I did not start saving in a 403b until I was around 50. I started small and was saving $90 a month in a couple of years. We were tight financially (very, very deep in cc debt) and I felt we were unable to do more.

However, it came time for a raise and I realized that it would only drop my salary about $5-6 if I put my entire raise into the fund. About 5 years later, I went to put my raise into it and I was told I could not put all of it, only $11. I was flabbergasted. I thought I could not save and here I was putting 25% of my salary (the maximum) into the 403b, paying off my bills, and still doing a little enjoying of life.

In the end, in the 17 years I worked for the state, I put $50k of my own money into my 403b, but we paid off all our debt, took a trip a year to see family, and did much needed work on our home. Way, way too late I learned how easy it is to save, especially when you don’t see it and live within what you actually earn.

Thanks for all the good advice. Even at 71 I still need to learn and am still saving because I know that even though I am comfortable at the moment, hard times could still come and I intend to live to be 123, so will need it.

I don’t know what is the worst: that they recommended a highly risky method of making money (and not even terribly smart risks, as other commentators have mentioned), that these risks were ignored and this plan portrayed as risk-free, or the fact that, given a publication date of April 2008, the authors should clearly have realized that their plan was no longer feasible, if it ever was. Unbelievable, in any event.

When do VULs make sense? When you have a sustained annual household income of over $250,000 and are looking for a tax shelter. If you are making that much money, your shelters are mostly taken away. At that point the VUL might be good.

For most people, though, they won’t ever be at a point where they are getting that kind of money. The 401(k) and Roth IRAs and term insurance offer better plans without losing a lot of money in whole life fees.

What if your job is minimum wage, Sara?

I realize that not everyone is in a position to save 20%, but I think it’s far easier to start by saving more than you think you can than to try to increase your savings percentage over time.

However, if you invest that same amount for 30 years and only get an 8% annual return you would end up with over $1.86 million!

Sure, some people may be lucky enough to concentrate in the right investment when a bubble forms and get out before it bursts and do great… but unless you own a functional crystal ball I wouldn’t try it. You could be one of those people that concentrated in the wrong investment just when a bubble burst! Ouch!

I think most people are better off with a diversified portfolio that “only” returns 8% annually over a 30 year period then gambling it all away in an attempt to get rich quick.

-Rick Francis

Diversification reduces risk AND returns.

Investors with the highest ROI’s search for or create investments with extrodinary potential returns and then focus their capital on those investments.

Increased risk is not for everyone, but neither is the slow and steady approach.

But yes, the expectation of consistent 10-15% returns on single family real estate investments is ridiculous.

I’m sure there were young people right out of college who took the Andrews’ strategies to heart…and now feel blind-sided.

I like it that you remain objective and acknowledge the specific good points of all the books you review, as opposed to just skewering their flawed advice. You are always fair.

Have you considered reviewing any of Jason Kelly’s books such as “The Neatest Little Guide to Personal Finance” or “The Neatest Little Guide to Do-It-Yourself-Investing?” I always liked his approach. His basic advice is to spend less than you earn, invest the difference, and protect what you have. Plus, he’s pretty funny.

Great post. I will definitely stay away from the Andrews’ book