Can finance self-help books really be trusted?

TLDR: Yale finance professor James Choi has analyzed over 50 personal finance self-help books and compared their advice to actual economic theory. The results show that many of these books offer iffy advice and should be approached with caution.

In a special off-week episode of the Slate Money podcast, Felix Salmon, Emily Peck, and Elizabeth Spiers interview James Choi about his findings. They discuss topics such as how much to save in your 20s and 30s, whether to invest in savings accounts or the stock market, and the potential risks of changing your retirement plan.

Choi’s analysis reveals that some common advice found in personal finance books is not supported by economic theory. For example, many books advise saving a fixed percentage of your income, such as 10%. However, Choi states that this recommendation doesn’t take into account individual circumstances and financial goals.

Another questionable piece of advice that Choi found in the books is the emphasis on investing in the stock market. While it can be a good investment option for some, it may not be suitable for everyone. Choi explains that the stock market comes with risks and uncertainties that may not align with everyone’s risk tolerance.

The interview also touches on the topic of changing retirement plans. Choi cautions against making drastic changes to your retirement plan without considering potential consequences. While flexibility is important, it’s crucial to have a long-term strategy in place to ensure financial stability in retirement.

Overall, Choi’s analysis highlights the importance of critically evaluating the advice given in personal finance self-help books. It’s crucial to consider your individual circumstances, financial goals, and the principles of economic theory to make informed decisions about your finances.

If you want to hear more about Choi’s findings and insights, you can listen to the full episode of the Slate Money podcast. Signing up for Slate Plus will give you access to an ad-free experience and additional weekly segments of the show.