How You Handle Money

April 30, 2009
Interview with Remit Sehti, author of I Will Teach You To Be Rich

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Mike Carruthers:
The recession has everyone taking a hard look at how they spend their money but the basics of personal finance remain the same.

Remit Sehti:
There's no secrets in personal finance and anybody who tells you that is trying to sell you something big. Fundamentally there are two ways to make money, cut costs and earn more.

Remit Sehti, author of the book I Will Teach You To Be Rich

It's about (first of all) picking out what rich means to you. For some people it's buying two hundred dollar jeans, for other people it's traveling and you shouldn't feel guilty about that. It's actually about saying. "Hey I'm going to spend extravagantly on the things I love but cut costs mercilessly on the things I don't."

Automating your savings and investing is critical because when the money is automatically taken out of your paycheck and put into your savings you're never tempted to spend it. And Remit believes life-cycle funds are a great place to invest.

What a life-cycle fund does is allow you to pick your age to determine the fund you get. It's a low cost fund - what's nice about it is that in your twenties the fund you invest in will be mostly stocks because you want to be aggressive. But over time that fund will automatically change for you and it'll become more conservative. Because when you're forty you have different investment needs than a twenty-two year old and when you're sixty you definitely need to be more conservative than a twenty-five year old.

And where do you find life-cycle funds?

You can find them at any of the popular companies - Vanguard is a great one, TIAA-Cref, T.Rowe Price, any of those.

To hear the complete unedited interview, click here.