Investment Advice for Dummies

Unlike many other commenters, I feel no urge to excoriate Alexandra Penney for having once been wealthy:

When I hung up with my friend, I turned on the TV and began to scour Google for news until the message became nauseatingly clear: Forty years of savings—the money I’d counted on to take me comfortably through the next 30 years—had likely evaporated in Madoff’s scheme.

THAT MOTHERFUCKER!! The soufflé fell.

I do wonder, however--what was she thinking, to invest forty years of savings with one motherfucker? Why would anyone do that?

Once you are making more than your basic expenses, you invest in highly diversified index mutual funds. Socially and environmentally responsible ones. That way, the only way you're entirely bankrupt is if Western Civilization permanently collapses. Which, at the moment, is a distinct possibility.

So you also invest in real estate (income property, not just Second Homes, or first ones), gold, and bonds. You have a chunk of money in a money market account. You have an emergency savings account in an unpretentious mom & pop savings bank. You have a couple of friends in foreign countries.

This is basic. But the failure to follow common-sense money managing principles seems to be part and parcel of what I've been ranting about all day--that too many people submit entirely to the Big Authority, instead of building a network of lateral connections. It seems that the only reason Alexandra Penney trusted Madoff was that he was 'exclusive' and well-known among the upper classes; she never met the man, never understood the nature of his business. And yet she handed him the power to wipe her out.