Why? Because they all seem to be variations on the same theme, and I don't need to have 100 different authors put their unique spin on the same ideas. My bookshelves aren't that big.
At the 10,000 foot level you can sum up the collective wisdom as follows:
- Spend less than you earn. Be frugal.
- Build up an emergency fund equal to 3 - 6 months of your salary.
- Education never ceases, and is the key to increasing earning power (i.e., invest in yourself).
- Limit the number and use of credit cards. Ideally, become self-financing.
- Pay off high interest rate loans first.
- Don't over-complicate your investment strategy. Keep it simple and diversified.
- Compounding is the eight wonder of the world.
- Cost matter in everything, especially where they compound year after year-- like mutual fund fees-- so seek out the low cost providers.
- Integrity matters in everything, so seek out those companies with an unblemished record of honesty.
- Stick with index funds. Don't put your faith in star managers.
- Determine the proper asset allocation for your risk tolerance. Then stick to it.
- Invest and rebalance regularly.
- Don't fall for get rich quick schemes. If it was such a great idea, they'd be doing it themselves instead of wasting time selling you their system. They are marketing companies, not investment companies.
- Pay off your debts so you can live like nobody else.
That's my synopsis. I'm sure many can come up with other ideas of what to add to this list. The point is that money management and investing is simple at the conceptual level, but much harder to put into practice because it requires discipline, the deferral of immediate gratification and a lot of good old fashion values.
What I've learned about investing is contained in a handful of books, the others are just rehashings of similar ideas. I would recommend Common Sense on Mutual Funds by John Bogle and The Four Pillars of Investing by William Bernstein. Everything I need to know about investing is contained in these two books, which is why I don't need to buy the latest and greatest, and can invest the money I saved. In addition, I find numerous articles on the internet that are worthwhile, but like everything on the internet you have to sift through the garbage to find the gems.
All I say is "AMEN!"ReplyDelete
I agree with the first post. It seems so complicated, but it is really just a matter of principles and discipline. Happy Saving!ReplyDelete
Dawn & Anonymous, thanks for stopping by and commenting.ReplyDelete