This weeks lesson, number ten, was on college saving and retirement. There was nothing really new for me on these topics. Basically, for college, do not feel guilty if you do not save or do not save enough (which I don’t). Work (for the student) is always an acceptable way to pay for college. The big idea was that you want to use tax sheltered ways to save for college if you are able, and to not go into debt yourself, nor let your student go into debt. Pay as you go!

For retirement, Dave believes you should complete steps 1 through 3 before starting to save for retirement (step 4). That means (1) Having $1000 in your emergency Fund (2) Paying off all your debts except mortgage (3) Having a fully funded emergency fund of 3 to 6 months. The exception to this is if your company or work place does a retirement match, then you should put the minimum in to get the match (the free money!).

Not a bad session. I still don’t agree with his making 12% per year on stocks, and I disagree with his investment advice of only investing in stocks. Again, I think your portfolio should be more diversified, and that the diversification should change over time to become more conservative as you approach retirement. Different investment mixes for different periods in your life – more aggressive younger and more conservative older generally speaking.

The big idea that we both agree on – take the company match at the least. And begin saving for retirement as soon as you can. Not bad advice at all!

Categories: General