“Gentleman, This is a football”: Mastering the basics of football and finances.

The great Vince Lombardi was famous for preaching the basics to his players.  I think more financial advisors should preach the basics to the public.  Here are my three financial rules:

Rule One:  Invest in what you understand.  My Uncle owns a machine shop so my first bit of investing advice to him would be for him to invest in another machine that will make him more money.  Never rush to hand your hard earned dollars over to someone else who will invest in things you don’t fully understand.

Rule Two:  Just in case rule number one has not discouraged you, my rule number two is:  Be happy with “average” investment performance.  Buy the entire stock and bond market with a few low-cost, diversified index funds and be happy with average returns.  Most people end up with less than their fair share of the markets return because they pay high fees for a broker who makes promises they won’t put in writing.

Rule Three:  Spend less than you make while saving  10-15% of your money.  I know that sounds easy but unless you figure out how to master rule number three, the prior two rules won’t help you.

We all need to master the basics before we try getting fancy with our finances.  As Vince Lombardi would say:  “Gentleman, This is a football”.