Don’t Listen to This Millennial

I was irritated when I started reading this Bloomberg article, because the subheading under this piece titled “The Five Biggest Myths About Saving Money, According to a Millennial,” is:

Investing’s simpler than it looks, says Ethan Bloch, so young people should chill.

Just chill out everyone!

Anyway, the millennial here is Ethan Bloch, the founder of Digit, a startup that uses an algorithm to move money from your checking account into a savings account (that offers a minuscule interest rate of 0.05 percent).

Some of what Bloch has to say is pretty standard (“just put money in an index fund on a recurring basis and go back to living your life”), and to his credit, Bloch says the “Latte Factor” is total baloney, but he also has this to say:

People spend too much time thinking about or having anxiety about emergency funds. If you have a 401(k) through your job and start putting money into it, if something crazy happens, that money will be there, even if you have to pay a penalty. That is, by default, an emergency fund. Finance people hate it when you say that, but it’s the truth. It’s pretty pragmatic.

Though it is true — the money will be there — it’s not pragmatic! It’s a last resort! Most people would rather borrow money from family, work a second job, or sell their stuff before turning to liquidating their retirement investments. Sorry, but your 401(k) is not your default emergency fund. There is a retirement crisis happening right now for a reason!

Oh no, did I just get trolled?

Photo: Ethan Bloch

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