Inaccurate Knowledge Is Worse Than No Knowledge

I hate bad nonfiction books—by bad, I don’t specifically mean boring (though I’m not fond of boring books, either), but books that contain major inaccuracies. I also hate it when people condescend to women, especially when it comes to finance. Unfortunately, I encountered both inaccuracies and condescension in a book I read recently. I had to trash it on Goodreads, but I’m sure there are many of you out there who don’t follow my Goodreads review. (I don’t follow most of the blogger I read on Goodreads, so I certainly don’t blame you!) Therefore, I just had to post this review on here in all its ranty glory. Enjoy!

The Financial Diet: A Total Beginner's Guide to Getting Good with MoneyThe Financial Diet: A Total Beginner’s Guide to Getting Good with Money by Chelsea Fagan
My rating: 1 of 5 stars

If this book were simply useless to me, I could have given it two stars. I know it’s marketed towards young women who don’t know much about money. And that’s fine, because there are people who don’t know much and everyone’s got to start somewhere. I get that.

What made me give this book one star (i.e. the lowest rating allowed—I’d give it negative stars if I could!) was how some of the information was just plain wrong. Like criminally wrong. So wrong that if you followed it, other poor fellow unfortunate readers, you’d find yourself in deep trouble.

The first major error I’m going to talk about comes in chapter 5. Do not, do not, DO NOT ever buy a house with a down payment of less than 20%. One of the so-called “experts” “interviewed” (I use both those terms, experts and interviewed, loosely) says you can put 3.5% down for your house. NO. Do not ever do that. PMI (private mortgage insurance) will eat you alive. Your finances will be so messed up it isn’t even funny. I will note that other reviewers pointed this out, too, so it makes me feel a bit better that this mistake did not go unnoticed.

The next, and in some ways more egregious error (because you probably start investing before buying a house) occurs in chapter 2, the chapter about investing. This quote is so misguided that it’s obvious the author, Chelsea Fagan, has zero idea what she’s talking about:

Explore other low-risk investment options, such as mutual funds and index funds.


Just so everyone knows, I do have investments in the market. They are all in mutual funds, some of which happen to be index funds. But let’s get one thing clear here: mutual funds are diversified investments because the fund invests in a multitude of assets (usually stocks, bonds, or some combination of the two). They are not low-risk investments! Let’s say that again for all the Chelsea fans out there who might just descend upon me for attacking their idol.

MUTUAL FUNDS ARE NOT LOW-RISK INVESTMENTS!

Sure, some of them are. But diversification does NOT equal low risk. One of the funds I’m in has lost a ton of money since I invested. It’s also known for its volatility, so I’m holding on to it. You probably wouldn’t know this from this book, but mutual funds are intended to be long-term investments.

How do I know all of this? I work in the finance industry (like in an actual financial institution—I’m not some random “personal finance blogger,” a field I will point out has zero barriers to entry and no credentials required*) and I have a masters degree in finance. Trust me, I know what I’m talking about. Chelsea Fagan does not.

That one little sentence I quoted above frustrates me so much because someone who doesn’t know much about investing could read that, go out and buy a mutual fund, then lose money they couldn’t afford to lose because they assumed it was a “low-risk investment” that they couldn’t lose money on. It should be criminal to make statements like that, especially in a book that is allegedly, you know, a personal finance book.

I’m all for women learning more about money, finance, investing, etc. but ladies, with all due respect, we’re better than this! This book, and the blog Chelsea writes (I have read my fair share of posts on that website), are so dumbed down as to be useless. I’m not saying we ought to be learning how to apply Taylor series to derivatives (I briefly learned that in grad school, then promptly forgot it all because I literally never need to use that knowledge). But we are better than this. There are a plethora of personal finance blogs and books out there that are way more deserving of your time than this rubbish. If you’re a total beginner, Ramit Sethi’s I Will Teach You to Be Rich is a good start (disregard everything he says about scholarships, though, as it’s completely unrealistic and wrong). If you really want to up your game and learn a ton, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy is amazing. It can be a bit dry at times, but if you read it and understand it, you’ll be better off than 99% of American adults today.

This review is getting long, so I’ll have to stop ranting. And I haven’t event touched on the level of profanity in this book—was there really a need for multiple f-bombs EVERY SINGLE CHAPTER?? I also question whether a personal finance book needs chapters on home decor, cooking, and romance, not to mention references to that insipid TV show Sex and the City. Seriously, people, that show is over and done with and sucked anyway. Let’s just move on.

*Note: There’s nothing wrong with being a personal finance blogger per se, as long as you actually know what you’re talking about!

View all my reviews

Advertisements

2 thoughts on “Inaccurate Knowledge Is Worse Than No Knowledge

  1. Thank you for reading that book and writing this review, Natalie. I used to follow TFD but the advice got really bland and millennial. Good to know that it’s safe to skip out on the book version. 🙂 I Will Teach You to Be Rich is on my list!

    Liked by 1 person

    1. Hi Katherine, thanks for reading my review! I also used to follow TFD somewhat regularly, but stopped for the same reason you did. I should also note that I’m a millennial, but I definitely wasn’t finding the advice to be very useful! I Will Teach You To Be Rich is definitely an amusing read. The Millionaire Next Door is also REALLY good. It may take you a while to get through it (it took me forever because as I said, it’s not the most exciting reading), but you will learn SO much. I hope everything is going well for you in Russia!

      Liked by 1 person

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s