I really don’t want to keep picking on The Simple Dollar. But I can’t let this one just pass by without saying something about it.
A couple of days ago, Trent published a post titled A Guaranteed Way To Increase Your Investment Returns. The point of the post is that the more money one invests for retirement, the more you’ll end up with. While I’d personally file that under my “well, duh!” part of my brain, maybe someone will get some nugget of information that will help them better their financial lives, even just slightly.
I hope so, because there’s so much wrong with the post I barely know where to begin.
I’m going to quote part of the post in question:
Even better, I’m not going to sell you this sure-fire tactic in some sort of two-day seminar or an investment kit. I’m going to give this advice away!
Are you ready for it?
Here is the one guaranteed way I’ve found to increase your investment returns.
Live cheaper and direct that saved money into your investments.
First of all, he talks it up like it’s some sort of great advice. He even uses exclamation points! Here’s one guaranteed way he’s found to increase your returns. Are you ready for it? The solution is to invest more money.
Except that has absolutely nothing to do with returns!
It doesn’t matter if you invest a dollar at 5% or a million dollars at 5%, your return is still 5%. The rate of return has absolutely nothing to do with the amount invested. Of course somebody is going to end up with more money if they invest more money. My cousin who is in second grade could practically tell you that. This is advice that is just blatantly wrong. There’s no ifs, ands or buts about it.
This is the reason why I don’t want personal finance blogs giving advice. I know this is fairly minor, and yes, the overall message of the post still makes sense. Just, if you could, actually hold yourself accountable when you get your facts wrong. I’d really appreciate it, but I’m not counting on it.