I do spend a chunk of my day in front of the computer, and for all of that time, my news feed is up in front of me. Most of what I see there is interesting, partly because I have my feed tuned to things I care about. Now and then items creep in that seem just silly to me. Lately, the big news has been that the powerball (whatever that is) jackpot is up to 900 million, and that there is a “frenzy” of people buying powerball tickets.

I’m not totally naive about the powerball. I understand that is has something to do with the lottery, which is a large money maker for the government that sponsors it. I’ve bought exactly one lottery ticket in my life, back when the Michigan lottery first opened around 40 years ago. I lost. Since then I have not been tempted to buy another one.

Folks like to gamble. It is entertaining for them. My Dad enjoyed his trips to the casino and liked to play the slot machines. He’d never spend more than he could afford to lose, and always seemed to have a good time. Good for him. My Dad also saw the wisdom of investing in his future. I assisted him at this, and now in his late 80s, he has plenty of money for the rest of his life. My Dad did not confuse gambling with investing. I suspect many people do.

There was recently a piece on NPR about investing. There are lots of these sorts of articles on NPR, but this one caught my attention, possibly because what this man believes about investing so closely parallels my own beliefs. Harold Pollack’s premise is that the most important investing advice can fit on an index card. Here is what was written on the card:

  1. Max your 401k or equivalent employee contribution
  2. Buy inexpensive, well diversified mutual funds such as Vanguard Target 20XX funds
  3. Never buy or sell and individual security. The person on the other side of the table knows more than you do about this stuff
  4. Save 20% of your money
  5. Pay your credit card balance in full every month
  6. Maximize tax-advantages savings vehicles like Roth, SEP and 529 accounts.
  7. Pay attention to fees. Avoid actively managed funds.
  8. Make financial advisor commit to a fiduciary standard
  9. Promote social insurance programs to help people when things go wrong

These ideas were spelled out for me in a book I read 3 decades ago called, “A Random Walk Down Wall Street,” by Burton Malkiel. If I were at a stage in my life where I was actively saving for retirement, I’d pin this card up on my wall, and read it every day. If I were retired and had some bad habits that are contradicted by the principles on the card, I’d pin it on the wall and read it every day.

If you are rushing out to buy another powerball ticket because you think it is a good investment, please save your money. Look down the list above, and put your powerball money into one of those categories. The lottery is not an investment strategy. The list above is.

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