Money Mysteries: Money advice in a nutshell

Scott Adams, the creator of Dilbert, reduced the tenets of financial advice into just 87 words of wisdom, says Dhirendra Kumar
It's a catch-22 situation. People who don't understand investing, and are still trying to figure things out, obviously need to take advice from someone else. However, they're also not equipped to figure out if the advice they are getting is good or bad.Everyone is eager to offer advice, but while some of the advice may actually have worked for the person handing it out, it could be utterly unsuitable for someone else.
Commercial advice purveyors are equally problematic. If they are working on a commission, the advice is certainly driven by commercial considerations, rather than your interest.So where should you turn for advice?
How about getting your financial advice from a cartoonist, albeit a very famous one? As a reader of this publication, you would doubtless be familiar with Scott Adams, whose Dilbert comic strip is an extremely funny yet despairing look at what corporate life is really like. Few people know that Adams has also written some of the best personal finance advice. He calls it a `book', and its title is Everything You Need to Know About Financial Planning. Except that this `book' has not been published and is just 87 words long.
Here it is, the whole thing: Make a will. Pay off your credit cards. Get term life insurance if you have a family to support. Fund your 401(k) to the maximum. Fund your IRA to the maximum. Buy a house if you want to live in a house and you can afford it. Put six months' expenses in a money market fund. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement.
Adams has a bachelor's degree is in economics. He also has an MBA and has worked in a bank for eight years. It's so wonderful that despite these handicaps, he still talks sense about personal finance.
Adams says that he did start out planning to write an entire book on personal finance. However, by the time he had thought through in detail what the book would have and simplified everything to the logical end, he just had these 87 words left.
The great thing is that these 87 words do successfully encapsulate everything you need to know in order to plan your entire life's savings and investments. Obviously, in India you would replace the 401(k) and the IRA with appropriate equivalents like your PF, NPS and annual investments in ELSS funds. For the 70:30 advice, choose a few good balanced funds and start SIPs in each. The earnings are even tax-free after a year.
Scott Adams has some great comic strips about the what he has called the `financial entertainment industry'. In one, evil Dogbert is explaining his plan to launch a mutual fund, “We're getting into the financial services game. That way, all our products can be imaginary . We'll start 10 mutual funds, each with randomlychosen stocks. Later, we'll build our advertisements around whichever one does the best purely by chance.My goal is to be the premier provider of imaginary expertise.“ I'm sure some Indian mutual fund CEOs will recognise this strategy from personal experience. Clearly, Scott Adams has a deep understanding of a lot more than office life.
The author has written about per sonal finance for over two decades. He is the Founder and CEO of Value Research