While I agree with his suggestion to just save yourself time, grief, and money by going with index funds rather than managed funds or stock picking, there are some nitpicks:
- "[Bonds] are not 100% safe, as their value can plummet if the issuing institution goes bust. You can mitigate the risk by investing in bonds from a varied pool of ‘reliable’ institutions (such as governments)."
Bonds have many types of risk; the strength of the bond issuer is only one of them. The more common risk is interest rate risk, where you buy a bond that pays 1%, then interest rates rise to 3%, and you have to sell your bond at a loss to make it match the new 3% offerings. This affects ALL bonds, not just the "safe" ones. However, you can mitigate this risk by buying bonds with a shorter duration (ie ones that pay out within a couple years rather than a couple decades).
- ETFs
ETFs are a useful counterpart to normal index funds, but keep in mind that they are not quite the same. For example, unless you're getting free trades at eg Vanguard or Wells Fargo, each time you buy or sell ETF shares will cost you a fee, so it's best to buy them only if you intend to keep them at least for several years. Another notable difference is that ETFs are repriced constantly throughout the trading day, whereas mutual funds are repriced only once a trading day at the closing bell.
- Investing in Startups
If you already work in the tech industry, keep in mind that investing in your own industry ties both your income and your savings to that industry, so if the industry sinks, you're in danger of losing both simultaneously. This also applies to owning stock in your own company. Not saying don't do it, but just keep this in mind.
If you're really just looking for simple, sound information on where to reasonably store your savings, I recommend reading the Bogleheads Wiki at http://www.bogleheads.org/wiki/Main_Page, and/or a book named "The Random Walk Guide to Investing". If you have questions, bogleheads.org also has a very good forum.
Investing is actually quite simple, and is only made to look complicated by those who would rather you hand your money to them instead.
Funny you should mention "The Random Walk Guide to Investing". Towards the end of that book the author mentions Scott Adams himself, and ends up basically saying "what he said". I think the book adds very little to what you can get from Scott's article (or mine), besides perhaps some tax advice and common sense stuff (pay off your credit card bills).
Given that Scott's article recommends a 100% stock allocation to everyone >= 10 years from retirement with half of that in emerging markets (which only represent a small percentage of the total stock market), I take his advice with a large grain of salt.
Keep in mind this is also the guy who thought ISDN would win the broadband wars.
- "[Bonds] are not 100% safe, as their value can plummet if the issuing institution goes bust. You can mitigate the risk by investing in bonds from a varied pool of ‘reliable’ institutions (such as governments)."
Bonds have many types of risk; the strength of the bond issuer is only one of them. The more common risk is interest rate risk, where you buy a bond that pays 1%, then interest rates rise to 3%, and you have to sell your bond at a loss to make it match the new 3% offerings. This affects ALL bonds, not just the "safe" ones. However, you can mitigate this risk by buying bonds with a shorter duration (ie ones that pay out within a couple years rather than a couple decades).
- ETFs
ETFs are a useful counterpart to normal index funds, but keep in mind that they are not quite the same. For example, unless you're getting free trades at eg Vanguard or Wells Fargo, each time you buy or sell ETF shares will cost you a fee, so it's best to buy them only if you intend to keep them at least for several years. Another notable difference is that ETFs are repriced constantly throughout the trading day, whereas mutual funds are repriced only once a trading day at the closing bell.
- Investing in Startups
If you already work in the tech industry, keep in mind that investing in your own industry ties both your income and your savings to that industry, so if the industry sinks, you're in danger of losing both simultaneously. This also applies to owning stock in your own company. Not saying don't do it, but just keep this in mind.
If you're really just looking for simple, sound information on where to reasonably store your savings, I recommend reading the Bogleheads Wiki at http://www.bogleheads.org/wiki/Main_Page, and/or a book named "The Random Walk Guide to Investing". If you have questions, bogleheads.org also has a very good forum.
Investing is actually quite simple, and is only made to look complicated by those who would rather you hand your money to them instead.