Book Review: “The Index Card” by Helaine Olen and Harold Pollack

Summary

“The Index Card: Why Personal Finance Doesn’t Have to Be Complicated” is a simple book for investors who want to take control of their finances without spending long hours studying and researching the topic. It covers a lot of the information people need to build a strong financial foundation, starting with saving 10 to 20% of their income, paying off credit cards in full every month, and maximizing tax-advantaged savings accounts. It also recommends not to purchase any individual stocks, noting that even many experts are bad at predicting the future price of any given company’s stock. Instead, the authors recommend investing in low-cost index funds. Readers are also urged to only hire financial advisors who commit to the fiduciary standard. Finally, the topic of insurance is also addressed.

Pros

Unlike most personal finance books out there, “The Index Card” contains simple, actionable information and doesn’t waste readers’ time with too many anecdotes. It covers many of the topics that beginners will need in order to get started: debt management, creating an emergency fund, investing in index funds, etc. The most refreshing aspect of the book is the fact that it doesn’t pretend to reveal “secret” financial information, unlike many of the personal finance books we have read over the years. Instead, its premise is that personal finance doesn’t have to be complicated and anyone can learn the basics pretty quickly.

Cons

Although they provide a sample portfolio for a forty-year-old person, it would have been helpful to see additional portfolio samples for people of different ages and risk tolerance. The portfolio described in the book, although decent, would not necessarily be good for younger investors.

Some of the advice in the book could have been a little more specific. For example, readers are encouraged to get term life insurance (which we agree with) but it doesn’t specify how much insurance to get.

How practical is the information in the book? 

Inveduco rating: A–

Most of the information is specific enough that anyone could apply it immediately after reading the book. It would have been helpful to list specific companies for some the products and services that they recommend, such as robo-advisors. (They do provide company names for a number of their recommendations, just not all of them.)

How sound is the advice in the book? 

Inveduco rating: A

The information is solid and it covers a surprising number of topics for such a short book. We believe that some of the topics could have been expanded a bit, such as the importance of regularly rebalancing your investments. (Here is an article we wrote on the topic.)

Does the book live up to its claims?

Inveduco rating: A+

Unlike many personal finance books which make bold promises of wealth or low-risk/high-reward investing, “The Index Card” simply tries to demystify basic financial topics and it does a great job at that. The book covers most of the topics beginners need to know about to get started investing for retirement.

Overall Rating

Inveduco rating: A-

In our view, this book should be required reading for all college students or anyone who is about to start working at a first job. People who are not interested in spending long hours studying this topic will appreciate the “no-bs” approach of this book and the fact that it is a relatively quick read (250 pages). Although most of the information in the book is very actionable, the format could have been further simplified and a list of recommended companies could have been added to make it even easier for readers to immediately put the information into action. Other than that, the information is sound and will benefit most beginner investors.