Retirement Savings: The Young, Rich, and Stupid

By endlessly trading, our nation's young millionaires are squandering their fortunes. Don't follow in their footsteps.

May 24, 2014 at 12:30PM

There are lots of stupid things that rich people do, and a recent survey found one that -- if you did it yourself -- could ruin your chances for a comfortable retirement.

The survey was conducted by Fidelity, and it asked millionaires from generations X and Y what some of their investment patterns were. Generally, these two generations span from 1965 to 2004 -- a huge range. This means that the millionaires Fidelity talked to were likely between the ages of 21 and 49.

Fidelity found that the average millionaire of this age made 30 investment trades per month. That's an astounding 360 trades per year. This triple-whammy of investment stupidity means that these millionaires are kissing their fortunes goodbye and making it highly unlikely that they'll be able to continue the same kind of lifestyle once they hit retirement age.

In the slideshow below, you'll see how such an approach results in higher transaction costs, higher taxes, and lower overall returns. And I'll show you one super-simple strategy that can lead to much better investing.

Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Brian Stoffel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

Something big just happened

I don't know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. Motley Fool co-founder David Gardner (whose growth-stock newsletter was rated #1 in the world by The Wall Street Journal)* and his brother, Motley Fool CEO Tom Gardner, just revealed two brand new stock recommendations moments ago. Together, they've tripled the stock market's return over 12+ years. And while timing isn't everything, the history of Tom and David's stock picks shows that it pays to get in early on their ideas.

Click here to be among the first people to hear about David and Tom's newest stock recommendations.

*"Look Who's on Top Now" appeared in The Wall Street Journal which references Hulbert's rankings of the best performing stock picking newsletters over a 5-year period from 2008-2013.

Compare Brokers