Sometimes I feel like I know what I need to know about Personal Finance. I continue to follow the philosophies and insight from billionaire Warren Buffett. But there are more successful and influential financial personalities that I can learn from. Why not learn from a diverse pool of experts?
So I decided to see if there was any major investment or personal financial philosophies I may not know about and could use. My plan was to google famous and influential personal finance personalities and read about their wisdom. Several names popped up and so I got a takeaway from each person which I’d like to share:
Jim Cramer’s Influence
Many of us know Jim Cramer. He’s a popular American TV personality. He’s mostly known for his show on CNBC’s Mad Money. He has over a million Twitter followers and is the “most influential radio and television personalities covering personal finance.” He’s also super wealthy with a net worth of $100 million.
If you’ve ever seen some or all of his show, he shows tremendous energy and passion around his thoughts and opinions. I’m a believer in that you can make any topic exciting if you speak about it with excitement.
His show Mad Money is ranked is a top Business and Finance TV show which has been on the air for over 12 years.
Younger investors watch his show due to the excitement he brings into the investing world.
Popularity and influence are not always positive. There are many Cramer critics out there as well. Motley Fool stated that although Cramer was advising people to sell in the 2008 recession, he didn’t advise them when to get back into the market. This was back in October 2008 when the Dow Jones dropped to around 8500. But guess what, it continued to drop all the way to March 2009 to around 6500. So if you listened to Cramer you did save money by selling your stock.
And Cramer also said is “if you can withstand it, ride it out.” Therefore, I don’t agree with Motley Fools advice of not listening to Cramer. When you invest in the in the stock market means you should position yourself to ride it during its ups and downs – it’s part of testing your patience and remains committed to your decisions. If you need access to your some funds, consider investing some in Treasury Bills, Bonds, CDs, etc. – investments with lower risk and greater stability.
Remember, Cramer is not working with other Portfolio Managers. This is evidenced by his support of index funds and negative comments towards actively managed funds. More and more people are moving into low-cost index funds because they don’t want to pay fees for performance which is below the index anyways.
My takeaway is that even though Cramer is not exclusively within the Personal Finance space and more on the investment-specific side, some of his advice or rather rules are still pretty solid. They’re his 25 Rules for Investing that I came across.
One of Cramer’s rules, in particular, I can learn from is Rule 11: Don’t Own Too Many Names. Per Cramer, it can be constraining, but it’s better to have a few positions you know well and like. This rule stems from his hedge fund manager days.
Cramer learned that good performance is tied to owning few positions and goes on to say bad money managers have tons of positions and good ones have few which they know well.
Check out the short video below where Cramer talks about 401k(s). I was excited to hear that he agrees it’s better to invest your retirement contributions in low-cost index funds as opposed to traditional retirement funds.
It was good to hear this because I made the change into low-cost index funds in my retirement account a few months back and am glad I did since I’ll be saving in fees!
Dave Ramsey’s Influence
Ramsey is probably right behind Cramer in terms of personal finance popularity and influence. Ramsey has a radio show that reaches almost 10 million people. He uses the Bible to teach people about money. One and perhaps the greatest example of his use of the Bible as is to avoid debt at all costs. He references Proverbs 22:7 stating, “The rich rule over the poor, and the borrower is a slave to the lender.” This was a great takeaway and reminder of the consequences of taking on debt.
Debt usually always helps the lender rather than the debtor. In the end, the lender receives more than the amount they have loaned to people. The debtor has to follow the rules of the lender, make payments on time, and accept the risk of losing something if the debt is not repaid.
Something that I didn’t know was that Ramsey filed for bankruptcy back in his twenties. But oh boy he has bounced back strong ever since with a net worth of $55 million.
The bank wanted Ramsey to pay off the full balance of the loan he had from acquiring rental properties. Ramsey wasn’t able to do so and had to file for bankruptcy. This led him to practice Christianity more and in the process help others which ultimately parlayed into a radio show.
Dave Ramsey invests in funds and not individual stocks. He also has real estate investments, but they are not debt financed.
Chris Hogan’s Influence
I’m surprised that I don’t know about Chris Hogan. He seems to be very popular. Hogan’s focus is to help people prepare for retirement.
He actually learned personal finance concepts from Dave Ramsey as he worked with him for over 10 years before starting his own show.
He developed the Retire Inspired Quotient R:IQ, a retirement calculator This is a tool to help you determine how much you need to retire. You have to sign-up on his website in order to get your personalized R:IQ. It obtains simple inputs from you such as your budget, how many years you’ve worked, how much you currently have saved up in all your accounts, and how much you owe in debt.
Hogan believes that retirement should be based on a nest egg number or amount you’ve set for yourself and not your age.
Similar to Ramsey, Hogan is strongly opposed to debt. He says debt is like “quicksand” to your retirement plans.
Hogan’s advice solidifies my plans to never acquire additional debt. So far I have a mortgage, which I hope to pay off many years before I retire and a car loan at a very low-interest-rate that I plan to pay it off within a year. I also have a couple of credit cards, but these have always been zero interest and I pay the balance off in full every single billing cycle.
As a whole, I continue to believe that personal finance is not complex, rather it’s SIMPLE. Effectiveness in your financial plan comes from simple activities like keeping your investment list short and investment costs low, reduction and elimination of debt and finding simple and intuitive tools to help you plan for the future or retirement. This may be my biggest takeaway after all.
Join The Discussion:
- Is there an influential financial personality that you levitate towards? What do you like about their personality?
- Have you recently enhanced your personal finance knowledge from someone’s influential personality/philosophy/investment style/tools or tips/etc.?
I use Personal Capital because (1) it’s free, (2) it tracks all of my accounts and overall net worth, (3) my account balances automatically update, (4) it shows how my investments are diversified and allocated in various sectors, and (5) can use built-in tools like “Investment Checkup” to get….wait for it…free personalized advice!