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Mon Apr 26, 2021, 08:43 PM

The best investment book I have ever read

Is a book by Burton Malkiel and Charles Ellis called 'The Elements of Investing'. It's a short book, only about a hundred pages. It's theme is that anyone can be a successful investor. It is a skill that can be learned like any other. It is best read when you are in your twenties. With the magic of compound interest, if you start out young, becoming wealthy in retirement is not difficult. I wish the book had been around when I was young. It took me many years to figure out what I was doing with my money.
When our nephew was in college we gave him a copy of the book. His reaction was 'Is this a joke?' We said 'No. You have had earnings from a job this year. We are going to fund a little IRA to start you off. Now just read the book so you will know what to do with it'. I don't know if there is a connection but he graduated, worked for a few years and paid off his college loans, and now has just been accepted at the Wharton School of Economics at Penn. We made the same offer to our niece but she wanted the money to pay down her loans. We'll try again when she is in the working world.
The lessons of the book are pretty simple but often hard to follow in real life. You will never be rich unless you save. You will never save unless you spend less than you earn. Ninety percent of profesional money managers can not consistently outperform the S & P average. Dollar cost average. Stocks are the one thing people don't want when they are on sale. To the long term investor the bear market is your friend. Buy low cost index funds. You can't control the direction of the market. You can control what you pay for an investment.
I lived through the bear market of 2000-2003. I was working for myself. Every month I had to write out the checks myself. Imagine, you put money in every month and your balance just keeps going down. I really didn't know what I was doing but for some reason I kept writing the checks. The smartest thing I did was eventually I just stopped opening the statements from T Rowe Price. I didn't realize it at the time but I was doing what you are supposed to do. I was buying low. When the crash of 2008 came along, I had figured it out. It was the greatest buying opportunity of my life time. By then it was easy. I was working for the state. I just had them take a bit more out of my pay check.
Malkiel and Ellis quote Warren Buffett on long run Investing': If you are going to be buying hamburgers your whole life, you want hamburgers to be cheap. The same with buying stocks.
I just think the book is valuable for all of us whose retirements are dependent on our 401ks and our own Investing' skills. You don't need an investment advisor or high priced fund managers. You just need to master a few Investing' lessons.

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Arrow 14 replies Author Time Post
Reply The best investment book I have ever read (Original post)
Tomconroy Apr 2021 OP
Shermann Apr 2021 #1
Tomconroy Apr 2021 #5
underpants Apr 2021 #2
msongs Apr 2021 #3
Tomconroy Apr 2021 #4
multigraincracker Apr 2021 #6
CommonHumanity Apr 2021 #7
Tomconroy Apr 2021 #11
XanaDUer2 Apr 2021 #8
PoindexterOglethorpe Apr 2021 #9
3Hotdogs Apr 2021 #10
Tomconroy Apr 2021 #12
3Hotdogs Apr 2021 #13
3Hotdogs Apr 2021 #14

Response to Tomconroy (Original post)

Mon Apr 26, 2021, 08:50 PM

1. Living below your means in your 20s can be damn hard

Sounds interesting, like a book John Bogle would have written.

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Response to Shermann (Reply #1)

Mon Apr 26, 2021, 09:17 PM

5. I think both authors

We're on the board of directors of Vanguard.

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Response to Tomconroy (Original post)

Mon Apr 26, 2021, 08:50 PM

2. Red and bookmarked

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Response to Tomconroy (Original post)

Mon Apr 26, 2021, 08:56 PM

3. compound interest these days is about 0.00000000000000000000000001% lol nt

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Response to msongs (Reply #3)

Mon Apr 26, 2021, 09:13 PM

4. Only if you were in a savings account

If you were in the market since 1982 or so the compounding on your investments is astonishing. I may have used the wrong phrase by referring to interest.
When I was in law school our class in Corporations was taught by the Dean who was a retired Wall Street lawyer. Everyone warned me not to take the class because he was a very tough grader. Usually he would have a class of about twelve students. That year about 40 of us decided to take a chance and we all did OK. I got my usual B.
The only thing I remember from the class is one day he said 'There are only two really interesting things in the world: One is leverage (Making money off of borrowed money).
The other is compound interest'. I got leverage at the time. I couldn't figure out what he was talking about with compound interest. Now after seeing my small investments compound over 35 years, I confess he was right. It is absolutely fascinating.

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Response to Tomconroy (Original post)

Mon Apr 26, 2021, 09:23 PM

6. When I was living in Ohio there was a man in town

that donated $10million to a college basketball team. He also donated millions more to others. He was a high school teacher with only a BS degree. The reporter asked him how he did it. He said when started teaching a guy told him to pay himself first out of his check and invest it in high quality, high dividend stocks. He did and it worked for him. He said that Einstein said the greatest force in the universe was compounding interest. Very boring, but it works.

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Response to Tomconroy (Original post)

Mon Apr 26, 2021, 09:38 PM

7. Thanks

Thanks for sharing this information with us. It was really nice of you to think of other folks and how it might help them. You even took the time to write a bit about it and your experience. Nice guy Tom!

I need help managing my money and this book sounds like a good start. I looked it up online it is available through Audible which I have. Yay!

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Response to CommonHumanity (Reply #7)

Mon Apr 26, 2021, 10:33 PM

11. I do really care about this subject.

On a very modest scale I have been a successful investor. The book is an easy way to master the skill. It is just such an important issue since guaranteed pensions have gone by the boards

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Response to Tomconroy (Original post)

Mon Apr 26, 2021, 09:55 PM

8. Thank you for your interesting post

the worst "investing" book I've ever read was Rich Dad, Poor Dad.

I try to invest each month in a Vanguard S and P 500 fund. I pay myself first. My mom always told me to do that.

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Response to Tomconroy (Original post)

Mon Apr 26, 2021, 09:58 PM

9. To everyone who claims it is totally, 100% impossible to save anything,

keep in mind that there are people out there living on less money than you are.

I do happen to have a financial advisor who has done me very well. Nothing flashy, but my money keeps on growing.

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Response to Tomconroy (Original post)

Mon Apr 26, 2021, 10:30 PM

10. Your niece may not be entirely wrong --- depends on the interest on the loans she owes.

If its low interest student loans, that's one thing. If its credit card debt, how many funds will increase in value by 20 + %?


Figuring this out, I pay my credit cards 1,800 per month. They will be paid off next February, saving the 8k in interest I was paying before I began paying the loans down.

Next year, I can start saving/investing.

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Response to 3Hotdogs (Reply #10)

Mon Apr 26, 2021, 10:35 PM

12. If I remember correctly

That is another of the lessons of the book. Try to avoid credit card debt.

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Response to Tomconroy (Reply #12)

Mon Apr 26, 2021, 10:39 PM

13. Yeah, if you're borrowing for "it," you can't afford it.

You can afford the monthly payments but you can't afford the product or service so don't buy it.

Yes, there are emergencies that could have been provided for before the emergency came to be.

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Response to Tomconroy (Reply #12)

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