Excerpt from So here are the two basic financial truths this job has taught me:
First, success comes from smart budgeting, not super-smart investing.
Thrifty budgeting isn't about a life of want, it's about trimming the things that don't really matter - so you can have the things that do.
The other essential personal-finance truth is that investors should suppress the ego.
Americans celebrate winning, and most investors define that as a big return - beating the overall market. That means buying and selling, which rack up annual fees and tax bills equal to 2 to 3 percent of the money invested.
An inexperienced, passive investor can escape those costs - and match the market's returns - simply by holding low-fee index-style funds long-term. Because of the extra costs, the active investor has to beat the market by 2 or 3 percentage points just to match the passive investor's results.It's like lifting your bowling score from 200 to 300 - and keeping it there. Forget it.
