Your Money Ratios by Charles Farrell

Repetitive in places and oddly self-promoting. Farrell adopts the grade-school method of writing: tell them what you’re going to tell them, tell them, then tell them what you’ve told them. After reading other financial advice books (Personal Finance for Dummies, Pound Foolish) that use a more modern and adult style, his was frustrating and a little off-putting.

That said, the advice itself is interesting and logical. Three things I learned:

  • 401K contributions are taken out pre-tax, and are tax free until you take them out. This means contributing to your 401K is an easy way to both save for retirement and lower your tax bill (since those contributions don’t count toward your income for the year).
  • Social Security is solvent now and will probably remain so, though benefit payouts might be reduced over time to keep it that way. Still, you can include it in your retirement planning, lowering the target amount you’ll need to save.
  • Splitting your retirement savings between stocks and bonds protects you from some of the down swings the stock market will experience over the years you’ll be saving for retirement, allowing you to confidently adopt a long-term perspective for your investments.