Preparing for a Rational Financial Planning Sequence

What's next, a Rational (tm) Work Out sequence? A Rational (tm) Dating sequence? A Rational (tm) Build Your Own PC sequence?

There are plenty of important topics for which a reputed and sourced guide by a trusted authority with a community stamp of approval would be helpful, but the most efficient way to achieve that would be for regulars to seek out established and reputed guides online (since rational in this context translates simply to 'good'/'efficient'), then link to them in some "guide repository thread".

That being said, when proven high quality content providers on LW choose to write about anything, people will want to read it. Do you count yourself among that reference class?

A non-rationality sequence about financial planning, tailored to US citizens (with topics such as "401K matching") and a few paragraphs about "salary negotiation" and the like, written by a newcomer with unknown credentials in the field, labeled as "Rational" - the prior for "such a sequence is likely to increase the signal/noise ratio" goes lower and lower. Especially in the presence of easily accessible guides such as e.g. "Money 101" on CNNMoney.

There's something worse than no information, which is unreliable information from uncertain sources. Knowing that you know nothing versus falsely believing that you know something, and all that.

Does your rational advice differ from the common folk wisdom/cargo culting on this topic? And if so, what was your research process?

I would start by writing a post on one of these topics and seeing what the reception is like.

Some notes in random order

• There is vast amount of literature about this. Go into any B&N and contemplate the shelves full of financial self-help books.
• You are overreaching. Career tactics? Choosing a spouse? You need to focus on a much narrower topic so that you can (a) finish this; and (b) write something useful instead of a brief overview of the surface of many things. Your outline looks to be made for a "how to live a life" book.
• Financial planning is more complicated than you think. For example, the common "save X% for Y years and you can retire at age Z" advice doesn't have much relationship to reality (consider, for a start, that is completely ignores volatility and the uncertainty of the future). In fact, financial planning is another name for financial forecasting and if you can do that well, Wall St. should provide you with enough money to retire very quickly :-/
• What's your edge? What makes you think you can write a better financial guide than some random planner from Fidelity or Schwab? He at least has the experience of having talked to customers.

The fact that you have a subsection entitled "Diamonds are forever, but most women would rather have a house." as part of the "Your Spouse" section suggests that you are assuming the reader's spouse is/will be a woman, which in turn suggests that you are assuming your reader is a man. Perhaps this is intentional and you really do want to write a book on financial advice for men, but I suspect it's actually an instance of a common failure mode (especially since you use "Jane" as an example in an earlier chapter). So if you're worried about potentially alienating some of your readership, you might want to rethink the title (and perhaps the content) of that section.

Only say 'rational' when you can't eliminate the word.

Interested.

I'm surprised by all the discouraging comments. If what you end up writing isn't good enough, chances are that the highest-voted comment will say so (and why). So I support the suggestion that you write a post and consider the reception.

That said, I can't help but notice that you've so far ignored the questions about why you consider yourself qualified.

I would read the sequence if it is not 90% filler feel-good material but mainly hard data and formulae.

If the sequence is sufficiently good I would consider buying the book for less than $15.

I don't need another Mr. Money Mustache guide but would very much like something solid.

I would love to read this! This seems extremely high value.

The other commenters who are saying that this information is available elsewhere have a point, but not, I think, a particularly strong one. There's nothing wrong with explaining something that someone else has already explained. Some pointers to the existing literature might be helpful, though.

Please write the sequence so that each article independently presents one idea (or one group of ideas), and thus can be rated according to how well the idea in the article is presented.

I hate articles which are just an "introduction" to something that is supposed to be written in the second part (which sometimes also is just an introduction to the third part). It is OK if an article contains hyperlinks to previous articles, but it is bad if it references unexisting (at given moment) future articles.

Also, many self-help books start with 100 pages of motivation, followed by an advice that could be expressed using 5 sentences but is expanded to another 100 pages. I am not going to criticize this at books; there could be a good reason for this. For example, the customers prefer thick books, because their heuristics say that thick books contain more information; and if you don't conform to their biases, they will simply not buy your book. -- But this is a blog, we don't need to fill a given amount of pages just to make a customer happy. You can get directly to the point.

As others have pointed out, there are lots of other resources out there that contain this information. I still think it would be useful to have here in one condensed guide, but that suggests it may be worth the time to find references / links to other people who say the same things, as well as pointing out people with serious, reasoned disagreements. If you say "index funds are a good idea," that's n=1. If you say "index funds are a good idea, are recommended by several Nobel Prize-winning economists, including local favorite Daniel Kahneman, and have outperformed X% of mutual funds over the last Y decades," that a much larger n and a much more serious and valuable recommendation.

In particular, it may be valuable to discuss the application of rationality to investing- that is, Ben Graham's idea of Mr. Market, Warren Buffett / Charlie Munger, etc.

Would be interested in parts of this. Start with whatever you think you're best at writing that doesn't require earlier material and let's have comments. Some things I want to discuss and hear discussed:

• Why shouldn't I live on interest plus part of the principal during retirement? If I should, what does this do to all the numbers guides suggest?
• Why shouldn't I invest 100% in Berkshire Hathaway while young? Don't just hold up a sign saying diversification, because then I have to ask why BRK isn't as diversified as you're suggesting I be.
• What trade-off am I actually making if I donate e.g. 20% of my annual after-tax income to charity? Years until retirement, dollars per month during retirement, etc.?
• Naively each time tick I want to maximize the expectation of the log of the ratio of my investments' value at the end of the tick to the value at the beginning. What's missing from that other than non-independence of behavior during different time ticks?

I would feel right about paying $0-$15 depending on my mood to read a book on this sort of material written by someone who wrote the above post if I had that option soon after it was available without reactions from other readers. With bad reactions, $0. With no reactions after enough time that there should have been good reactions, $0-5. With good reactions, $5-40-200+ depending on content and reactions. I think more good would come of discussion on well-written initial posts than of a long monologue.

I like the idea, but I think it has been done before on other blogs. Mr. Money Mustache and Early Retirement Extreme come to mind, which were written by a (now) retired software engineer and a physicist, respectively. Their advice may bear repeating, but I do not think I would purchase a book on the subject. There are so many free resources online; it seems financially unwise to spend more on a book.

But may I ask, who are you, and what are your qualifications to speak on this subject?

I would read this on LW, but would not buy it as a book.

I would be especially interested in subjects under part IV, or equally interested in a link to another source on this information with some significant vetting.

I'm currently in a situation (and I expect many other LW readers to be) where I am still a student but won't be for much longer. I know how to live rather cheaply and not make life-destroying decisions, but I don't know how to open a different kind of bank account, buy any kind of stocks, or appropriately munchkin the rules on student loans.

Brief thoughts (some redundancy with what others have said):

• This seems enormously broad. Like, this is material that could fill multiple books. I strongly suggest you narrow your focus significantly, at least at first.
• Most of these topics are very well covered elsewhere. Judging by your outline here and your linked comment, I suspect I've read many of the same things you have. That doesn't mean it's not worth covering here! But rather than duplicate effort saying things other people have already said, a well-sourced compilation of what you consider the best of the best advice might be more useful. Which leads me to...
• Make sure to include references and show your work. This is where you could really add value. Personal finance is a topic where there's a ton of folk wisdom, not all of which is going to be true, and it's not always easy to track these cached beliefs back to their source.
• If there's anywhere else where you can add specific value versus standard books and blogs on the subject, I recommend focusing there. e.g. If you can run Monte Carlo simulations, you could answer some of the questions about chances of successful retirement, the effect of charitable donations on such chances, etc.
• I'd also like to know if you have specific credentials or are a domain expert. I'm a CFA charterholder and have worked in finance for seven years (asset management in a family office), and I'm not sure I'd consider myself enough of an expert to write a sequence like this. I suspect I'd largely be passing down cached beliefs. If you have a strong reason to think otherwise for what you write, it'd be great to know.

Do you have a secret identity OP?

Like a lot of people, I'm interested.

By the way, the word is' optimal', not 'rational' financial planning :-)

65-year old you will not want to live like a grad student

Great food for thought. My rather wealthy grandparents were much more frugal than most of today's twentysomethings.

Interested too. And will be particularly useful if consider topics which are not easy to find in other sources: giving, x-risk, disruptive technologies, cryonics.

Having just discovered Mr. Money Mustache's blog, I would be interested on discussion concerning early retirement.

I did read your comment that the lifestyle this blogger advocates is unrealistic for many people, but it seems that he has a good counterargument w/r/t hedonic adaptation--i.e., we may think that living frugally will make us unhappier, but in fact, it likely will not, and vice versa--and preferences changing over time.

If you're going to narrow your focus, it might be valuable to focus on places where the LW demographic would want to do something different than most people because of their different goals (how does optimizing for donations or signing up for cryonics change your financial strategy?), and/or where the advice of experts is incorrect.

I'm interested in part 4, and would likely pay $5-10 for a digital book that contains it, so long as it were favorably reviewed by other members of this community. (Other guides to this exist, I'm sure, but I'd rather pay $5 than spend the time to track down a good one.) I would probably skip part 1 entirely and skim parts 2 and 3 to confirm my impression that it contains nothing new for me.

This looks like it could help very much with instrumental rationality. I would love to read this!

Most interested in Part 3 and below. Already convinced saving is a good idea.

Very interested.

Also, here's a bit of old discussion on the topic I found interesting enough to save.

I would definitely read the sequence. I'm especially interested in How Tos on Investment - the free advice specifically about Investment on Mr. Money Mustache boils down to "Index Funds" and "Here are a bunch of books I read on the topic" as far as I could tell from my admittedly short visits to the site.

If you found (a) co-author(s) in Germany, I would buy the Germany-specific country edition if it's not ridiculously expensive.

I'd read this on LW.

I'm interested. I'm also worried that it might not be particularly helpful given my particular obstacles (a "Munchkin your way out of the basement blindfolded without necessarily starting a successful software career" sequence would be awesome), but the general utility seems worth having (and having it on LessWrong would save me the need to search for it elsewhere in the short term).

Would be interested.

Interested.