5 Wealth-Building Tips Money Experts Disagree On
Written by
Martin Dasko
Edited by
Molly Sullivan
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When you start learning about personal finance and building wealth, you’ll likely consume various experts’ messages until you find one that resonates with you. Some financial topics may have a similar tone between the various experts, while others will split the opinions of popular experts.
What are five wealth-building tips that money experts disagree on?
1. Planning For Retirement With a 401(k)
Robert Kiyosaki isn’t a fan of investing in a 401(k) for retirement, even though most financial experts will urge readers to take advantage of this tool.
According to his blog, “The problem is that most people who invest in 401(k)s don’t know a lot about money or investments, so they’re happy to give away their money, even if they could be putting it to much better use in other investments.”
Kiyosaki isn’t a fan of financial planners in general or the hidden fees that come with this investment vehicle. He has been vocal about why people shouldn’t rely on a 401(k) for retirement planning.
On the other hand, Dave Ramsey often recommends this investment vehicle for those planning for retirement. Ramsey has stated:
“If your employer offers a traditional 401(k) with a match on your contributions, make sure you invest at least up to the match to take full advantage of that free money.”
Deciding how to invest for your retirement is a complex decision that requires meticulous planning. As always, we urge you to work with a certified financial planner who can guide you in the right direction.
2. Investing In Crypto/Investing Philosophy
Kevin O’Leary mentioned losing a $15 million payday because of the FTX collapse. In an interview, O’Leary admitted that he put around $9.7 million into crypto on the exchange as part of his hefty losses. Before the FTX collapse, he was promoting the exchange on social media.
Ramit Sethi differs here because he’s a proponent of investing in simple index funds, so you don’t have to stress about your finances. Warren Buffett has also claimed that investing in simple index funds can be a more successful approach than complex investments.
However, Sethi believes that once you have a solid portfolio, you can allocate 5% to 10% to fun investments like crypto. You won’t see Sethi touting the benefits of investing in crypto like O’Leary.
Despite being a proponent of real estate, Robert Kiyosaki has advised readers to invest in crypto on social media.
Money experts will likely never be able to agree on investing in crypto — it has become a controversial topic over the last few years, as social media has become flooded with stories of major wins and colossal disasters. It’s essential that you conduct your own research before investing in speculative assets.
3. Cutting Back on Coffee
If there’s one topic guaranteed to create controversy in the personal finance space, it’s the idea of spending money on coffee.
Kevin O’Leary tweeted, “STOP wasting money on $5.50 coffee and $15 sandwiches. Pack a sandwich, skip the fancy latte, and watch your savings pile up. Do you agree?”
Ramit Sethi responded with:
“Are you guys really falling for this guy wearing a $6,000 custom suit while telling Americans to cut back on coffee as he conveniently skips over how frugality isn’t what made him worth hundreds of millions?”
Financial expert and bestselling author Suze Orman told CNBC that buying coffee is like peeing $1 million down the drain.
Dave Ramsey isn’t a fan of the daily caffeine spending habit either, but he provided a balanced take on his blog:
“The point we’re making is this: be smart about where you’re spending your money. If you’re happy with your daily Starbucks, go for it! But if you’re trying to achieve other goals, turn on the coffeepot. This minor sacrifice can make a huge impact.”
As you can imagine, there are numerous takes on spending money on coffee. Ultimately, you get to decide how to spend your money and where to cut back.
4. Spending Money on Joy
When discussing cutting back on coffee, Orman mentioned how much someone could save by not buying coffee. According to her calculations, if you spend $100 on coffee monthly, you could put that into a Roth IRA and have up to a million dollars after 40 years. These calculations fail to factor in the joy one can receive from morning coffee purchases.
Ramit Sethi is known for helping readers create a rich life by spending money on what brings them joy without feeling guilty. Many financial experts ignore the role of happiness and joy in money management.
5. Focusing On the Bigger Picture
While some financial experts focus on reducing daily expenses, others emphasize the bigger picture. What separates Sethi from experts like Orman or Ramsey, who constantly preach about cutting back on coffee, is that he leans toward going after the bigger wins so that you don’t have to stress about the minor expenses.
What are some of the big wins recommended by Sethi?
- Aggressively pay down debt. When you pay down your debt, you save money on interest, and you can keep more of your income.
- Negotiate a higher salary. When you make more money, you have more options and won’t worry about paying for a cup of coffee.
- Try to land your dream job. Finding a job you enjoy will give you a higher quality of life.
Closing Thoughts
Deciding which expert you take advice from will depend on your situation and your goals. This is why it makes sense to browse various pieces of advice before deciding who you’ll listen to so that you can enjoy your life.
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