Comments on: A Conversation with Helaine Olen About the Dark Side of the Personal Finance Industrial Complex http://thebillfold.com/2013/03/a-conversation-with-helaine-olen-about-the-dark-side-of-the-personal-finance-industrial-complex/ Everything About Money You Were Too Polite To Ask Thu, 23 May 2013 03:37:33 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: scn231 http://thebillfold.com/2013/03/a-conversation-with-helaine-olen-about-the-dark-side-of-the-personal-finance-industrial-complex/#comment-48463 scn231 Fri, 03 May 2013 21:03:40 +0000 http://thebillfold.com/?p=25430#comment-48463 Thank you so much for this interview, it is fantastic. When the billfold first started up I was waiting for it to come into its own, and I think you really have by tackling these harder/bigger questions, as they're applicable on a person level. More please! Thank you so much for this interview, it is fantastic. When the billfold first started up I was waiting for it to come into its own, and I think you really have by tackling these harder/bigger questions, as they’re applicable on a person level. More please!

]]> By: fennel http://thebillfold.com/2013/03/a-conversation-with-helaine-olen-about-the-dark-side-of-the-personal-finance-industrial-complex/#comment-39721 fennel Sun, 17 Mar 2013 19:01:28 +0000 http://thebillfold.com/?p=25430#comment-39721 @fennel p.s. i hope that was clear -- these things are awfully dry-sounding, i know. but studies have been done many times, and very few managed funds ever beat the market in the long run. index funds echo the market, or a particular segment of the market. index funds have extremely low fees because not actively managed. ergo, index funds are a relatively good bet. It used to be that most major institutions invested in S&P 500 index funds. I don't know if that's still true -- it started changing when so many people followed suit that the S&P index funds started to get out of step with the market because of the distortingly large number of people investing -- but they are still a pretty great first step for investing. I learned this stuff after getting incredibly condescended to by financial planners who used to just suggest they take automatic control of my savings every time I met with them, as if that conversation had never happened before -- it was an automatic reflex for them as soon as they met me or heard my voice, and it seemed incredibly gendered. As well as an incredibly bad idea. Bankrate.com is a reliable place if you want to learn more about this stuff on your own. @fennel
p.s. i hope that was clear — these things are awfully dry-sounding, i know.

but studies have been done many times, and very few managed funds ever beat the market in the long run. index funds echo the market, or a particular segment of the market. index funds have extremely low fees because not actively managed. ergo, index funds are a relatively good bet.

It used to be that most major institutions invested in S&P 500 index funds. I don’t know if that’s still true — it started changing when so many people followed suit that the S&P index funds started to get out of step with the market because of the distortingly large number of people investing — but they are still a pretty great first step for investing.

I learned this stuff after getting incredibly condescended to by financial planners who used to just suggest they take automatic control of my savings every time I met with them, as if that conversation had never happened before — it was an automatic reflex for them as soon as they met me or heard my voice, and it seemed incredibly gendered. As well as an incredibly bad idea. Bankrate.com is a reliable place if you want to learn more about this stuff on your own.

]]> By: fennel http://thebillfold.com/2013/03/a-conversation-with-helaine-olen-about-the-dark-side-of-the-personal-finance-industrial-complex/#comment-39720 fennel Sun, 17 Mar 2013 18:56:22 +0000 http://thebillfold.com/?p=25430#comment-39720 @Mrs. Beeton Wimseywisp is right. Index funds are the type of funds where you are most likely to actually make money because they are not actively managed -- they are just a portfolio of funds that were designed once to mimic an index, like the S&P500 or the Russell Small-Cap. -- which means that they don't need to have a manager -- which means that fundholders pay a tiny or no fee. Any fund that, by contrast, is actively managed, is taking a part out of whatever profits you made to pay for the manager who is managing the fund. Since funds already have to make more than the rate of inflation to make the real value of your holdings increase, people usually don't make as much money as they think they are making on investments. This becomes extra true when you realize money gets taken out to pay a manager, if the fund is actively managed and not an index fund. signed, another lady @Mrs. Beeton
Wimseywisp is right. Index funds are the type of funds where you are most likely to actually make money because they are not actively managed — they are just a portfolio of funds that were designed once to mimic an index, like the S&P500 or the Russell Small-Cap. — which means that they don’t need to have a manager — which means that fundholders pay a tiny or no fee. Any fund that, by contrast, is actively managed, is taking a part out of whatever profits you made to pay for the manager who is managing the fund. Since funds already have to make more than the rate of inflation to make the real value of your holdings increase, people usually don’t make as much money as they think they are making on investments. This becomes extra true when you realize money gets taken out to pay a manager, if the fund is actively managed and not an index fund.
signed, another lady

]]> By: whimseywisp http://thebillfold.com/2013/03/a-conversation-with-helaine-olen-about-the-dark-side-of-the-personal-finance-industrial-complex/#comment-39701 whimseywisp Sun, 17 Mar 2013 12:59:32 +0000 http://thebillfold.com/?p=25430#comment-39701 This was absolutely fantastic. I guess I have to say I do believe in cutting down on things like overpriced cable, coffee, and smart phones: we don't NEED those things. I'd rather pay a little for Netflix, make my own coffee exactly to my specifications, and have a basic phone, so I can have extra money to eat better food and travel. Studies have shown that spending money on experiences instead of stuff you don't need makes you happier in the long run, and I'm a big believer in that. Saving money, paying off credit cards, having good credit in general - all of that was really instilled in me by my parents, and I'm so grateful. I can't wait to read this book! This was absolutely fantastic. I guess I have to say I do believe in cutting down on things like overpriced cable, coffee, and smart phones: we don’t NEED those things. I’d rather pay a little for Netflix, make my own coffee exactly to my specifications, and have a basic phone, so I can have extra money to eat better food and travel. Studies have shown that spending money on experiences instead of stuff you don’t need makes you happier in the long run, and I’m a big believer in that. Saving money, paying off credit cards, having good credit in general – all of that was really instilled in me by my parents, and I’m so grateful. I can’t wait to read this book!

]]> By: whimseywisp http://thebillfold.com/2013/03/a-conversation-with-helaine-olen-about-the-dark-side-of-the-personal-finance-industrial-complex/#comment-39700 whimseywisp Sun, 17 Mar 2013 12:54:42 +0000 http://thebillfold.com/?p=25430#comment-39700 @Mrs. Beeton I had to look it up, too! Wiki says, "An index fund or index tracker is a collective investment scheme (usually a mutual fund or exchange-traded fund) that aims to replicate the movements of an index of a specific financial market, or a set of rules of ownership that are held constant, regardless of market conditions. As of 2007, index funds made up over 11% of equity mutual fund assets in the US." @Mrs. Beeton I had to look it up, too! Wiki says, “An index fund or index tracker is a collective investment scheme (usually a mutual fund or exchange-traded fund) that aims to replicate the movements of an index of a specific financial market, or a set of rules of ownership that are held constant, regardless of market conditions. As of 2007, index funds made up over 11% of equity mutual fund assets in the US.”

]]> By: Bunburying http://thebillfold.com/2013/03/a-conversation-with-helaine-olen-about-the-dark-side-of-the-personal-finance-industrial-complex/#comment-39532 Bunburying Fri, 15 Mar 2013 19:45:30 +0000 http://thebillfold.com/?p=25430#comment-39532 I want to go to a party with Ms. Olen and talk about the Q train with her. I want to go to a party with Ms. Olen and talk about the Q train with her.

]]> By: chevyvan http://thebillfold.com/2013/03/a-conversation-with-helaine-olen-about-the-dark-side-of-the-personal-finance-industrial-complex/#comment-39525 chevyvan Fri, 15 Mar 2013 19:38:05 +0000 http://thebillfold.com/?p=25430#comment-39525 By: Mrs. Beeton http://thebillfold.com/2013/03/a-conversation-with-helaine-olen-about-the-dark-side-of-the-personal-finance-industrial-complex/#comment-39454 Mrs. Beeton Fri, 15 Mar 2013 16:58:19 +0000 http://thebillfold.com/?p=25430#comment-39454 Wait, what's an Index Fund? Wait, what’s an Index Fund?

]]> By: Sloane http://thebillfold.com/2013/03/a-conversation-with-helaine-olen-about-the-dark-side-of-the-personal-finance-industrial-complex/#comment-39432 Sloane Fri, 15 Mar 2013 16:19:56 +0000 http://thebillfold.com/?p=25430#comment-39432 My parents were really good at teaching my lessons about personal finance. My father was especially good - he taught me to put away 10% of my allowance, and he helped me open a savings account when I was a kid so that I could make deposits when I had enough. My parents were also religious, so tithing was expected. Then, when I got my first job, my dad encouraged me to contribute another 10% to retirement. When you add all this up, it meant that I was living within my means for my entire life, without ever really knowing that that was what I was doing. That's the best way to learn personal finance. I had a couple of financial planners pursue me as a client when I finished graduate school. They looked over my budget (still saving 30%!), and they were really impressed. In fact, they really couldn't sell me an of their products because I was in good shape already. I don't need life insurance because I don't have a family, and I do all of my own planning, saving, and investing. Oh yeah, and I'm a woman. My parents were really good at teaching my lessons about personal finance. My father was especially good – he taught me to put away 10% of my allowance, and he helped me open a savings account when I was a kid so that I could make deposits when I had enough. My parents were also religious, so tithing was expected. Then, when I got my first job, my dad encouraged me to contribute another 10% to retirement. When you add all this up, it meant that I was living within my means for my entire life, without ever really knowing that that was what I was doing. That’s the best way to learn personal finance.

I had a couple of financial planners pursue me as a client when I finished graduate school. They looked over my budget (still saving 30%!), and they were really impressed. In fact, they really couldn’t sell me an of their products because I was in good shape already. I don’t need life insurance because I don’t have a family, and I do all of my own planning, saving, and investing. Oh yeah, and I’m a woman.

]]> By: amirite http://thebillfold.com/2013/03/a-conversation-with-helaine-olen-about-the-dark-side-of-the-personal-finance-industrial-complex/#comment-39415 amirite Fri, 15 Mar 2013 15:18:43 +0000 http://thebillfold.com/?p=25430#comment-39415 @highjump I went to high school in Alberta and we had to take a Career and Life Management class in grade 11. Here's what I remember learning: -buying a TV or whatever on store credit is a bad idea -groceries cost more if you get them at the 7-11 (they made us do price comparison by going to a convenience store and a grocery store) -credit cards: not great (not as bad as store credit though) -how fill out a cheque Did it work? I still have credit card debt. I understood what I was getting into, but not how that would feel or what it would mean for my life. Same with making a budget: they gave us an exercise with a hypothetical income, rent, etc, and we had to create a budget around it. It's one thing to say "well, there's only this much for groceries," and write that number down, it's another to actually try and live off that much. And that was my problem with budgeting for a long time, I'd make up a number that seemed reasonable, not be able to achieve it, and then stop even trying to stay in budget because why bother? It took me years to get to the point where I could track my expenses and accurately predict what expenses were upcoming and figure out how much that left over for the fun stuff. So it probably helped a little bit, but I still had to live those experiences to understand the impact they would have on my life and the choices available to me. @highjump I went to high school in Alberta and we had to take a Career and Life Management class in grade 11. Here’s what I remember learning:
-buying a TV or whatever on store credit is a bad idea
-groceries cost more if you get them at the 7-11 (they made us do price comparison by going to a convenience store and a grocery store)
-credit cards: not great (not as bad as store credit though)
-how fill out a cheque

Did it work? I still have credit card debt. I understood what I was getting into, but not how that would feel or what it would mean for my life. Same with making a budget: they gave us an exercise with a hypothetical income, rent, etc, and we had to create a budget around it. It’s one thing to say “well, there’s only this much for groceries,” and write that number down, it’s another to actually try and live off that much. And that was my problem with budgeting for a long time, I’d make up a number that seemed reasonable, not be able to achieve it, and then stop even trying to stay in budget because why bother? It took me years to get to the point where I could track my expenses and accurately predict what expenses were upcoming and figure out how much that left over for the fun stuff.

So it probably helped a little bit, but I still had to live those experiences to understand the impact they would have on my life and the choices available to me.

]]>