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Why you should stop listening to kooky weirdos about money

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How many of us have friends and family that are FULL of advice… that makes NO sense?

Your parents will tell you, “real estate is the best investment!” Your college advisor will tell you, “Better take Chinese! The future is in China!” And your friends will tell you about this “super-cool investment strategy” that they read about on a penny-stock site.

Isn’t it weird how everyone feels their opinion counts? Let me be the first to tell you: No. No, it doesn’t.

FOR EXAMPLE: If you write in and tell me how I have a spelling error on my 47-page sales page, and how dumb I am, then offer to “consult” for me on spelling, I’m probably gonna ignore you. Guess why? First, because I’m Indian and therefore a spelling-bee champion. Second, because minor spelling errors don’t matter. I have sales data and I factually, definitively know you’re wrong. In this case, your opinion is worthless. Thanks for playing.

In today’s video, I’ll explain WHY people offer you nutty advice…and how to see beneath the surface to decide whether it applies to you or not.

And make sure you leave a comment below with the craziest advice YOU’VE ever gotten. This is going to be great.

I do have one suggestion: sign up for my free email list to get exclusive strategies and systems for living a rich life..

Join my FREE email list

(If you can’t see the subscribe box above, click here.)

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119 Comments

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  1. “I know real estate is expensive and you have no money, but you should find a s%*&-hole and buy it.” ~2005

  2. Never EVER buy a brand new car. You are throwing money away on depreciation.

    Never mind that a 2 year old toyota with 50k miles was only 1k less than a brand new car with 12 miles on it. But maybe I should buy used just so I can be true to financial wisdom.

    • Another great one. And this time, the advice is from the so-called experts.

      Here’s my take on why I bought a new car.

    • I bought a MINT, 1 previous owner, black 2003 BMW Coupe 2 years ago with 30k miles on the clock for £8,500. Original sales price of the BMW with options was £28,000. RRP of the new model at time of Sale £34,000. Cost of repairs since purchase 2 years ago, £450 front left light, £2.99 seat belt button. Insurance was less than new car. Road Tax same, so erm call me stupid all day long… that’s £25,000 I didn’t spend.

  3. Go to a prestigious school and get a degree even if you have the program and are not learning anything from it.

  4. “I agree that you’re being under-utilized and deserve a raise, but we don’t have the budget to give you one right now. Keep working and let’s revisit this in 6 months.”

  5. Good advice for the “Money magazine” crowd. I run Global Fixed Income & Currency for a large government, and people should always ask 2 questions: “is your schedule D larger than your 1099. And are you a 1%er? If they say “yes” to both, you should think about what they have to say.

    I’m guilty of giving advice to family. Probably a mistake because my motivations are unclear. They have all their money in cash, or have all their money in Vanguard.

    You probably have some good wisdom, but you are aware that 10 year returns on US equities are 0%, right? And, most people won’t wait 10 years for you to be right, right? You also know that USA=Japan, and 23 year returns will also likely be 0%, and after inflation and taxes, something like -50-90%, right?

    Inflation and taxes are the biggest enemy. I have not heard your answer to that. I have one, and rich people all know the answer – people who don’t make their living selling books/videos.

    What’s your schedule D, LT gains line like relative to your book income?

  6. Hi RAMIT SETHI,

    As such advice is free of cost so most of the people easily accept it. Actually, It is B2B(Benefits for both) Adviser and listener.

    There are number of people around me who advise (free of cost) time to time but how much it is useful for me only I know.

    RAMIT, I also give advice to people ( I am a forex trader and Chief Analyst ) and help them to maximize their profit. But remember that it must be useful for them.

    Thanks
    Shawn James

    • Please tell me more about this free of cost B2B advice to maximize my profit!!!!! (Awesome use of B2B. I am intrigued by your comment.)

  7. Worst advice? When I told a co-worker about a new car I’d bought (second-hand, bought via a loan that was short term and lower % than the dealership) he told me that I should have instead used that money as a deposit to buy a second property, renovate it, then rent it out. So in addition to my existing mortgage and financial commitments, he was suggesting I take out a loan and ANOTHER mortgage, then add the fees and costs of buying a property, then the renovation costs. Just like that. Forgetting the fact that the bank would look at my meagre salary and financial commitments and refuse me on the extra mortgage anyway. This was all because I bought a new(er) car than the junk-heap he was driving and had taken the decision to replace my POS car when he should be doing the same!

  8. Bells and Whistles Link to this comment

    When I was seventeen going on eighteen (hot, young, and barely legal), me and my mom were advised for me to take up a credit card for me to build credit.

    Took out a $500 limit card (I think it was platinum) from Capital One.

    Oh yes, fun times since 2006.

  9. Buy the Facebook IPO stock!

    Given by almost every paper, magazine, website, radio host – “experts” all.

  10. “First, because I’m Indian and therefore a spelling-bee champion.”

    HAHAHA

    Craziest advice: “Your newlyweds, invest in yourselves and buy a house. Stop throwing money away on rent.”

    The math on that logic depends on more than just the American dream of owning a house. You have to run the numbers for your own specific situation.

  11. Sorry to make an unrelated comment, but good luck speaking tomorrow at FINCON Ramit! You’ll do great :)

  12. Everyone should buy real estate no matter what. Don’t worry if you’re only going to be there a couple of years. Don’t worry if you’re young and unsettled in your career. After all, renting is “just throwing money away,” right? After all, real estate is the best possible investment, right? Oh, wait, even in good markets, the real return on real estate is about half of what you get out of a low-cost mutual fund if you figure it correctly. Hmmm, can I get my down payment back?

  13. “Pay off your smallest debt first, no matter how high your other interest rates are! Those small wins will make you feel SO AWESOME!”

    Yeah, dude, but paying all that extra money in interest won’t.

    • That’s only bad advice if you can actually take comfort in the fact of the interest savings while still facing the same number of bills. Many can’t.

    • I heard this just this week. A study is claiming that people that pay debts of smallest to largest are more likely to get out of debt than using any other method. The report had lots of data and numbers they were showing to back up this “Pay off small debts first.”

      Disclaimer: My debt listing when i started paying them off was the same if listed by total $ amount or by interest rate.

  14. “Just get a job, any job, and stick with it so you’ll have a career.” — My parents

    Um, yeah… The days of sticking with a job like one sticks with an abusive partner are, most thankfully, over.

  15. in high school my kids didn’t listen to my advice and made their own decisions. Now, they listen to my advice and make their own decisions. I am proud.

    I listen to all the advice I can. Sometimes even the most foolish people will come up with a gem. The key is knowing that listening does not equate to following…least that’s my advice.

  16. Gold, penny stocks, and Beanie Babies. All from the same coworker.

  17. @ William:
    My mom asked me about the Facebook thing, had a crazy look in her eye. I know nothing about stocks (relatively) but I said “NO, mom. You’re an idiot!”! What a great son.

    Worst advice I’ve ever heard: I know a couple who no longer contributes to Roth or 401k and use the money they would have used on that to buy GOLD. The commercials on Rush Limbaugh got to them.

  18. “You and your wife need to get a house soon or you wont get any tax refund this year”

    I actually got the biggest tax refund of my life that year simply because I got married and was able to file jointly.

  19. I’m going to have to agree with William on this one. Buying into Facebook IPO was horrible advice, and was given by so many experts and media sources!

  20. My mom, at the time age 90 was in a Merrill Lynch stock portfolio loosing lots of $ monthly. My siblings knew about the conitinual losses and when I recommended we take action they said “leave as is, she is in for the long run”. They said they called Merrill and that is what they recommended. WHAT??

  21. LOVE your videos, your book, your blog, your emails, your advice. Where do we enter questions for you? I’m very interested in starting investments other than my 401(k) – I know Roth IRA is something to look into next, but I found a website called betterment.com that looks like it manages risk for you in an easy-to-use website – I’m just not sure how it works, or if this is an interface that manages an IRA & its risk for me. Could this site offer a nice, automated option?? Thanks Ramit!! You are awesome!

  22. Ramit.

    I am a new subscriber to you. From the few things you have sent, I like them very much. I just got to say though, in your example above: “First, because I’m Indian and therefore a spelling-bee champion.” I just don’t get. I get you’re trying to be funny, right, and I like that but I don’t get it ha

    “Second, because minor spelling errors don’t matter”. I don’t get that either because what comes naturally for me is seeing errors on a page almost instantaneously. They stick out visually to me, and when they do, I consider the web page as being more professional, or one of some possible Joe Schmo hanging out in his skivvies in his living room at home. I am all about no spelling or gramatical errors ever being released to public.

    I’m not nitpicking. Like I said, I like you alot. I just felt like commenting because misspelled words and errored writing, bother me that much :)

    • It’s: a lot.

    • Are you a Virgo too? :-) Misspellings, incorrect word usage, misuse of punctuation (seriously, at this point, people should be licensed before they can use apostrophes), etc., make me crazy.

      HOWEVER, I know I’m in the minority, so I’ve learned to grab my eyes by the scruff of the neck and move them on when they (my eyes) are transfixed on a spelling error in a hardcover book. Life is short, and you can’t throw away the baby with the bathwater when you’re evaluating potentially good advice.

      That said, I still have the occasional nightmare about the billboard proclaiming “LOOSE [sic] WEIGHT!!” on a major Los Angeles thoroughfare. (Correct usage is LOSE weight.)

    • His point on “minor spelling errors don’t matter” is because in the bigger picture scheme of things, they do not. He’s taking action, making sales, focused on the overall system approach to sales.
      The fact that it bothered you just shows that you need to focus more on the big wins FIRST, then minutiae later (and the minutiae would be to assist the big wins (developing systems), not to distract you from even getting started). Here’s the big wins manifesto: http://www.iwillteachyoutoberich.com/blog/the-big-wins-manifesto/?awt_l=E3O5.&awt_m=3X8BuOHnt9MY4bn

    • Spelling Police Link to this comment

      Ahem….Lisa, “alot” is NOT a word. The correct words you are looking for are “a” and “lot”. As in: “I like you a lot.” I would have never said anything, but your entire post is based around the fact that you don’t like errors and then you make one of the spelling errors that bothers me the most.
      Just saying.

  23. It’s a tie between:

    - If you think buying a car is better than leasing it, you have absolutely no idea what you’re talking about. (Just heard that yesterday)
    - Shop around and find the best CD rate you can. (Compared to ING, the CD he mentioned equated to about $15 a year in interest more… don’t remember the exact number off-hand, I did a quick cocktail napkin calculation while he was lecturing me)

  24. @Sherman McCoy — Zero percent return for the last ten years?? Sorry, dude, but that’s just not true. The annualized compound total return on the S&P 500 Index for the ten years ending August 31, 2012 was +6.51%. For the Dow Jones Industrial Average, it was +6.90%.

    This idea of the “Lost Decade” came about because financial journalists don’t understand the difference between price-only returns and total returns. They looked at the index level of the S&P 500 or the Dow Jone Industrial Average, saw that it was roughly the same as ten years before (this was circa year-end 2009 or 2010), and concluded the return was 0%. HOWEVER, the index LEVEL does not include the income received from dividends. Total Return is the performance calculated to include the reinvestment of dividends.

    Also, investing solely in something like an S&P 500 index fund (i.e., only US large caps) is not enough diversification — you need to diversify across asset classes, as well as within. So you need to add exposure to small caps, international developed market large and small stocks, and emerging markets — in prudent proportions. Also, if your risk tolerance warrants it, mix in some short-term, high quality bond funds.

    So who am I, and why should you listen to me? I work for a major mutual fund company; 10+ years in finance, including 5 years as a Registered Investment Advisor (RIA); MS in Finance; CFA & CAIA charters. But of course, maybe you shouldn’t listen to me. :)

  25. I know the numbers work for me on the home ownership front. I bought a POS house in the hood, fixed it up and live in it for reasonably cheap. I mortgaged it out to buy another place… not thinking about the neighborhood. The house itself means almost nothing — the neighborhood means everything. It’s weird.

    My big regret with real estate (and I’ve been in it since 2006) is not thinking about how people really are. I wish I’d known some of the things you say (by which I mean Ramit AND the intelligent commentors) back then. Could’ve dodged some stupid mistakes.

    If you’re usually disconnected with the rest of the world and are considering buying a place, bring along someone “normal” (people who know what makes a “good” versus “bad” neighborhood). If it’s a poor area, you can take your chances (I’ve had some success in lower-income areas), but if it’s a war zone you can give it a pass. I’m probably going to sell for a loss because I can’t get the damn place rented to people who’ll pay and take care of it. It’s not a good move, but it’s the best one I currently have available.

    I ride a used bicycle that I’ve intentionally spent money to customize specifically for my needs, riding style, etc. Screw gas. My vehicle budget is $20 a month (covers maintenance, busted tubes, etc. and usually has an excess). After everything, it’s been about $400 (including some failed experiments like airless tires and several busted tubes — I’m going kevlar next month).

    Returns on US equities are 0%? My dividends have been paying me pretty steadily since I started buying ‘em in 2005 (except for the ones that died in 2008 — and I’ve adjusted how much risk I’m willing to take on accordingly). Ramit did inspire me to take on some ETFs for diversification, but I’m still not interested in target-date funds. The idea that bonds are “safer” than stocks is, in itself, a misnomer. And I’ve heard plenty of stories about people who went heavily into diversification and 401ks 40 years ago only to have them be a serious disappointment to figure that if I’m going to make a mistake, I might as well be personally responsible for it.

    As far as advice goes, all people tell me is “stop making loans to people.” I think I’ve made my last loan… unless the interest rate is REALLY good. I’m so hooked.

  26. When I was in 10th grade, a money management teacher at my high school invited a friend to give a lecture to my entire grade about day trading (the lecture was to the entire grade of 400 students, not just the 15-20 money management students). The lecturer explained how profitable day trading was because “with a little research anyone can make big profits on any day no matter how valuable the underlying stock actually is.” The lecturer, who used to be a taxi driver before “making it big as a day trader” told the entire class of impressionable (and broke) 16 year olds that constantly buying and selling rolling stocks throughout the day was way more profitable than buying and holding. He compared day trading with his job as a taxi driver where he learned that picking up multiple short fares (which start at $3 as soon as they step in the cab) was more profitable than picking up one or two really long fares (wtf is this logic). He then, of course, handed out cards for paid material and courses on day trading.

    I was not in the money management class and I did not know anything about stocks at the time but the guy made day trading sound like a great idea. In retrospect, I can’t believe my school allowed this guy to speak to a class of 16 year olds at a MANDATORY student assembly. Shame on the school, shame on the lecturer, and shame on the money management teacher! I’m talking about you Stu!

  27. “We’re getting married for the tax break.”

    “I need my mortgage so that I can write off the interest.”

    • Yes! In my age bucket, relatively new couples are moving in together to save on rent. I’m jealous of them for their savings, but then I’m not jealous of them when they have nasty break-ups and have to live with each other.

      There are some things I would rather have than an extra $200 in rent savings. Happiness in my relationship and living situation is one of them.

  28. I’m in the process of looking for a job right now, and everyone keeps telling me that “looking for a job is a full-time job.” That seems to sync up with your messaging about the top achievers. In other words: the ones who get the jobs are the ones who spent the time looking and PROPERLY applying, making themselves stand out.

    What I don’t understand is that everyone seems to be telling me that I should be all over Monster and CareerBuilder, applying to 20+ jobs each day. They say that’s what it takes, because there’s so much competition.

    But that doesn’t make sense to me. I think it’s better to take the time to pore over the smaller job boards and look for positions that A) you’re actually qualified perfectly for, and B) you get excited about when you read the description. Then take the time to tweak your resume and craft a custom cover letter that you can send in.

    Perhaps I’ll regret this “slow and steady method” in a couple weeks, after I’ve still gotten 0 call-backs. But I’m optimistically hoping that this will yield better results than simply being another resume spammer.

    • I did the same so far and was very successful with it, in fact I LANDED MY DREAM JOB with alomst 0 effort (I wrote only 4 applications in total)! Good luck to you!

  29. Years ago a friend was telling me about how great Boston Market was – the food was great, they were growing, etc., etc. Check out the stock, she said she had just purchased 10,000 shares. So, I looked it up – it had a P/E of 700 at the time! I said the P/E is totally unrealistic, the stock cannot go up from here. She said “What’s a P/E?” Needless to say, she lost money on it.

    • And here I felt bad for considering Chipotle when its P/E was in the 40s (I don’t typically buy if it’s over 10, and I really like <5). What are your thoughts on P/E vs. Price/Cash flow and Price/Book? I've never found a company with unilaterally low numbers, though I believe that would be a badass company (provided its dividend was reasonable).

  30. Thanks for the video, Ramit — I’m new to your mailing list and am loving your straight-forward approach!

    Recently, I was trying to pay-forward the lessons I learned from my grandfather by educating a young (23yo) co-worker of mine on the value of compound interest and investing earlier in life. I encouraged her to enroll in our company’s 401(k) with its matching funds. She was dragging her heels and finally told me that her mom had told her that ***She didn’t need a 401(k) — all she needed was “life insurance.”***

    I think I yelled, “WHAT…?!?!” before I calming asked her how financially secure her mom was (turns out… not so much!). Then I sent her facts about how much $$$ she was losing each week in future earnings by waiting to enroll.

    The numbers convinced her — she finally signed up… whew. ;)

  31. Incidentally, Australia’s basically anchored to China, which has woes of its own. So there’s not even a good rationale for “the Australian Dollar will strengthen.”

  32. My sister told me to invest in Iraq money, because when the Americans “take them out” it’ll be worth a mint! In fact, she says, it’s already gone up!! (She’s had it 10 years) lol

    • I bought about 20,000 Iraqui Dinars in 2006… for about $3 on ebay (mostly shipping). I just like having a big fat wad of cash. I highly doubt it’ll ever be that valuable in a rational sense.

      It’s really sad that someone would buy it for a serious investment purpose. I could just imagine talking about that at a party and not realizing that people aren’t laughing *with* me, but *at* me.

  33. I was advised by a commerical real estate builder (whose business was crippled by the mortgage crisis) to invest all my money in REITs after the housing collapse. Why on Earth would I take advice about real estate investment from a person who went from making millions a year to nothing in the Real Estate Market?

    Wouldn’t that be like taking stock advice from an investment banker?

    • Have you checked how those REITs have done since?

      I try to avoid taking advice from idiots and people who would sell the recommended product. But when someone has expertise in a field (say real estate), they might be worth listening to.

    • Well, it depends. After the housing crisis blew up, the weakest links died (RIP, American Home Mortgage). So the wheat stood up while the chaff was hacked down. The REITs you can pick up today are reasonably sturdy, and have adapted to work in a slightly more sane environment. As well, you can pick up some reasonable valuations.

      More importantly IMO, you can also receive steady dividends. Yes, they are often based on interest rate arbitrage (which is a pain to understand, but basically means borrowing for little and lending for more), but those with steady dividends and good profit margins tend to pay reasonably well. A great way to save on costs is to use a DRIP (dividend reinvestment plan) that automatically reinvests your dividends.

      As a real estate investor in my regular life, I have some understanding of the whole housing “thing.” I could totally write an ebook about the three major operations associated with real estate, but long story short I would caution you not to write off REITs entirely.

      As far as the guy who lost millions in housing, sometimes we end up learning valuable lessons from our mistakes. Such as to keep a solid base of boring, broad market-based ETFs alongside our carefully researched individual stock and trust holdings. Rich people bounce back. That’s one lesson I’d love it if Ramit would expound upon.

  34. worst advice?

    when buying my first home, i was choosing between a medium-sized house and a much bigger house priced the same. was advised to buy a bigger house to have “more house” (and i was even single at the time!) while the initial cost per square foot was less with bigger house, over the long term maintenance, utilities, and taxes were significantly more. plus we tend to fill extra space with things we don’t need.

    • Forget the house itself. The house is a tent with a toilet. WHERE is it? Go with the better neighborhood every time. Yes, I am a kook who has no idea how to run a life, but YES, I have made these mistakes and am trying to warn you from them.

      Ghost of Moo past…

  35. Former teacher once told me that “the Masters degree is the new Bachelor’s degree”, which implied that I better do it if I want to succeed.

  36. Sharon Armbrust Link to this comment

    When I moved to another state I was advised to not waste my money on rent–find a house near work and buy it. I did. The job did not work out. Shortly after I moved, a huge factory moved out of the area and housing prices fell. I was stuck. Plus, the neighborhood was not for me.

  37. Advise:You need to start buying property (to invest) because if you don’t do it now, you can never gain money fast enough. Me:But well, I don’t have that much spare money.. Advise:Well- you always only say you don’t have money!!…Me: Blank-look.. What??!!!!

  38. “Best” advice I’ve ever received? Seems like it’s not uncommon, looking through the comments here, but it’s below:

    “Quit your job and go back to school. You’ll find the money SOMEWHERE.” This, from a woman who lost her advertising job and went to beauty school.

    Sounds like she’d know what she was talking about, right? Not really, considering she’s now making barely above minimum wage, working fourteen-hour days six days out of seven. Meanwhile, I’ve got full health benefits, a set work schedule (with a five-day workweek, thanks), and about $16 coming in for every hour I spend at work. Why would I throw that out the window, when chances are a degree won’t magically make a better job than this appear?

  39. I used to work for a bank and a customer called me to ask for a personal loan. I asked what it was to be used for and she said her sister told her to get one and put the sum into a savings account: then she would have savings.

  40. Worst advice (from a rehab center counselor AND both my parents):

    “Don’t divorce your husband. He’s abusive, compulsively gambling and an alcoholic because you aren’t trying hard enough to be a good wife. And your child needs a father! Besides, if you divorce him, you’ll just turn around and marry someone just like him.”

    Uh, no. I filed divorce papers right after leaving that rehab center family counseling session. After recovering from the first marriage, I re-married a great guy who doesn’t drink, gamble, or beat up women. I also moved thousands of miles away from my parents.

    My ex? Let’s just say his ex-wives and I get along quite well.

    • Sorry I didn’t clarify why the advice was bad financial advice:

      1) Being married to a compulsive gambler is not a good way to regularly invest in a nice, boring index fund because the money you made today is often gone before your even write the check.
      2) Large quantities of alcohol really eat into the monthly budget. I realize it’s a disease, but it’s an expensive disease if it’s untreatable.
      3) Being beaten up regularly leads to large hospital bills. Emergency rooms and surgeries are expensive, at least in the USA.

    • Hi Susan,

      Thanks for sharing — I’m so happy to hear you didn’t stay with that dill weed husband of yours! Yay you! :D

  41. Worst investment? When your spouse believes in MLM/network marketing when the plate is already full and already has a great reputation for his talent – but is going to taint it by looking scattered.

  42. with every advice I’ve received, I always considered to do exactly the opposite, I have always evaluated what is behind the advice, I don’t know why!

  43. You folks forgot “Don’t spend money on your lattes” or “Spending money on lattes every day would amount to $300k by the time you retire”

  44. And that equally classic “Clip coupons to save hundreds of dollars a month.”

  45. Hi Ramit:)
    Congratulations on these Q&A’s you just started!
    Looking forward to them! Every week, I hope?!?
    Apropo of bad advice:
    going to college for the sake of a diploma
    AND getting a job for the sake of working somewhere,
    AND buying a house (“don’t pay rent”) no matter what!!!
    I guess most of us heard these 3 the most:)!!!
    Best regards, Adi.

  46. My co-worker keeps pushing me to buy into a medical marijuana CBD product that’s a penny stock. I like a toke as much as the next guy but this is some kooky advice.

  47. thanks for the advice! really true!!

  48. “Don’t get a credit card. You only need a credit score for things that will cost you more money.” Not untrue…but I probably will need a place of my own one day…

  49. I list these in order from worsts to least bad. Unfortunately I did the first two.

    1) From my family: You need to buy a house. In this area (Silicon Valley) the values always go up. It will get you in the game, and you can trade up once you get some equity.

    2) From my ex wife who didn’t have a job “I want to move into a bigger apartment. Even it’s more expensive, it’ll just work out.”

    3) and some “Financial Planner”, tried to sell me a some sort of life insurance retirement plan that was impossible to comprehend.

  50. My greatest hits:

    1) “You should play the forex (foreign currency exchange) market. If you only close your currency pairs when you’ve made money you can’t lose!”

    Even if it were true, people as well-financed as those who typically follow that advice make cents a day while fretting for hours about their ‘investment’. And then come the fees and commissions.

    2) 401(k)s, Roth IRAs and other retirement plans are a liberal/conservative/socialist/boomer plot to destroy your savings. Take your money and put it into gold/silver/real estate/guns and water, it’s the only REAL investment!

    I’ve only ever heard this from people who a) have no savings or b) are random crackpots on the internet.

    3) Starting your own business? Don’t bother! The government just takes everything from you anyway! Just keep the money in savings/gold/silver/guns and ammo!

    I can almost guarantee you anyone telling you this has either a) wanted to start a business, but never tried or b) started a business and ran it into the ground due to their own mistakes, and then decided that they were faultless. This advice has usually come to me from the former rather than the latter, however.

  51. 1. “Get a joint JD and MBA or a PhD – you’ll be incredibly marketable that way.” -my dad, even though I don’t know what I want to do and would have to invest a ton of money simply in applying to said programs, likely to be turned down due to an inability to show focus on my applications.

    2. “I bought a few apartments in the Philippines because I love it there and I got a great deal from the bank. I’m essentially going to move there and rent out the apartments. You should do the same.” -a friend. Cool idea but I have limited knowledge about the Philippines’ in terms of banking, interest rates, and stability. Plus, I am American living in Australia. I don’t really want to uproot yet again.

  52. Since some of you are under the assumption that the worst advice ever is to buy gold, I do wonder if you have any idea about gold or you just dismiss it because a radio or tv personality you have never heard or watched supposedly promotes it. But that’s a digression. I have received a lot of bad advice over the years, but the best advice I ever received was to buy physical precious metals. Ummm….let’s see, bought gold about 10 years ago when it was $300 ounce, now around $1700. Bought silver around the same time at $8/oz, now around $32. Best investments I ever made. If you tell me that the precious metals are in a bubble, you are just mimicking nonsense and you don’t know what you are talking about. Can’t even believe some of you said that advice to buy gold was the worst advice you ever received. Wow.

    • It is unlikely that Gold, Silver, etc will ever go to zero, since these metals will always have intrinsic value. But until you actually sell the gold or otherwise convert it into a microchip, tooth filling, or something else that you WILL ACTUALLY USE, it’s value to you is still ZERO. You bought low, so now why not sell high? When gold goes back down to $300-ish/oz (and it will eventually), will you be the one to say: “Well, what I have is valuable”

      Money is to be spent or saved, not hoarded. Hoarding will not do you any good.

    • You are correct. This is because many (including some writers) criticize that which they don’t understand…and there are plenty of followers. Also, many are upset because they couldn’t find the courage to invest in gold or silver… Because they’ve been told the only way to invest is to go with what worked before or is the most simple…

  53. Worst investment I ever made, well paying for my grad school. No college or university teach you about the complexities of real life. I guess more and more people like you should come forward and enlighten people about real life and what actually deliver right results.

  54. “For Gods Sake don’t start a new business until you have x amount of money, and only do it if you have an actual job, and never ever ever try it without talking to me first!”

    Yep. Guess who got ignored.

    • That’s awesome. When did “starting a business” became this big scary ass thing that involved lawyers and suits and gobs of startup funds?

      I really love the stuff AppSumo has put out on starting a business. Those guys are on the warpath, beating the drum that business isn’t hard, you just have to START. FUCKING. DOING. IT.

      Check out:
      *Sumo Business Blueprint
      *Sumo Business Blueprint LIVE: Case Studies
      *Read Nevblog, and sign up for his newsletter

    • In the mid-80s when there were hiring freezes left and right (though not as bad as now), I started my own business translating technical documents. I had no money when I started (just rented a typewriter by the month and borrowed a technical terminology dictionary from the library until I could buy one) and worked from home. So if you have a salable skill, a known target group wanting your skill, and are willing to put in the hours, you can start a business with $0. You must do your homework up front to identify your exact customer set, and be willing to acquire basic business skills (taxes, accounting, and so forth), but it can be done. Good luck with your business Heather!

  55. “We should stop throwing our money away on rent and buy a house.”
    My wife really wanted to buy a house. I was resistant, but eventually caved. Best decision ever. We bought in when the housing market crashed, then refinanced this year. Our house payment is now only $250/month and we have $40,000 in equity saved up.

    If we were still renting our $600/month apartment, we’d be at -$36,000, with no equity.

    That’s assuming we can sell the house and get our equity, but we’re really happy with our careers and where we settled, so no plans to move. Our goal is to pay off the house and those damn student loans and finally be debt free.

    Am I just deluded? Why is buying a house worse than renting?

    TL;DR We stopped throwing our money away on rent.

    • Another instance of when buying property is not a bad idea applies to me. I always wanted to live on an acreage where I could raise most of the food we eat and keep pets. (I know you aren’t into pets Ramit, but some of us are.) I chose an acreage on a highway, within 30 miles of a city, just a mile and a half off an interstate, with an old farmhouse. Given time, the farm land around our acreage has been selling off to people building McMansions on 3-4 acres. Our crummy house has had repairs, but no improvements, yet continues to increase in value, even in this economy. The value is being dragged up purely by the surrounding valuable homes. So when the time comes to sell our place, we should recoup our investment and make some profit (even considering repairs). The humor is that the buyer will probably raze the building we live in and still pay us well. Meanwhile, house payments, insurance, repairs, and taxes are far below the monthly cost of a one bedroom apartment in the nearby city. I eat food as fresh, local, and organic as it gets. Commute time to the city is the same as commute time to my job 8 miles away when I lived in Dallas, TX, and I burn less gas going the further distance. This is because most of the commute is by highway and we have no stop and go traffic anywhere on the route, any time of day or night.

      Caveat: One must intend to live in the same place for years for this type of investment to pay off.

    • @Susan

      Your caveat hit the nail on the head. But many younger people do not intend to live in one place for a long time. It is typically an older person, particularly with extended family that would be more likely to be ‘settled’ in one place as a primary base for some time. Someone just getting started in their career, job, or business is unsure where their business will take them. Imagine buying your dream home and then your boss says you must relocate? For the younger crowd or those pursuing larger financial goals, purchasing a house is much, MUCH more likely to be an expensive dead weight; more harmful than helpful.

      The house should NOT be treated as a primary investment. If it happens to become one, then fine. Keep in mind also that your equity is not realized until you actually cash out. A lot can happen between then and now. I knew someone upstate New York who’s house value was rising rapidly and had been worth over $500,000 near the peak of the housing bubble; he got offers even with no ‘for sale’ sign or any listing with any agents. Post housing bubble and I think the house is worth about $250,000-ish?

  56. @Lisa – The advice to buy gold itself isn’t bad advice. If you do 5% of your assets in precious metals you can reduce the variability of your portfolio overall. It becomes bad advice when people start saying “Doomsday is here! Sell everything and buy gold!” In the 1980 gold was over $800 an ounce. But most of the 90′s into early 2000s it remained under $500 and ounce. The price is high now but who knows what’s going to happen tomorrow. Just like for someone who invested in Lucent Technologies in the 90s it was the best decision they ever made in their lives. Until one day it wasn’t…

    Worst advice I ever received? A lot of it has been covered in the comments above in some way shape or form. But articles like these are all too common: http://goo.gl/ftUzu

  57. Just before my wedding, a coworker offered me his secret for a happy marriage: “separate bedrooms”.

    • Did you know that a new trend in building homes in the US is separate suites for husband and wife? The advice you got sounds stupid, but apparently there are enough people who snore, have restless leg syndrome, or steal covers to actually change the architecture of our future housing. (BTW, sleeping separately does not imply lack of intimacy. It just means you sleep in separate rooms. Intimacy is assumed in this new configuration, and actually improves if both parties are well-rested–important in the US where lack of adequate sleep is considered a major health issue.)

  58. Here in Brazil, EVERY financial advisers ou even investment gurus say “You should NOT buy a house. You’d better pay the rent, invest some money in stock market and, in the future you will be able to buy your house without debt”
    Then, I ask they if they live by paying rent and EVERYONE says: “No, I bought a house”

  59. I had to pause the video about 2seconds in cause I was laughing so hard at the chuckle you opened with. I love your stuff Ramit, always entertaining and immensely helpful.

  60. Finally quit listening to everyones’ advice on how to spend my money. My wife and I just sold our car and only have one now that is paid off! We are on our way to paying off our loans next. Hopefully in 2 years we will be debt free. Follow our journey here…
    passingthroughdebt.blogspot.com

  61. “You can’t take it with you”

    This was stated by my brother-in-law as his reason for not saving… as in, you can’t take your savings with you when you die. Needless to say, I doubt he’s considering that I most likely don’t want to work until I die…

    • This is the trickier of the advice because it actually gets at the core of the fears that people have: The fear of their own death…. another way to say it is: the fear to take a risk and be alive. It is correct that you cannot take anything with you when you die. However, saving towards a specific (concrete) goal is wise if you truly intend to follow through with it. Like saving for a vacation, or for a newer car, etc.

      Saving for retirement can be a concrete goal also. I avoid thinking too much into the future because life just throws too many curves at you. Some exceptions to this is stuff you do regularly. Like my Dad goes to Jamaica every year during part of the winter, and he buys a plane ticket 9 months ahead of time. The ticket would be 5 times more expensive if he tried to book it 2-3 weeks ahead of the travel date. Focusing more about building a system now that will sustain you for years is much more profitable than saving-only. Unless you can combine savings with frugality, as most of the people interviewed in the books: The Millionaire Next Door or Ordinary People, Extraordinary Wealth. Most people do not have that kind of discipline.

  62. Most people have already commented on on stuff i’ve done.

    Buy a house for the following reasons:
    1) Very responsible for a man your age (i was 19 at the time)
    2) You dont have to throw away money on rent.
    3) you’ll have equity

    shortly after buying townhouse, i decided to pursue military career (enlisted). Renting out the place was a nightmare, and although i heard about section 8, i was not experienced on all the rules and qualifications. Trying to juggle the mortgage payment was very difficult on e-2 salary (I was single, and did not qualify for housing allowance). I thought about getting married, but I did not have the wisdom that I have now as to WHO to marry. Luckily the bank had a program where they would take back the house, cancel the mortgage, and no adverse reporting on my credit report.

    Nothing wrong with listening to other people, but try to find people who you can watch what they do and see if the results they are getting are similar to what you want. Then consider copying some or all of what they are doing, adjusting it to your particular circumstances. This is much more objective ‘advice’. I can say that as a general rule, young people especially should avoid agreements that lock them down and force them to make ridiculous assumptions about the future. Things like marriage, mortgage (for a house) have their purpose, but have your own specific reasons for doing it first. Your preacher or parents will rarely give you objective advice about certain things…..their biases MAY get in the way.

  63. Any sentence that begins with “You should…..”

  64. Bad advice from college financial aid department. “You’re financial aid is not done processing. Go ahead and go to class. Everything will be ok.” I can’t afford tuition out of pocket. That’s why I needed financial aid.

  65. That the people on Wall Street are the smartest people on Earth =P

  66. Ramit, I think you failed to answer her question. I think the nature of her question wasn’t that she wanted to do all sorts of crazy financial tricks in order to make some money through currency exchange, but rather, protect her hard earned saving from inflation and hyperinflation. The US economy is a rather shifty state right now; I would be interested in knowing what can it be done to actually protect your savings from getting completely raped by hyperinflation should the dollar actually falter. Even though it may not, keeping some savings in a stronger currency bank is a way minimize your risk completely losing you the worth of your of savings. Calling it “Chicken Little” shit; how about you tell the people of Germany after World War One, Israel in the 1980′s, and Argentina in 1989 that hyperinflation doesn’t happen.

  67. Aussie dollar may be going under parity soon.. so suggest forget this idea

  68. Hi Ramit,

    I just had to jump on and comment on your video. In short, its brilliant! Time, and time again I see people coming into my office with similar questions (Few months it was all about gold, at the moment it seems to be US property).

    We all know there is nothing worse than a well meaning friend/family member with a little knowledge on a get-money fast scheme, but yet so many of blindly take their advice!

    The trick really is discipline and setting up a winning strategy with good advice from the get-go.

  69. I’ve been bitten on the behind in a similar kind of situation. I was living in Japan for a few years and was encouraged to look into getting a mortgage denominated in yen (not much encouragement required, I was keen to do it…) I was able to get my 117K GBP mortgage transferred to yen and the interest rate I was paying went from 4.5% to 1.5% – great stuff! But… The crap hit the fan in 2008 when the exchange rate (GBP/YEN) went from 190 to the pound to 120 in a few short months. Result – 117K ended up closer to 150K and the monthly payments (in GBP) nearly doubled. I’m still paying 1.5% and while I can keep up those payments I am still one of the luckier ones in that I am not yet underwater on the mortgage.

    Shorter version – if you think you’re doing something very clever then you WILL get your ass kicked. It’s just a matter of time before you realise it.

  70. The worst $$ advice I get is from my father, who lost all his $$ to a pyramid scammer a long time ago. Lately, he’s pretty sure that armageddon is on the way because of rising gas prices. He feels strongly that I should invest in guns, years worth of canned food, and wilderness survival skills.

    • It’s interesting how prevalent this idea is. I genuinely wonder what’s going on in their head. Fear? Power? Feeling that there is no other option? Do they truly believe the civilized world is going to crumble and we’re going to _kill each other_ for food?

    • Well, National Geographic channel had a show on preppers (those getting ready for “the end of the world as we know it) and many popular blogs are devoted to the subject, as well as books. I think the media exposure has started a lot of this behavior. Even Costco has multiple items for sale with foodstuffs that are supposed to last for years, so retailers are reinforcing the media message.

      On the other hand, watching Hurricane Katrina, the tornado destruction in recent years, power outages from ice storms, mass lay-offs, and flooding, have made some self-sufficiency seem like a reasonable idea to many folks. By this, I mean looking at the response time of government and volunteer agencies to help people versus when folks actually needed basics like food and water. So a tiny bit of prepping (say, two or three weeks of food, water, meds, etc) doesn’t seem too crazy. As for getting into guns and true wilderness skills (other than, say water purification, or emergency shelter construction to last a couple of weeks) seems extreme to me–sort of like building those fall-out shelters back in the late 50s and early 60s. (Yes, this means I’m an old person, but even I knew if an atom bomb hit we were goners, fall-out shelter or not.)

  71. From my mom: “Forget our state retirement funds [which are tied up in the stock market]. From now on, it’s about land and gold.”

    She’s only joking because they don’t have the resources to start stockpiling gold or land.

  72. Ramit,

    You have some great ideas…but please come off the sarcasm as if it’s a bad idea to want to even hedge a currency. Also, your sarcasm suggests that you believe you know everything about investing. The US Dollar has been devalued the last several years and having a position in gold ( to offset this) has helped “real returns” greatly. I would seriously hope you consider things like inflation into your investment returns. It does matter.

  73. Parents – You should not quit your (sucky going nowhere) job to go back to school and finish your degree. Thank god I did!

    Boyfriend – You should never pay for a financial advisor. I know alot about investing and used to day trade (and lost my asssss). Easy to ignore because my bank account is much healthier than his.

  74. Oh I’ve gotten some interesting “advice”. I have had so many people tell me “that “you only live once, money doesn’t matter”. You DO only live once, so why do so in debt?

  75. I would fly to new york city with a special girl to say thanks!

  76. The production quality of that video was top notch and you provided a great rebuttal. I’m looking forward to more!

  77. Bad advice – Just think of an idea that benefits everyone and get rich that way.

    Good advice I thought was bad – I graduated with a 5k loan, but had about $1,500 left over that I didn’t need for tuition. My Dad insisted I invest it in an IRA instead of paying it back since my interest rate on the loan was quite low. Ultimately, I paid off my loan in the first year I lived in NYC making almost next to nothing. I did it by automatically appropriating all of my overtime checks to the loan. And now I have a decent retirement fund I’ve been growing years longer than my peers.

  78. Great video! I love how you keep things simple. Speculative currency trading is a losing game.

  79. One of my dearest family members always told me “you have to spend money to make money”. That’s what he’s done all his life and GUESS WHAT? He’s broke. Guess that little jewel did not work out so well for him, yet he still sits on his soapbox and tells me that advice to this day, Total cray cray

  80. The worst advice ever? Easy, “There will be plenty of time for that later”
    NO, NEVER, BIG MISTAKE… Wish I had run off with my girlfriend last minute on that trip in 1987, done a kegstand at one frat party, had kids younger, invested more in my IRA/ROTH and taken more naps!
    Totally bogus advice, thanks for the fun blog of the day!

  81. One day I wish I will be rich. I think I always lose money and not make money. Stocks tank. People short sell their house and I still have a mortgage because i’m chicken out to short sale. That’s America

  82. This will probably go unanswered since I’m coming onto this post late, but I want to ask Ramit if his spelling mistakes are ON PURPOSE. It is easy to see how meticulous and focused Ramit is on releasing products that have been prepared MONTHS in advance.

    So I find it hard to believe that the spelling mistakes are accidents. What is the psychology behind them? Is it that people are more willing to buy a product that appears to be coming from a real human being (who makes spelling errors)? That is my explanation.

    I’ve seen spelling mistakes on a lot of long form sales copy pages coming from people other than Ramit, so this made me think it was not coincidental.

  83. Here’s a good one…. Spend less than you make! Sound and average financial advice for broke people to get out of debt give by broke people. No, don’t run up debt as a consumer on credit cards, buy assets and get those assets to cash flow. broke is temporary, poor is for a lifetime.