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I wear lots of hats. One is a self-styled financial “therapist.” No, I’m not a licensed mental health professional. But I do talk with many people about their finances in providing MaxiFi Planner’s Concierge Planning Service.
In the process, I’ve encountered a goodly number of households, rich and poor alike, unwittingly engaged in what I call downside investing — investing with the sole, if unintended purpose of potentially making themselves worse off. The good news is that this financial masochism is not entrenched. Once people realize it, they switch their holdings.
Let me describe the financial pathology. But first, some background on MaxiFi – my company’s financial planning software, which I use to diagnose the disease. The software is 33 years in the making. Its patent-winning technology solves the fundamental equations of finance, delivering economics-based financial planning. These equations were developed over the past century by a Who’s Who of personal finance wizards, including Irving Fisher, John von Neumann, Oskar Morgenstern, Milton Friedman, Kenneth Arrow, Harry Markowitz, James Tobin, William Sharpe, Franco Modigliani, Menachem Yaari, Paul Samuelson, and Robert Merton.
Their work comprises the core of personal financial science and is taught in every top finance and economics department across the globe. MaxiFi is also becoming part of this curriculum. To quote Nobel Laureate, Robert Merton,
“I assign MaxiFi Planner in my asset management course at MIT’s Sloan School of Management as an outstanding science-based lifecycle and retirement management platform.”
If reading the word “equation” makes you sweat, grab a towel. MaxiFi does its math under the hood. Above the hood, it’s easy as pie. Indeed, the program can be used by 9th graders. In fact, here’s my offer to high school teachers.
If you’re a high school teacher and want free licenses to MaxiFi for yourself and your students, email me at kotlikoff@gmail.com. Have your kids plan for their parents as their homework assignment! Financial literacy courses teach financial lingo, explaining terms like discounting, equities, and budgeting. But knowing what the words mean doesn’t tell you what the moves mean — for a good reason. Using just your noggin to making correct financial moves, like beating a master computer chess program, is beyond human capacity. Using MaxiFi will teach your students the moves as well as the words, delivering effective rather than surface financial literacy.
My claiming…
Read More: Are You Investing Solely to Lose Money?
