unravel. So we can see evidence of the rich classes consolidating their money into gold as the economy goes downward. This would explain the rapid increase in golds trading price. To check my statement on the relation between gold and the collapsing economy you could check the foreign economic trends and foreign gold prices. Thank you for helping me relive some of my thought on the economy and I hope we all make wise choices to continue to profit off of the current economic trends.

  81. Hi Ramit,

    Clear concise and to the point, I absolutely agree that there is no point in whingeing about things which are out of our personal control. Can’t remember how I found this site, but glad I did. I have a full time job managing a shop, and also translated a magazine from Spanish to English; it folded! so I’m looking for more translating work and am glad of tips to make money, without the rice cake bit. I go to the library 3 or 4 times a week.

    Cheers and thanks, Janice

  82. Positive feedback on your feedback. Like the casual video augmented with your notes below the screen. Easy way for us visual/audio learners to max out our time spent!

  83. I wanna see more videos…where do I purcase the book in Bangalaore, India????

  84. Most people should take their money out of stocks and put it into
    CDS and high interest bank accounts.Stocks and funds are a
    suckers game.

    And start a small business which I do as a writer. Just my two cents.

  85. I have my ROTH IRA in a target-date retirement fund (Fidelity Freedom Fund) because I’m not an expert and didn’t want to have to manage it much! Are these a good idea?

  86. Most macroeconomic questions are dumb, agreed (though I question the wisdom of calling readers dumb!), but not all of them are immaterial. People in low tax brackets who expect to later be in higher brackets in retirement should clearly preference Roth IRAs to standard IRAs, and similarly there is a value judgment to be made about whether a 401k makes sense (even with the compounding) if you can only choose a lousy overpriced plan (as most of them are) AND believe your tax rate will increase in retirement. The last question requires a value judgment on whether the USGovt can possibly begin to meet its obligations and still keep taxes low. Doubtful.

  87. I loved this video — you get straight to the point with what to do, no extra explanation of the many factors that go into today’s economic situation that doesn’t really apply to the average individual’s personal finance. Keep ‘em coming!

  88. Great video….short and accurate…Please keep the videos coming. Rock on…

  89. It’s such a delight to watch this nearly 10 months after its original airing. Your comments were spot on back in September 2008 – and as relevant as ever today. My favorite line:

    “Most people don’t have enough money because they didn’t save enough – not because they lost it all in the stock market.”

    This is so true – even with the bear market we’ve just gone through (and perhaps are still in). Your advice to focus on what we can know and control and ignore the rest is sage counsel indeed. Way to go Ramit!

  90. Ramit,

    Great first effort (love the tranquil background BTW). You are so right about macro vs micro issues. The questions will drive you batty, and when you ask people “how much did you put in your 401k last pay period?” they will continue to rant about this macro stuff.

    Just keep increasing your savings by a percent or two, and put aside your raises. Make some extra money, and put it aside. Old formulas that work.

  91. Awesome video, I do have a question that would impact myself (as well as possibly others on your site). The market is low now, we all know that but my question is this. While the market is low, is it really a good time for me to start throwing everything I can afford to into it?

    Thanks a lot, I’ve been a reader for quite sometime now but sadly very slow at actually taking action.

  92. Hey, I love what you do and how you focus on picking the low hanging fruit of personal finance. Nothing to do with how you look or the quality of production but I tend to skip over the video in favor of text.

  93. Thanks for the valuable information! I definitely like the video format, feels more interactive. I like your comment on stop asking dumb questions…people tend to focus on the complexities instead of sticking to the basics.

  94. You’re a cutie!

    I was watching OPB a few months back and saw you on a finance program for teenagers. I was intrigued by your book (despite being in my 30′s), and read it.

    I’ve decided to take the extra $100 that I was putting towards my mortgage premium (I bought my first house last year) and invest it. I put it into an index fund, but don’t I have to pay taxes on the earnings when I withdraw it? I had some money in an ING Direct savings account last year and when I put the interest earned amount into my tax return, nearly all of it was added towards the tax amount I owed. I am already putting 12% pretax into my traditional IRA and maxing out my ROTH IRA, and want to earn more than the measly 1% that savings accounts are yielding right now for my emergency fund. Is a non-taxable investment account something that exists?