Preparing for a Rational Financial Planning Sequence

by elharo 6y22nd May 201365 comments


What follows is a rough outline for a possible rational financial planning sequence that was inspired by some other recent discussion here. I'm not sure how useful this would be to how many people. I know there are some LessWrongers who would enjoy and learn from this; but I don't know if there are 5, 50, or 500. If you'd like to read it, let me know. If 500 people tell me they can't wait for this, I'll probably write it. If 5 people say maybe they'll glance at it, then probably not.



Part I: Preliminaries:

    Financial Rationality
    Multiplying uncertainties
    The inside and outside views
    Interpolation is reliable; extrapolation isn't

Part II: This is important:

  • Why to save for retirement
  • Dying alone in a hole: the story of Jane.   
  • Why compound interest is cool
  • 65-year old you will not want to live like a grad student
  • 65-year old you will not want to work like 35-year old you
  • Existential risk does not defeat personal risk
  • Existential success does not defeat personal risk

Part III: Analyzing Your Life

    (This section needs a lot more fleshing out, and thought)

    Personal satisfaction and happiness: do what you love, and adjust your financial expectations accordingly
    How much do you need to retire?
    When do you want to retire?
    How much do you need to live on today?
    Big expenses you need to plan for
    Increasing Income
    College the best financial decision you'll ever make or the worst?
    Choosing a career: what is your comparative advantage?
    Switching careers
    Career Decisions
        equity vs salary; steady singles or home run hitter
        employee or owner
    Career Tactics
        Salary negotiation
        when to change jobs
    Cutting Expenses
    Save more tomorrow

Part IV: The Practical How-to Advice:

Emergency Cash
Credit cards: the good, the bad, and the criminal
Where to save (tax advantaged accounts)
The importance of fees
401K matching: the highest return you'll ever see
Social Security
What to invest in (index funds)
    stock vs bond funds
    domestic vs. international
    target retirement funds
    Comic books are not a retirement plan (but a comic book store might be)
Avoiding hucksters and doomsayers
Investment Advisors
What if the shit hits the fan?
Can smart, rational investors beat the market?
Good debt; bad debt
Cars and other expensive purchases
Cutting out the middleman: making money on Craig's list, amazon, eBay and AirB&B
Buying a house
Renting vs. owning a house; rental parity
Student loans
Health Insurance
Life Insurance
Auto Insurance
Your Spouse: the most important financial decision you'll ever make
    Diamonds are forever, but most women would rather have a house.
    One or two incomes?
    Live longer, be happier, get married



If there are any topics you'd like to see covered that aren't here (wills? lawyers? the financial press?), let me know. Similarly, if you think there's a section that doesn't belong and should be dropped, let me know that too.


One caveat: while some sections are fairly generic, others will be very U.S. centric. The most specific advice will not be applicable to non-U.S. citizens and residents. That does limit the audience, but there's not too much I can do about that. Perhaps if it's successful I can seek out co-authors to do UK, Canadian, or other country editions.

A question for people who are interested in financial planning material: If this were available as a complete book (electronic and paper) today, how likely do you think it is that you would buy this book instead of one of the other available books on the subject? What would you pay for such a book?  If this were available as both a book and a sequence on LessWrong, how might that change your decision?

For now, this discussion thread is just a minimum viable product (MVP) to find out if a sequence is worth the time it would take me to complete. If the MVP pans out, I'll write and post one or two of these chapters to further gauge interest. If the MVP doesn't look promising, I'll drop it and move on to my next book idea.