Tuesday, November 3, 2015

Financial Dictionary

It took me a great deal of life experience to get my far from complete understanding of the financial world. Here is my attempt to capture in as few words as possible the right way to think about some financial terms.

Bank: An entity that aims to take you for about 3% of everything you own or owe each year.

Bonds: Payday loans to governments.

Car: The most expensive part of your self-image.

Commute: The most underestimated cost of both time and money.

Debt: A crushing burden that weighs down your life and dreams.

Expenses: Anything a salesperson calls an “investment”.

Government: An entity that transfers your tax money to its employees.

Inflation: An invisible force that slowly makes your retirement income worthless.

Insurance: Something sold using the illusion that it will prevent bad things from happening.

Insurance Company: An entity that pays small claims and denies large ones.

Investment Industry: All entities whose income comes solely from dipping into your savings.

Longevity Risk: Cat food.

Lottery Tickets: A common retirement plan whose success rate increases when combined with smoking.

Organization: An entity whose main function is to pay its administrators.

Payday Loans: The last lap in swirling down the financial toilet.

Smoking: A means of combating longevity risk.

Stocks: An overconfidence tax when bought. A fear tax when sold. A wealth generator when held in great variety for a long time.


  1. I thoroughly enjoyed this :) Poetic! If I had to pick a favourite, it would be a toss up between Longevity Risk and Smoking.

    1. @Sebastien: Glad you liked it. Maybe I'll add more entries over time.

  2. OK, so this is the kind of content everyone needs to read, and the sad part is people think you are joking. I didn't laugh, I felt sad reading this, and then I laughed. The only thing missing is the financial toilet graphic (with the swirling).

    1. @Big Cajun Man: You're right that while I tried to make this amusing, I intended it to have serious messages.

  3. Index Funds - a guarantee to underperform the index

  4. Debt: A crushing burden that weighs down your life and dreams...if misused.

    Inflation: A visible force that slowly makes your purchasing power worthless...unless you keep getting raises.

    Insurance Company: An entity that charges you for doing nothing and charges you even more when it does do something.

    Stocks: A wealth generator when held in great variety for a long time.
    Long Time: The ubiquitous 100-year stock chart that is applicable to no one.

    Smoking: A means of collecting taxes to subsidize a health care system burdened with treating sick smokers.

    1. @SST: Even many people who think they are using debt wisely get burned.

      It's tough to get raises after you've retired unless you have an indexed pension.

      I think there is good reason to believe that owning a slice of the world's industriousness in the form of businesses is a good bet. Certainly a better bet than the alternatives.

  5. You really put a damper on my $5 donation to the office lottery pool with that definition today. I was counting on that $60 million to enhance my life of debauchery, and to buy as many high polluting toys as will fit in my garages.

    1. @Paul: You can count on me to take the fun out of things :-)