"The Best Financial Advice I Can Give..."

Americans are hit with so much financial advice these days that it’s impossible to understand and keep up with it all. Most of us want to know the bottom line—what are the most important financial steps to take? To cut through the clutter, American Profile asked five top personal finance experts to offer their single best piece of advice. Here’s what they had to say:

“Spend Less Than You Earn”

“Spend less than you earn. Successful financial planning really stems from that simple statement. If you retain a portion of your current income, you’ll soon ask yourself a question: What should you do with that money? And that question is the beginning of wealth creation. It is essential that you do not spend 100 percent (or more) of your current income on current expenses. One day, expenses—housing, education, medical, retirement—will exceed your affordability if you are relying solely on current income. That’s why you’ll be glad (and relieved) that you’ve got past income to rely on. Spend less than you earn. That’s how rich people got rich.”

—Ric Edelman, author of three best-selling books on personal finance, including the newly released paperback version of Ordinary People, Extraordinary Wealth.

“Start Now”

“Start now. Your money compounds more the longer it’s invested. Invest in a S&P 500 index fund, a mutual fund that puts investors’ money in 500 of the best companies in the world, including General Electric, Microsoft, and Pfizer. These funds beat 75 percent of all other mutual funds, while charging lower fees, earning about an 11 percent return since 1926. In addition to starting now, invest often—monthly if possible. Start now, invest regularly, keep commissions low, and enjoy yourself.”

—Jeff Fischer, senior analyst and portfolio manager for The Motley Fool financial education company and author of The Motley Fool’s Investing Without a Silver Spoon.

“Strike a Balance with Money”

“As with most other life challenges, you should strive to strike a balance with money. For example, too many people overspend and fail to live within their means. This prevents them from saving to accomplish goals and can saddle them with credit card and other high-interest consumer debt. At the other extreme are misers who save too much and who have difficulty spending and enjoying their money. Take the time to discuss with family and contemplate your financial and personal goals so that your financial decisions are toward that end. Then, gradually implement your plans. Invest in your relationships with family, friends, and in your health—without these, all the money in the world won’t be worth having.”

—Eric Tyson, financial counselor, syndicated columnist, and best-selling author of Personal Finance for Dummies.

“You Can’t Control the Market”

“Investors should focus on what they can control and ignore what they can’t. You can’t control the market. The fact is it’s extraordinarily difficult to pick winning stocks, find superstar fund managers, or guess the stock market’s direction. What to do? Focus instead on the stuff you can control. That means making sure you save enough, keeping a tight lid on investment costs, minimizing your portfolio’s tax bill, thinking carefully about the investment risks you take, and making sure you don’t react too emotionally to the market’s ups and downs.”

—Jonathan Clements, personal finance columnist with The Wall Street Journal and author of 25 Myths You’ve Got to Avoid If You Want to Manage Your Money Right.

“Work with a Fee Based Adviser”

“When seeking financial help, work with a fee-based adviser and not an investment salesperson who charges commission when buying or selling investments. Fee-based advisers generally recommend less costly investment options with better tax consequences, which maximizes the overall return on your investments. They also have less of a tendency to frequently move in and out of stocks, preferring to buy and hold for the long run—a proven investment strategy. Finally, this arrangement allows you, the investor, to know exactly what the planner’s costs are and how much he or she is charging for the service.”

—Thomas Grady, author of J.K. Lasser’s Preparing for the Retirement Boom and partner at a financial planning firm with $500 million of assets under management.

John Nardini, a Michigan-based financial counselor, is a regular contributor to American Profile.

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