The Gravest Risk to Your Retirement: Oprah

You are denied!
If you've tuned into Oprah Winfrey's show at any time over the past week or so, chances are you've been treated to a jacket full of finance diva Suze Orman. She's been on the show offering debt counseling to Oprah's viewers.

Very often, her advice is useful, if sassy. "You are denied!" she'll yell into the camera at women, already in debt, who want to borrow more to buy a house, or get a new car, or indulge some other want. She's right: We should all avoid unnecessary debt, if at all possible.

So why the heck is Oprah hawking Amazon.com's (Nasdaq: AMZN  ) Kindle? "I know it's expensive in these times, but it's not frivolous because it will pay for itself," she told her audience. "The books are much cheaper, and you're saving paper."

Right. What was I thinking? Here's $309, Ms. Winfrey. Take my library, too.

You are denied ... responsible advice
There's something unseemly about watching Oprah sell out like this. I mean, what's next -- having Suze hawk designer jackets to her indebted denizens? The whole affair reminds me of an old Steven Wright joke:

I have a 3-year-old dog; I named him "Stay." He was a lot of fun when he was a puppy, because when I called him I'd say, "Come here, Stay. Come here, Stay." ... He's a lot smarter than that now. Now, when I call him, he'll just ignore me and keep on typing.

Boy, would I love to do that, too. But I can't. In my opinion, Oprah's advice is worse than conflicted; it's moronic. If the members of your audience are struggling to make ends meet, are they really in a position to spend more than $300 on a Kindle -- just for the opportunity to spend hundreds more on e-books so the device can "pay for itself"?

Suze isn't much better at times. During a recent episode of Oprah, she told the audience that "a stock certificate won't put a roof over your head" -- the implication being that you're better off investing in your mortgage than in your portfolio.

Maybe, but these situations are rare in my experience. More often, it's correct to invest, because:

  1. Stocks, not real estate, offer the surest path to retirement wealth.
  2. You needn't take outsized risks to earn outsized rewards.

And that's it.

Wait! There's more!
Well, OK, that isn't everything. To successfully invest for retirement, you need to:

  • Pay as little in fees as you can. Fees eat into returns. And I mean really eat into returns. Earning just 1% extra per year on $1,000 invested annually over 30 years adds up to 33% more at retirement.
  • Save as much as you can. Big balances are built, not made, so be aggressive with saving in your 401(k) and in your personal brokerage account. Future You will thank Present You when it comes time for retirement. (Say that five times fast.)
  • Invest as often as you can. Regularly dollar-cost averaging into a diversified portfolio of assets is, over time, a proven wealth generator.

Finally, because stocks are better than a Kindle when it comes to funding your retirement, here's a list of five-star dividend dynamos that you can buy for a whole lot less than $309 using a starter brokerage account:

Company

Latest Price

Yield

Diageo (NYSE: DEO  )

$55.34

5.6%

BHP Billiton (NYSE: BHP  )

$29.52

5.6%

Philip Morris International (NYSE: PM  )

$39.06

5.5%

TransCanada (NYSE: TRP  )

$25.60

5.5%

MVC Capital (NYSE: MVC  )

$10.56

4.5%

Titanium Metals (NYSE: TIE  )

$6.72

4.5%

Sources: Motley Fool CAPS Screener, Yahoo! Finance.

Or, if you're the cataclysmic type, use your $309 to buy roughly 0.42 ounces of gold.

With apologies to comedian Bill Maher, what we need, Oprah, is a new rule: No more dispensing financial advice on your show. At least not until you cut the consumerism -- specifically, until you realize that an electronic book reader is optional for the great majority of us who carry credit card debt. Send your viewers to their local libraries instead.

Lots of women want to live like you, Oprah. Almost none of them can. They're too busy being denied! by Suze Orman.

Retire to the easy chair with related Foolishness:

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. He hunts for the best of tech as a member of the Motley Fool Rule Breakers team. Here's how to try this market-beating service free for 30 days. Get access to all of Tim's Foolish writings.

Amazon and Titanium Metals are Stock Advisor selections. MVC Capital is a Motley Fool Hidden Gems pick. Diageo is an Income Investor recommendation. The Motley Fool's disclosure policy needs more coffee. (Yawwwwwwnnnnnnn.)


Read/Post Comments (14) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 28, 2008, at 1:00 PM, sessionka wrote:

    Great article. Oprah is great at making money for herself. She should give advice on what she knows best... The Media.

    As for Suze Orman, she's the flavor of the day. I respect how far she's come, but I don't agree with all her advice.

  • Report this Comment On October 28, 2008, at 1:14 PM, franklinomics wrote:

    "If they can't buy books, let them read Kindle" - Oprah Antoinette

  • Report this Comment On October 28, 2008, at 1:22 PM, KwizatzHaderach wrote:

    "She's right: We should all avoid unnecessary debt, if at all possible."

    If it's unnecessary, then why can't it be avoided?

    Dah! If we hadn't been such a debt-thirsty nation, perhaps a great deal of our present crises could have been eliminated.

    The author's sentence would have been stronger (to me at least) had it been written, "She's right: We should all avoid unnecessary debt."

    Of course, so little debt is necessary anyway, perhaps it ought to have been, "we should all avoid debt."

    <i>Avoid</i> does not imply that we never use. It's just a guiding principle.

  • Report this Comment On October 28, 2008, at 1:36 PM, sessionka wrote:

    One more thing I forgot...

    Great advice on going to the Library. It's one of the BEST deals in the world.

    THE BEST (IMHO)!!!!

  • Report this Comment On October 28, 2008, at 1:46 PM, Darwood11 wrote:

    I second the advice on going to the library. Ours has free books, free magazines, free periodicals, free CDs and even free movies (DVDs and VHS).

    Save a bundle and invest what you save!

  • Report this Comment On October 28, 2008, at 4:20 PM, Marnic235 wrote:

    Interesting. I just happened to catch a bit of Suze Orman's own show the other day...in which she also "APPROVED!" someone to buy a Kindle. Not that I'm implying anything, of course.

  • Report this Comment On October 28, 2008, at 5:51 PM, atalanta16 wrote:

    I'm a bit confused. I've had my Kindle since February and it's already paid for itself in the deep discounts I get on books purchased, not to mention the space savings. I haven't begun to take advantage of the "great books" offered for about a dollar.

  • Report this Comment On October 29, 2008, at 10:05 AM, catoismymotor wrote:

    I would like to go on record as the first of us to see a "rescue plan" for Oprah's Book Club members that mis-use Kindle. Maybe it can be rolled into the second wave of mortage bailouts that will hit in four years.

    BTW: Who here would pay to see an Orman vs. Kramer cage match?

  • Report this Comment On October 29, 2008, at 11:47 AM, photoquest wrote:

    I use to admire Oprah for years and what a powerful woman she's become untill this past year when she had a guest on her show and was using her position to influence her viewers, I thought that was just freakin tacky for someone of her status, as for the kindle suggestion I no longer tune into Oprah but i save money on my book purchases by swapping on the internet which all it cost is 2.00 and change to ship a book and i get new releases and other books i want to read for just over 2.00 without having to spend 300 for a devise to read with. Please no hate mail from the Oprah fans i use to be one myself and i'm intitled to my opinion just like everyone eles.

  • Report this Comment On October 29, 2008, at 2:40 PM, McCrikey wrote:

    I'd take Orman's advice over Cramer's any day.

    In fact, I'd take anyone's advice over Cramer's any day.

    He's not even entertaining. He's a rabid dog that should be put down.

  • Report this Comment On November 04, 2008, at 11:39 AM, mm199691 wrote:

    Suze Orman is right. It is better to reduce your debt by paying it down rather than investing in a company whose stock may go up or down regardless of your expectations for it to go up.

    Oprah is right. Those of you who have not experienced the joy of a Kendal will just not get it until you have experienced it for yourself.

    And both would agree that you should not go into debt to buy a Kendal or a TV or a stereo or anything else that we want, but do not need.

  • Report this Comment On November 26, 2008, at 2:21 PM, sandrewapic wrote:

    I don't watch Oprah because I work during the day and have no interest in taping her show. I'm certain that she has many viewers that don't have credit card debt and can easily afford a Kindle. Come on people, not everyone tuned into Oprah is poor and foolish. Isn't she allowed to appeal to different components of her audience? Oh, and there's that famous Book Club. It makes perfect sense that she would promote the Kindle.

    I love my Kindle. Spend a few nights home reading instead of paying for dining, cover charges and overpriced cocktails, and it easily pays for itself. It is perfect entertainment for a recession AND it's cool!

  • Report this Comment On March 02, 2009, at 2:21 PM, FutureMonkey wrote:

    Out of curiosity Tim, do you use an iPod or other mp3 player? Or only the radio that comes...er.."free" with your car. Still using your landline or do you have a cellphone? How about one with email/internet functions? How about a Garmin instead of that $1.75 paper map from the AM-PM? They still broadcast free TV, should Oprah be advising people to give up their HD digital cable. Afterall, paying for cable is a grave risk to your retirement , if you consider you could be putting that $89.90 into your 401k.

    I see little to no difference between Oprah gushing about the Kindle or any other new technogadget like an iPod, iPhone, Garmin, or microwave oven for that matter.

    If you are debt or otherwise cannot afford your roof, no you shouldn't buy a Kindle, nor should you buy an iPhone, iPod, pay for cable, or internet; nor should you be buying books in any format. But if you have discretionary income and spend $50-100 per month on new books and magazines, then Oprah is absolutely correct: the Kindle actually would save you money - potentially a lot of money.

    Kindle appeals to people that pay for books already. People that did not buy books before are unlikely to run out and buy a Kindle and start devoting a portion of their discretionary income to buy a Kindle just because Oprah said so. Some people like to own books, some people like the tactile experience of books, some people like to go to the library. Personally, I like the tactile experience of books, but the Kindle appeals to me for a lot of reasons. I also like the tactile experience of dropping a needle on the B-side of Abbey Road, but I still got an mp3 player anyway. Would you be critical of Oprah pumping mp3 players (a very green alternative to CDs and Albums) or a tiny netbook or using Boxee. Were you critical of her selling her magazine or recommending books in paper form? Give Oprah and Kindle a break both are pretty cool (and both are optional if they don't appeal to you).

    FuMonk

  • Report this Comment On March 02, 2009, at 8:22 PM, invaluewetrust wrote:

    The library? Are you joking? Talk about time consuming and inconvenient. Try going to the library at midnight when you want to read something. The Kindle is brilliant in every aspect. The days of brick and mortar bookstores and environmental waste are over. Good riddance.

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