Review “The most important financial advice is stunningly simple and fits on an index card. The newbie investor will not find a better guide to personal finance.” —BURTON G. MALKIEL, author of A RANDOM WALK DOWN WALL STREET  “Ten simple, amazingly effective rules unencumbered by the agendas of fee-sucking fund managers or reckless business-media pundits. Highly recommended.” —NOMI PRINS, author of ALL THE PRESIDENTS’ BANKERS  “The Index Card offers engaging stories, persuasive explanations, and fascinating data. It’s realistic, honest, wise, and compassionate, as well as socially and politically astute.” —JOE CONASON, editor in chief at THE NATIONAL MEMO  “All parents should buy The Index Card for their children. If they refuse to read it, consider disinheriting them.” —ROBERT H. FRANK, professor of economics, CORNELL UNIVERSITY  “In a world of relentless financial noise, Helaine and Harold are here to help. This is the best and most important financial book of the year.” —ZAC BISSONNETTE, author of DEBT-FREE U and THE GREAT BEANIE BABY BUBBLE About the Author HELAINE OLEN is the acclaimed author of Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, which was featured on The Daily Show with Jon Stewart and PBS’ Frontline. She writes the Spread the Wealth personal finance column for Inc.  Her work has appeared in numerous publications, including The New York Times, Salon, Slate, where she wrote the popular column The Bills, and the Los Angeles Times, where she wrote the popular Money Makeover column.  HAROLD POLLACK is the Helen Ross Professor of Social Service Admin­istration at the Univer­sity of Chicago, where he researches health and urban policy concerns and is a nonresident fellow at the Century Foundation. He writes regu­larly for the Washington Post, Politico, Atlantic Monthly, healthinsurance.org, and other publications. Excerpt. © Reprinted by permission. All rights reserved.   INTRODUCTIONSAM’S STORYA few years ago, Sam received an inheritance after his dad died. Grief stricken and overwhelmed by the demands of work, marriage, and raising children, he placed the money in a local bank’s savings account. Every so often, Sam would make an effort to think about the money. He knew he should invest it in . . . well, something. A few times a year a very official-sounding officer from the bank, someone called a wealth officer, would contact him about it, suggesting a complimentary meeting.So Sam would sit down at the bank, and an advisor would offer him coffee and muffins and talk to him about his children, his job, and where he next planned to go on vacation. Then he would offer a solution, the next-best thing to a guarantee, he said, as he started talking really fast about expected rates of return, risk, and the importance of the stock market.The wealth officer, or wealth specialist, or whatever the heck he was called, wanted Sam to sign papers right there and then so the money could get to work, as he put it. But Sam held off. He knew there were unscrupulous money people out there, and he wanted to do his due diligence.So Sam would call friends, and friends of those friends. Sometimes those friends were in finance or married to people in finance, and they would make suggestions based on what they had picked up from their jobs or their husbands or wives over the years. One offered to manage the money for him altogether but didn’t say how he would be compensated for his time and effort. Another said he should call Vanguard and put the money in something called index funds. Bonds, advised another. Others talked about allocating different percentages to different investments. Still another pal suggested a financial advisor named Kelly who had done amazing things for him.Other people told Sam horror stories. There was the friend who had been persuaded to invest in tech stocks in 1999 and lost “a bundle,” as he put it. A coworker told him about the friend of the family who seemed so kind but put her mom in some sort of investment that didn’t do what it was supposed to and left her in a worse position than when she started out. Several people mentioned Bernie Madoff.It was overwhelming. It seemed as if everyone contradicted one another. And they were all so sure . . . sure that they had the secret to how to make money grow or that it was all a rip-off. And Sam was scared. He needed that money. He wanted to send his children to college. He couldn’t bring himself to risk losing it.So Sam ended up doing . . . nothing.Not only did Sam’s nest egg end up losing a chunk of its value to inflation, but the stock market also did well during this period. Sam didn’t benefit from that run-up. He wasn’t running anywhere. He was stuck doing nothing because the combination of the myriad options and uncertainties of money, the economy, and the financial services industry had all but paralyzed him.THE POUND FOOLISH STORYSam is hardly alone. Statistics and studies show that many of us choose not to deal or take a hands-on approach when it comes to our finances.   • Almost three out of four of us say our finances cause us stress on at least a monthly basis.   • One-third of those in relationships say money is a major source of conflict with their significant other.   • Fifty-five percent of people with investable assets worth between $50,000 and $250,000 say they fear outliving their retirement savings.   • Sixty-nine percent of us answered “never” when asked how often we balance our checking accounts.The roller coaster that is our economy only makes us even more hesitant to take control of our financial lives. In her book Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, Helaine told the story of how for all too many of us wages began to stagnate and fall, even as jobs and paychecks became less secure. At the same time, almost all the income and wealth gains since the end of the Great Recession have gone to the wealthiest.We feel as if we are falling behind because, frankly, we are, often through no fault of our own.We’re convinced any financial mistake will send us on a downward spiral we won’t be able to recover from. Many of us walk around with a constant and growing sense that financial doom can arrive at any moment.So like Sam we fret about our finances but remain frozen. Money feels complicated, boring, scary, and overwhelming all at once. Who wants to wade through competing budget apps? We want to be careful financial stewards but instead get caught up playing a losing game of financial Whac-A-Mole.Desperate, we tell ourselves that someone out there must have the answer. All too many people working in the financial services industry market themselves as our friends who have special insights into the world of finance and future events. Even as we don’t trust many of the financial types we encounter, we are secretly convinced there is one person out there, one honest man or woman, who can identify exactly that magic investment for us, and guarantee that our money will grow, and that nothing will go wrong, not ever.But as Pound Foolish showed, many of our financial problems were not the result of our financial missteps. They were caused by economic trends and recessions and then compounded by the failure of financial regulators to crack down on bad behavior by those who claimed to be offering us help.Many of Pound Foolish’s readers contacted Helaine to thank her for not laying all the blame of their financial woes on their shoulders, and just as many had a simple follow-up question: If we all need to be wary of the financial services industry, and yet we also need to be proactive about our finances, what do we do?For a long time, Helaine had no answer to that question.Fortunately, Harold did.HAROLD’S STORYLike Helaine, Harold does not work in the financial services industry. A professor at the University of Chicago and a contributor to a number of media outlets and blogs, including the Washington Post’s Wonkblog, Harold came up with the concept of the index card not as some academic experiment but as a practical solution to the kinds of urgent financial problems many of us encounter at some point in our lives. As he explains,For most of my life, I had no real savings to speak of. I didn’t even own a home until I was forty years old. My wife, Veronica, and I were not poor by any means, but we were starting a family. Like many people our age, we never displayed much financial forward thinking or savvy. I was putting money in my retirement account but basically treading water otherwise. We rented (and subsequently missed out on a historic real estate run-up). I invested in dot-com stocks. You can guess how well that ended. We had child-care expenses. We let some costly debts accumulate. We overpaid for a nice new car when a nice used model would have worked fine.Then, as so often is the case, life happened.Around the time of my forty-first birthday, Veronica lost her mother quite suddenly. Veronica’s brother Vincent, who lives with an intellectual disability known as fragile X syndrome, was living with Veronica’s mom. The issues were sad and complicated, but the bottom line was simple. After this untimely death, Vincent needed to move in with us and our two young daughters. Vincent moved in with us and our two young daughters.Immediately, we felt the financial strain. Veronica had to leave the workforce to address Vincent’s needs. Yet even as our income fell, our expenses mounted. And mounted. Vincent had multiple hospitalizations and medical challenges, many related to his morbid obesity. The La-Z-Boy chair we bought to support his 340-pound frame cost nearly $1,000. Not long after, Veronica developed a serious heart infection that landed her in the cardiac ICU. We weren’t in financial free fall, but things were tight, and we were living a fundamentally different kind of life than we had ever expected.I needed to quickly find some real answers to right our financial life.I didn’t have much financial knowledge. I did draw upon the tools of my academic trade to help guide me as I tried to distinguish the useful advice from the useless or worse. I consulted financial advisors and read books and academic papers on managing one’s finances.Through trial and error, conversations with friends and other academics, I slowly pieced together a new financial regimen. Some was common sense. Some involved teaching myself insights that were actually well known to financial economists but underemphasized in the cacophony put out by the financial services industry. The most important advice was embarrassingly simple. It included the following:   • Save 10 to 20 percent of your money—or as much as you can, if you can’t put that much aside.   • Pay your credit card balance in full every month.   • Invest in low-cost index funds.By following these rules and a handful more, we saw our financial picture begin to brighten. Life didn’t change overnight. But it did change. We had more money in the bank. We could afford to take a vacation without fearing what would become of us the next month if we encountered an unexpected home repair. We could exploit the various tax-advantaged savings offerings we could never use before. And putting money away allowed us to get lucky in the stock market; investment returns from the most recent bull market will help pay the college tuition for our daughters. We could refinance our mortgage on favorable terms. We found ourselves able to help out our relatives who were struggling. We felt financially secure, even though our house is still worth notably less than it was when we bought it in 2003.THE INDEX CARD STORYWhen Pound Foolish was published, Harold contacted Helaine and interviewed her on the Reality-Based Community blog. During their Internet chat, Harold offhandedly noted that the fundamental dilemma facing the financial services industry is that the correct advice for most people fits on a three-by-five-inch index card and is available for free at the library.A surprising number of people wrote to Harold, asking for the card. Because he was speaking metaphorically, this was a problem. But he had promised. So he pulled one of his daughter’s index cards out of her backpack, picked up a pen, and in maybe three minutes wrote down some of the simple and basic financial rules he and Veronica had been living by for the past decade. He then snapped a crude picture with his smartphone. This is what it looked like:Harold posted the photograph on his blog, and things quickly went viral. There were hundreds of thousands of hits around the Internet. A life coach copied it word for word and read it aloud in a YouTube video. The card was even translated into Romanian. There were also shout-outs from people who have deep knowledge about personal finance, economics, and investments.“Pollack’s right. Follow these principles and you’ll be in much, much, much better shape than most Americans—or most anyone,” wrote Ezra Klein over at the Washington Post.“Your new financial advisor is Harold Pollack’s index card,” declared the website Boing Boing. Marketplace, Forbes, the Huffington Post, Reddit, and Lifehacker discussed it.The MacArthur fellow Sendhil Mullainathan tweeted the card out. So did top economists like Justin Wolfers. Vanguard mentioned the index card on its blog and e-mailed a picture of it with accompanying information in a “MoneyWhys” New Year’s investment advice message to its subscribers. Money magazine called it one of the “best new money ideas” of 2013. The Minneapolis Star Tribune wrote, “The most notable personal finance writing of 2013 . . . was a handwritten 4 × 6 index card.”There were thousands of comments and tweets, Facebook likes, and LinkedIn shares. Among the index card’s many fans? Helaine, who knew she finally had an answer for her readers. Rather than people relying on the so-called expert advice of the financial industry to dig them out of their money troubles and provide them with a magic bullet, she and Harold knew instinctively that the answer was much simpler and that it lay not with the experts but within ourselves.One quick note: You’ll notice we made a few alterations to the original index card. Most of these changes were either organizational or for wording, but a few are more significant. Most important: Harold originally suggested that people save 20 percent of their pretax income. It’s a terrific goal. It’s also all but impossible for many of us. Aiming for 10 to 20 percent is a more realistic long-term strategy. We also eliminated the recommendation to use target-date funds—read on to find out why. Finally, we felt it was important to include insurance and housing, both of which didn’t make it onto the original card.KEEP IT SIMPLE—THE ONLY STORY YOU NEED TO KNOWSo a question: If the rules are so simple, why do you need more than an index card—heck, a book—to explain them?Most of us don’t want to follow rules unless we know why they are rules. This book explains how the rules work and why we chose them. They may be simple, but they aren’t always self-explanatory.Simplicity—as anyone who has ever tried to perfect a golf swing knows—often takes work and insight to achieve. Just telling you financial rules to follow is not the same thing as showing you how to master them so that you can follow them with confidence. And you will need to because . . .There is a whole industry of financial services advisors out there who make their living by convincing you that it’s naive to believe that simplicity, common sense, and restraint are potent enough weapons with which to deal with the whirlwind of financial chaos facing any of us on any given day. They make their money by convincing you that investing is so complicated, you need to turn it over to them. Or they convince you that they—as insiders, as “professionals”—have the ability to outsmart everyone else and know exactly what investment scheme will outperform the S&P 500.The financial world offers an odd juxtaposition. The financial products we use in our day-to-day lives—credit cards, mutual funds, mortgages—are often quite complicated. But that doesn’t mean the way we lead our financial lives needs to be equally complicated.Between Helaine’s experience covering the pitfalls and traps of the financial services industry and Harold’s proven practical solutions to his own financial problems, we can help you take control of your financial life.So by following the nine simple rules as outlined on our index card, you will   • have the confidence to make your own financial decisions;   • discover basic financial truths such as that low-fee index funds outperform just about any more complicated investment you can buy and that simple fixed-rate mortgages remain the best way to borrow money to buy your house;   • be armed with a timeless set of guidelines that you can turn to no matter what financial issues you may face or how drastically the winds of financial change shift; and   • be sure you never make the same mistake Sam made and let your fears about the financial unknown prevent you from doing anything.Ready to finally take action and begin the next phase of your financial life?Good. Let’s get started.
D**L
Five Stars
"REMARKABLE"
M**L
Rubbish
Total rubbish. You could write all the information in this book on one index card.
B**N
Short simple read for making very important retirement decisions now (along with great information).
I was a Certified Financial Planner in a past life and like to buy one of these books every now and then. I am about 10 years from my own retirement now and thought it appropriate to update my knowledge. I have already bought one of these for my 23 year old son and his wife. Whether you are a Canadian or American, this book is applicable and where I would start. From there I would add Millionaire Teacher by Andrew Hallam and for Canadians about prior to being 10 years from retirement, get Daryl Diamond's Your Retirement Income Blueprint. Another eye opening book which got me thinking in a different direction was "Pensionize your Next Egg" by Moshe Milevsky and Alexandra MacQueen. Again another book that works regardless of what country you live in (that has government sponsored pensions). This book and Millionaire Teacher tell you all the things you should have been taught in school. They will get your children at any age off to a great start. If you really want detailed information, I also recommend (this is a Canadian version but the bulk applies conceptually to Americans as well) "Personal Finance" by Kapoor, Dlaby,Hughes and Agmad. This gets into real details on every aspect of financial planning and is great as a reference, not something you have to read from beginning to end all at once; more so as applicable.Getting back to The Index Card system, I am surprised I haven't seen a book like this offered before. It should have been out there a long time ago. The wisdom in this book is not ever going to be dated. This is a one size fits all book. If you have adult children, order a copy of this book for them.
P**N
Brauchbar & Nützlich
Für mich persönlich war nicht sehr viel Neues darin enthalten, weil ich mich vorher bereits in die Thematik eingelesen habe. Für Anfänger, die sich noch nicht wirklich mit ihren Finanzen beschäftigt haben ist es brauchbar. Es ist einfach aufgebaut, nimmt den Leser an die Hand und weist noch einmal auf Basics hin, die keiner wahrhaben möchte, die man allerdings braucht für stabile Finanzen.Ein Stern Abzug, weil das Buch nicht kritisch auf die Rolle des Staates eingeht und weil ungefragt suggeriert wird, dass Steuern/ staatliche Systeme allzeit und in jeder Höhe Berechtigung hätten, solange damit Anderen geholfen wird. Das macht in den USA ein bisschen Sinn (die Steuern dort sind je nach Staat niedrig, moderat oder hoch), allerdings nicht in diversen anderen Ländern, in denen Steuern weiter über dem internationalen Niveau erhoben werden um die Bevölkerung zu kontrollieren und einzuschränken, anstatt ihr zu helfen. Der Teil war mir also etwas zu einseitig.
G**M
First very truthly finance book in a long list of false ones!
I’m from Brazil and I really liked the book. Of course that there are some things that doesn’t apply here (like the 401K account) but the ideia can adapted to similar services we have here. This is the first book about finances I have read that are not trying to sell finance products to you. Instead it gives you simple path to have a healthy finance life. Very recomended!
J**H
Reasonable Advice
Reasonable advice at a low price.If your financial advisor isn't already a millionaire, neither will you. If he is a millionaire, you can't afford him.
A**R
Still gives great advice, but must research the equivalent in Canadian ...
I'm canadian... so little connection to this book as it is made for american citizens. Still gives great advice, but must research the equivalent in Canadian tax benefits. It all works a bit differently. Wouldn't suggest to any Canadian people, but knowledge is knowledge!
P**8
I recommend if you are americains
There are some very good advice but it was written for the US and not Canada.
A**R
Disappointing
I thought this book was very disappointing, nothing new.I shouldn't have bought it.
J**R
Excelente libro
Excelente libro para gente como yo que no tiene ni idea de economía domestica
S**D
Well written.
Good book.
J**N
You can just read the table of contents, but still a good read (the details matter).
Olen and Pollack have written a quick easy to read book on personal finance. (This is ironic given that Olen previously wrote Pound Foolish, which lambast most of popular personal finance books.) In Pound Foolish, Olen criticizes personal finance gurus for overemphasizing financial gimmicks, such "The Latte Factor" or the "Dogs of the Dow." and financial advisors for selling overly-complicated self-serving investment and insurance products. After being so critical of other people's financial advice, one wonders what Olen would recommend people do with their money? Well in The Index Card, Olen joins with Harold Pollack (a social science professor, but not an economist, at the University of Chicago) to answer the question, "What should middle class Americans do with their money?"As the title indicates, Olen's and Pollack's answer fits on an Index Card. 1-Strive to save 10%-20% of your income. 2-Pay your credit cards off every month (and minimize other debt). 3-Maximize your 401(k) and other tax-advantaged savings accounts. 4-Never buy or sell individual stocks. 5-Buy inexpensive well-diversified indexed mutual funds and exchange-traded funds. 6-Hire a fee-based fiduciary (avoid commission-based financial salespeople). 7-Wait to buy only as much home as you can afford (remember homes are usually highly-leveraged investments with high maintenance costs). 8-Buy term life insurance, auto-insurance (especially liability), home insurance or renter's insurance, and disability insurance. 9-Support the social safety net (government programs, such as Social Security, Medicare, Medicaid, and student loans, because 96% of American depend on such programs for financial assistance, even though 40% deny obtaining help from the government.) 10-Keep doing the first 9.Much of this advice falls under easier said than done, but these are achievable goals for someone in a stable financial situation. The authors repeatedly tell readers how to take care of their money during good times, so that they will have money during bad times. The first principle, saving ten to twenty percent of your income will be difficult for people who have gotten used to spending what they make, which the authors acknowledge, but one should at least save as much as possible. Likewise with the second principle, payoff your credit cards every month, easier said than done, but the Olen and Pollack suggest that if you can't pay them off, then stop using them altogether. Psychologically cash is harder to spend than credit. Principle 3 harkens back to principle 1, save 10-20% of your income, only try to save as many pre-tax dollars as possible to reduce your taxes and you're less likely to miss what you never got. Principle 4 is simple, playing the stock market is like playing poker, unless you are exceptionally skilled and lucky (and rich) you will lose more often than you win. Instead, principle 5 suggest that you bet with the house and just try to match the market, since most stock-pickers and fund managers do worse than the market over the long run. The last two principles stress protection for disasters that are too big for you to self-insure with your savings. Finally, like staying in physical shape, staying in financial shape requires frequent repetition.Through trial and error as well as research, I have come to many of the same conclusions. Recently, I have been able to implement all ten principles. They work well for me, but I wish the Olen and Pollack had said more about costs that seem destined to set one back, such paying for college and home renovations. Nonetheless, I would recommend this book to recent high-school or college graduates just beginning their careers.P.S. I have taught college courses and published papers on the sociology of money. I have also obtained licenses to sell life and health insurance and mutual funds. Thus, I have been on both sides of the table.
A**R
For the American market, not the UK.
This is for the American Market: approximately 50% of the book relates directly to the USA, and beyond the generalisations / most basic advice, is often not relevant to the UK. I bought it after coming across it in a Guardian article. The title however is correct, in that all the advice within could indeed be fitted on an index card. Not worth the money. Note that the 5* reviews are very likely american (amazon.com).
K**S
Clear, simple and accurate advise. Read it, right it down. Do it.
My takeaway:-Start automatic saving today, even just 3-5% of your income and work your way up.Force yourself to because other forces are working against you.-Stop trying to live like Diddy.-Cancel all the subscriptions you aren't needing. There are a lot.-Anything that makes it easy to buy stuff is bad for you and the planet and your kids and your marriage and your health.-Use cash.-Cancel any buying clubs or memberships that give you benefits the more you consume.-Pay off your credit card(s), cancel all but one and freeze it in a block of ice. Then freeze that in another block of ice.-Put your savings into a low cost index fund and stop pretending to be a day trader.-Financial institutions, insurers and utility companies are all into the same business: sales. Don't be oversold and ask questions - of yourself first and them next.-Health, home, car and liability insurance aren't optional. Costs vary and some protection is better than none and some is also better than too much.-Enjoy what you have. Hoarding more things won't enhance your enjoyment. The simple pleasures are the only true ones.-Enjoy more free time with your family the free way - a day at the park doesn't cost a penny and is truly priceless....
C**Y
Simple read with straightforward advice
This is a straightforward book with simple advice to follow. I purchased this book because it was listed as a “beach read” in Money Magazine. Although a lot of the advice is common sense, I still found the book valuable because it confirmed strategies that I was already doing- like pay your credit card balance in full every month and buy inexpensive index mutual funds. I found their advice on mutual funds very beneficial because it led me to re-evaluate the mutual funds that I currently own and I ended up selling off my funds that were both poor performers and had high management fees (as they were actively managed) and purchased better rated mutual funds with low fees. I didn’t agree with all of the financial advice such as never buy or sell individual stocks. Instead, I would suggest to place the bulk of your money in low fee diversified index mutual funds and for any extra money that you are okay with losing, then it’s okay to buy individual stocks. I purchased both Ford and GM stocks and did very well with the former and lost all my investment with the latter. I also disagree with their short argument against making money from income properties as they state “Real estate speculation is best reserved for gamblers and the pros” (page 175). I have 3 investment properties and do very well with them. I have a property manager to handle any daily issues that may come up. They are all paid off so I receive positive cash flow every month. I do not think they did the topic justice and would suggest the “Rich Dad Poor Dad” series for anybody interested in real estate. Overall, I think the book is worth purchasing for those new to finance or anybody wanting financial strategies explained very simply.
A**S
Simple advice is the advice you will actually follow
Simple advice is the advice you're most likely to follow and this book does a great job of laying out exactly that - simple steps you can take to protect your financial future and *why* those are good steps and how to avoid common pitfalls. Great for people who are not following the Index Card steps already and a perfect book to hand out to those younger folks in your life who need a to get started.
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