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Personal Finance Advice: One Size Does Not Fit All

This article was written by in Investing. 8 comments.

It is human nature to search for Truths that describe the world we live in. This is one reason why personal finance gurus are so popular amongst a group of individuals that listens. Many of the more popular authors, seminar leaders, and cult favorites stick by their mantras, Grand Unifying Theories, such as “credit cards are evil,” “invest in stock index funds for the long term,” and “always buy a used car.”

Any individual who has been able to build a following, cult or otherwise, within the subject of personal finance would do well not to let others peek inside the leader’s own. The advice doles out to the public is usually for a specific intended audience, and it is rare for a guru to fit within the audience he or she is addressing.

In her book, Women and Money, Suze Orman explains that everyone should be invested 100% in stock index funds until close to retirement. This is solid, definitive advice for Suze’s audience, and in this case, men as well. There are some instances where this statement may cause trouble, such as the recent stock market collapse. The book was published in February 2007, as the stock market was reaching a recent peak.

Yet, the average person entering retirement will still have several decades to live, several decades in which the nest egg must last even when being drawn upon. The best way to do this is with a stock index fund. But if we look at Suze Orman’s own portfolio, she doesn’t follow her own advice. As of last year, Orman had $1 million invested in the stock market, a lot of money but only 4% of her own portfolio. The rest was mostly invested in municipal bonds which are very safe but earn less over time. In an interview, she stated she only invests in the stock market what she can afford to lose.

The rules, defined and proliferated by Suze Orman do not apply to her. And they shouldn’t. Why would someone with assets of $25 million follow the same advice as Suze’s audience, in which members might have a net worth anywhere from several hundred thousand dollars below zero, in debt, to several hundred thousand dollars above zero?

The mathematics don’t magically change when you are rich, but the only chance for average individuals to survive through retirement is to take relatively risky bets on the stock market. While the stock market has failed to disappoint in the long term if you look at the numbers, real performance doesn’t always match the statistics thanks to timing. Wealthy individuals, like Suze, can afford to accept less risk. A bond return of 4% on $24 million invested results in an income of $960,000 a year — and that doesn’t include speaking engagements, royalties and television deals. Suze, who is quite comfortable at this stage in her life and career, should not be required to live by the same philosophies she preaches for her callers.

Should you stop following her advice? Suze Orman has helped many people come to terms with their financial condition. But unless you’ve spoken to her about your specific situation, take her mass-market advice with a grain of salt. Yes, her nuggets of wisdom are in many cases helpful, but not everyone falls neatly into the same category.

Updated May 5, 2014 and originally published May 25, 2009.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 8 comments… read them below or add one }

avatar 1 Anonymous

Thanks to advice from flexo, FMFblog, & others around the PF community, I recently set up accounts at Schwab and began investing in stock index funds (only a $100 minimum to invest). I also opened an account with Vanguard, but have to save up some money before I invest with them ($3,000 minimum).

I am now working on setting up automatic recurring transactions to invest in several different index funds each month. Currently I am investing a very low amount due to my focus on debt reduction for the immediate future, but at least I am doing something! I have learned that something…anything…is better than nothing!

I am also beginning to fund my 401k again, another low percentage while I focus on debt reduction, but soon to increase as well. I have about 10 more months of debt reduction before I increase my retirement contribution percentages.

As the article states, my situation is different than yours, but this is likely a good strategy for most people in my position to follow.

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avatar 2 Anonymous

Everyone must determine what their goals and objectives are before simply following someone else’s advice. What is right for one person may not be the right solution for you. So the next time you hear the latest and greatest solution from your financial guru check to see how the solution offered would fit into your overall financial plan before you implement. Thanks for the excellent post.

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avatar 3 Anonymous

This post is dead-on, Flexo. Way too often, personal finance books, commenters, and, ahem, magazines give advice that doesn’t take into account the dozens of variables that may or may not make the advice applicable to the listener.

One, really easy example of this is the target-date retirement fund. Sure, the average 50-year old might need 70% in stocks or whatever to achieve the growth he needs to not run out of money in retirement, but the 50-year old who is saving 30% of his income every year might be able to be much more conservative.

The problem in personal finance media, as I’m sure you’ve noticed, is that people’s eyes start to glaze over as soon as you start to give all the caveats that make your advice good or bad. So, you end up delivering the simple advice that’s true for most people and leave it at that. It’s not ideal, however, and I hope together we can achieve a more perfect way to help people.

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avatar 4 Anonymous

I actually have some bonds in my 401k even though I am 40 years away from retirement. Suze Orman and many others like her are trying to get the attention of the general public and make her advice actionable to this audience. To appeal to these people, many commentators have to make advice so simple that the public will actually give it a shot. If commentators make the advice too complicated, they know the audience won’t do it. They also know the financial savy people will just ignore them. Dave Ramsey is another example with his rants against credit cards as you mentioned. I use them, pay them off every month and get free rewards in the process. It works for me.

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avatar 5 Anonymous


I work in marketing for a Fortune 500 financial services firm and my job is to give pre-retirees the education, tools, and advice that they need to be ready for retirement. I’m fairly certain that I know just about every investment product, tool, and “program” in the retirement income planning space – there’ s lots of cool stuff out there – but the advice I give my family and friends is to find a good CPA and/or tax attorney and/or certified financial advisor and create a plan that suits your unique needs, personality, and situation.

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avatar 6 Anonymous

You wrote: “…the only chance for average individuals to survive through retirement is to take relatively risky bets on the stock market.”

This is a belief; it’s not a fact. Many “average” folks have started businesses, acquired real estate, invented and patented doodads, or even done crazier things like fund startup companies to make a ton of money.

There are pretty much infinite ways to make a few million dollars.


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avatar 7 Luke Landes

Erica: You are right that many people start businesses, but once someone starts a business, they no longer represent “average” due to the sole fact that most people do not. “The average person” — not “an average person” — does not start a business.

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avatar 8 Anonymous

I believe the ‘average’ person being invested in stocks, on their own, is a relatively new way of doing things. Average people used to work for companies and pensions, relied on friends and family for more things, and consumed less disposable things. Average people did not go to college and never got advanced degrees. Things change, hopefully for the better, and with information availability increasing and technology costs decreasing why not hope for a bigger improvement in ‘average’.

Oh, I should also point out that I mean ‘average’ standard of living like I know it, because of course if you average worldwide (is China 1/2 yet?) the average person probably does not invest large portions of their money in stocks hoping for an ‘average’ retirement. I try to take all ‘beliefs’ and ‘facts’ with a grain of salt… and some realistic perspective.

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