Pound Foolish

POUND FOOLISH: Exposing the Dark Side of the Personal-Finance Industry by Helaine Olen falls into the genre of anti-investment books (that’s not quite the right term, but it’s the best I can think of), the ones that point out that investing in stocks is not a sure-fire road to millionairehood (as one classic of the genre put it, Where Are the Customer’s Yachts?).
Olen dissects Suze Orman, the Rich Dad Poor Dad books, TV’s Jim Cramer and countless others and finds their advice is worthless, inaccurate or just nuts (“This stock has the potential to rise in value from 100 percent to infinity!”). Which unfortunately, doesn’t mean people don’t listen. Because we’re desperate. Scared. Insecure. We look at the advice—how much we should have for retirement, how much we should save every month—and we freak out (and apparently we freak out more the less money we have to spare).
Beyond that, Olen argues the advice is bad because so often it’s impractical: for many of us, saving 10 percent of our income isn’t doable, the stock market isn’t going to boost our 401(k) to the point we can retire comfortably, and women are more cautious than men because they have less money to spare (there’s a whole chapter on sexism in the finance industry).
Beyond that, she argues that like the McDonalds budget, this is just more richsplaining. Blaming financial illiteracy is just a way to avoid admitting that the erosion of our wages and the Wall Street mismanagement of the economy are the reason we can’t save enough (as she points out, there’s no sign we were more financially literate 50 years ago, but the average American’s finances were in much better shape). Likewise, the 401(k) dream gives companies an excuse to axe defined-benefit pensions (ones where you get a set amount no matter what the stock market does) and for government to reduce or privatize Social Security (it’s clear that pensions and Social Security are what she’d like to see more of).
While I admit the book plays to my own biases, I was still very impressed with it.