Personal-finance

Go ahead and make the first biggest investment (in terms of value) you can ever make for your children - by buying and reading this book!

Mike Powers uses strong and straightforward language, which urge parents to think, with words like, "What we are buying for our children is the ability to get good job and make more money over the course of their lifetime, without it, they are headed for 50 years of wearing funny little paper hats and endlessly repeating "would you like fries with that?" We know this and we'll pay whatever it costs to help them avoid it."

He explains why the colleges are so costly, where and why the colleges spend so much and how much it will cost in the next years to come. He suggests which colleges suit your child and what fits in our pocket. He has divided the book in to parts, investment and aid; I think all the possibilities are covered.

However, if you are already into investment, what you will find on "your contribution" section will appear basic. Also, if your child is about to go to the college in a few years time, the "other resources" section will look rudimentary. Unfortunately, Mike Powers does not reveal any specific strategy or scheme, which an individual can follow.

Not withstanding this, if you are interested in the welfare of your children, reading this book will definitely change your mindset, and help you start investing for the bright future. Particularly, parents who have small children will be highly benefited by reading this book.

Thanks Dave Rye for writing a book about the stock market that the average person can understand. After reading your book, I now not only know how to avoid making stupid mistakes when investing in stocks, but how to take advantage of the market and make MONEY.

This book covers the 25 myths about managing money. What makes this book better than others is that it gives you the background logic behind the decisions. For example, the author discusses the myth of buying the biggest house possible and why this mindset was successful in the 70s & 80s (and could be again) but isn't a good idea in today's economy. The author further shares the "forumula" behind the logic -- inflation rates, present/future value of money, and lost opportunity.

The 25 Myths are nothing surprising, but you will find that the logic is refreshingly simple and easy to apply to your financial situation.

The best book I have read on financial planning strategies and tactics. If I had my own financial planning business, 25 Myths is the one book I would give to to clients to explain the basic rules to follow in implementing a successful financial plan. I enjoy reading Jonathan Clements's Getting Going columns in the Wall Street Journal. Don't worry his book is not a rehash of his articles, although many of his ideas and recommendations are familiar from reading his column. He takes 25 familar financial myths and explains how each myth arose, where we go wrong in following those myths and what the new rules are. Myth: Stocks are risky. Reality: Stocks are not risky compared to the risk you suffer from inflation if you concentrate your money in safe investments like bonds. Myth: You can beat the market. Reality: You can't beat the market but you can cut the costs by using discount brokers, no load mutual funds, low cost funds, and income tax efficient funds. Clements recommends keeping 80% of a person's investments in stocks (which shifts to 60% as you approach retirement). To ensure that upon retirement a person has a cash balance Clements offered the tactic of using zero coupon bonds to fund the cash balance for retirement. So long as one focuses on the maturity value in retirement, the possible fluctuations in value of zeros doesn't matter. I also liked his analysis of inflation indexed bonds as way to hedge against inflation and interest rate fluctuations. I will list the myths here because the book review does not list the table of contents: 1. You can have it all. 2. Get a good job and you'll be set for life. 3. Stocks are risky. 4. You can't go wrong with IBM. 5. You can beat the market. 6. Your investments will make 10 percent a year. 7. You can't go wrong with mutual funds. 8. You can find the next Magellan. 9. Index funds are guaranteed mediocrity. 10. Nothing's safer than money in the bank. 11. If you need income, buy bonds. 12. Hedge your bets with hard assets. 13. You should own a balanced portfolio. 14. You need a broker. 15. Keep six months of emergency money. 16. Debt is dangerous. 17. Buy the biggest house possible. 18. You can't beat the mortgage tax deduction. 19. Invest in your house. 20. Trade up as soon as you can. 21. Protect against every disaster. 22. Life insurance is a good investment. 23. Invest in your kid's name. 24. Max out your IRA every year. 25. One day, kids, all of this will be yours.

"25 Myths You've Got To Avoid If You Want To Manage Your Money Right" is a great personal finance book. The book gives a solid overall philosophy to managing your money. It's probably best for new to intermediate investors.

Each chapter begins with an investment or personal finance myth. Clements explains where each myth goes wrong and concludes each chapter with new rules to replace the myth.

Clements discusses the myth that you should invest in bonds for income. He says that investors love bonds because they love income. But, Clements says that investors loving bonds is a "masochistic relationship" when we factor in all of the negatives of bond investing.

Clements explains that the callable feature of bonds means that if interest rates drop significantly, bonds will probably be called in, depriving investors of the desirable and higher interest rate on their existing bonds. But, if interest rates shoot way up, the bonds won't be called in, and investors will be locked into receiving a low rate of return. Clements says that the call feature of bonds is a case of "heads I win, tails you lose."

And, as much as investors love bonds, Clements notes that the taxman loves bonds even more. After factoring in taxes and inflation, Clements shows us that bonds are a dismal investment. (Especially when we toss in default risk and interest rate risk). The chapter about bonds is particularly good and will give investors much to think about.

So, what about investors seeking income? Does Clements go along with the "No problem. Just sell some shares when you need some money" crowd? No. Clements realizes the inherent risk in needing to sell shares for income. The market might be down, and you could take a clubbing.

Clements explains that stocks or mutual funds holding stocks "are your portfolio's engine of growth. Everything else is there to reduce risk, so that you won't get unnerved by market swings and can tap your portfolio for spending money without selling stocks at fire-sale prices."

So rather than following the conventional advice of holding a portfolio balanced between stocks and bonds (usually 60% stocks and 40% bonds), Clements suggests investors consider holding a portfolio of 25% cash and 75% stocks. I strongly agree that this is something to consider.

Ultimately, Clements tells us that it's our asset allocation which will determine the long-term rate of return our portfolio achieves. Rather than holding a portfolio composed of only 50% stocks and then trying to seek the next Microsoft, investors would probably do much better holding a higher percentage of stocks and foregoing the search for the next big winner.

Clements says it's a myth that you can beat the market. In addition to not liking market timing, he doesn't believe in sector rotation, or individual stock selection. Further, Clements doesn't tend to like actively managed mutual funds. Because Clements is of the earliest columnists to cover the mutual fund industry for The Wall Street Journal, we should probably listen when he gives mutual fund advice.

What typically happens, Clements explains, is that a superstar fund manager hits a streak. This might be due to his or her investing style coming into favor or it might be due to luck. Then typically the public relations department of the money management firm kicks in and the money under management balloons. Ultimately, the fund returns to moderate performance or bombs entirely. The superstars reputation fades away. A new superstar at another fund is born.

Clements has seen too many superstar fund managers wipe out to believe it's worth his time seeking the best mutual funds among the several thousand existing funds. He recommends indexing your stock market money among larger U.S. stocks, smaller U.S. stocks, and foreign stocks.

Clements includes a good discussion of the controversy surrounding whether to invest all of a lump sum at once or whether you should dollar cost average it into the market. He prefers dollar cost averaging it into the market as a means of reducing risk. Rather than aiming for the highest possible return, we want to minimize the risk of losing capital.

Clements says we probably won't get a 10% rate of return on our investments and that the new "Disney World for the post-teen set" is using compounding calculators, plugging in estimated rates of return, to calculate how large their retirement nest egg will be. Considering inflation, Clements corrects us showing that, due to inflation, the real return on stocks is closer to 7% a year. Those compounding calculators are fun, aren't they?

I disagree with some of Clements' advice. What he says about building a credit cushion rather than holding excessive savings in a low-yield, money-market fund is good. But, I'd much rather count upon a home equity line of credit than a (gulp!) margin account at a brokerage, which he suggests as an option.

Clements also suggests that if you're wealthy you probably don't need umbrella liability insurance as you can self-insure this risk. He says the same about health insurance. How rich is rich? We're not talking $5 million here. I'd recommend retaining both health insurance and umbrella liability insurance regardless of your wealth. But, as Clements says, you probably can forego termite reinfestation insurance. You can absorb the cost of annihilating the little bugs yourself.

Finally, "25 Myths You've Got To Avoid If You Want To Manage Your Money Right" has a great discussion of why you might not want to max out your (non-Roth) IRA, but consider holding a global index portfolio in a taxable account instead. In addition to not having access to the money for a long-time, you're converting capital gains into more heavily-taxed income with the non-Roth IRA.

Peter Hupalo, Author of "Becoming An Investor"

I bought this book hoping to get a useful summary of 25 great investment books. It would have been a great time saver to gain all that knowledge by reading a single book. I guess I was hoping for too much, and I was extremely disappointed.

The editor says from the beginning that he believes in fundamental analysis and does not believe in technical analysis. In fact he finds a way to mention this in almost every chapter / review. Given that he only has around 6 pages per book summary, he wastes far too much time repeating his personal opinions and spends far too little time discussing the major points of the actual investment classics.

He tends to write about the authors, rather than about the books. Maybe he thought that would make the book more interesting and relevant, but personally I wish he had stuck to (or in some cases, started to) discussing the actual book content. The chapter on Gann is a good example. Gough hardly seems to mention anything from Gann's book, but he wrote a lot about the famous Gann myths and mysteries. It makes me wonder whether he has even read Gann's book (in fact many of the chapters are so brief and vague that he may not have read several of the books). I don't care about the myths and mysteries or the editor's opinion on fundamental vs. technical analysis - I was just hoping that the Gann chapter would summarise the major points of Gann's book. Crazy huh?

The only time I got the impression that the editor was giving information from the books (rather than talking them down) were in the chapters reviewing the books on famous fundamentalists like Buffet and Lynch.

Don't waste your time and money.

I appreciate what the author was trying to do with this book, introducing us to his own list of the 25 best investment books of all time. Although I am no worse for the wear after having read this volume, the exercise left me somewhat dissatisfied upon reflection.

The collection of books is haphazard, looking at areas of the market and investing that are widely dispersed. This is not a weakness in itself, but the disjointed way the author jumps from work to work with no transition gives this volume the flavor of reading a stack of unorganized book reviews. The writing quality is not terrible, but it does not hold attention well and could have used some serious editing in places. The book's main strength is its brief distillations of the 25 works it covers.

The author, a financial journalist, provides no evidence of any special competence or authority in any of the subjects he covers. This is a significant contrast to a work like Dean LeBaron's Treasury of Investment Wisdom, where Mr. LeBaron brings a lot of expertise in various areas and makes no bones about where he stands on various topics.

One quote that stood out for me near the end of the book was the following (p. 207):

"...He (Wittgenstein) was ever conscious of our inability to be certain. This is one of the great existential riddles, and I have every sympathy with the majority of people, who feel uncomfortable at this thought and prefer to find refuge in the arms of any number of ideologies and belief systems."

No, Wittgenstein is not one of the 25 authors covered among the investment classics (for an exact list, check the book's editorial reviews in detail). Wittgenstein is simply a manifestation of the author's wishy-washiness. He does not believe in technical analysis, is not quite sure he believes in fundamental analysis, and does not appear to have any shockingly special insights on these works.

Because some of the books he covers are very good, the wisdom of the 25 authors cannot help but affect you, no matter how buried in the author's prose. The few direct quotes from works that he inserts provided the fresh breaths of air I needed to keep going through these pages.

Hopefully digesting this book will inspire the reader to read the underlying "25 Investment Classics", which will be ultimately much more rewarding.

I appreciate Mr. Gough's book for the valuable insight offered by the 25 "masters" of finance. Indeed it is his choice of experts and his obvious appreciation for their accumen, moxie and well yes, success that makes this book a good read. Mr. Gough has a fine, clear writing style and we leave the book a bit smarter and perhaps a bit more interested in some of his muses. I recommend it!!

There is an old Chinese motto that who opens scroll always profits. The same applies to books and you usually can't go wrong reading any one of them. O'Neil's book is no exception and there is lots in it especially for the beginning investor. Perhaps that's why the crass commercialism in favor of IBD hurts so much. Also disturbing are the frequent errors in logic that include begging the question (buy a stock that will go up), false analogy (the stock market is a battlefield), and over generalization (cut losses when your stock falls 8% from where you bought it). On the other hand I like the ideas that paper trading does not cut it: does not give you the real experience of being in the market and I certainly agree that you should sell your worst performing stocks first otherwise you will end up with a portfolio of dogs. All in all, though, you will be better off reading Peter Lynch's books, which have more intelligent advice more clearly expressed minus any commercial pitch.

Though it doesn't include all the reasoning behind the methods (for that see O'Neil's "How to Make Money in Stocks...), this book provides the essence of the author's selection process in short, easy to understand lessons.

Though he emphasizes his newspaper publication (Investor's Business Daily), the lessons are valuable even without the paper; and should you choose to use the paper as well, there is a wealth of information that other papers only have in very raw forms. The emphasis on the information contained in his paper stems from the fact that it is the same information that he uses for his selection process. You could get the same information from the Wall Street Journal, you'd just have to set up complicated spreadsheets to arrive at those results. That said, this, like all other investment books, should be read critically as no investment strategy is without faults.

I thought it was a great book for someone like me who knew ablsolutely NOTHING about investing in the stock market. I found it while browsing in a book store. Although I bought several books on investing that day, this one is my favorite primarily because of it's readability. One of my favortite features is the bulleted summary at the end of each chapter. Now, I have a basic understanding about how to pick stocks which was exaclty what I was looking for. Although the book discusses fundamental and technical analysis of stocks, I did not find it overly technical.

The day after I completed the book, I went to my local library to take a look at IBD and 'lo and behold' it wasn't Greek to me. "24 Lessons" has opened my eyes to the world of trading stocks which to me was an invaluable lesson.

True, it's not a comprehensive book about the stock market, but no single book can be. I viewed it simply as a place to start. Halfway through the book I had already trained myself not to be irritated by the excessive advertising for IBD because I liked what I was learning.

Bottom line? I guess the value of the book is not what it costs, but how we individually can relate to the information presented. But just to put it in perspective, last month my husband went to a "FREE Seminar" [not by William O'Neil or IBD]on investing in stocks. What did he get?--a REAL sales pitch for "trading" software that cost (get this) only $3,995.00! That's what I would call shameless advertising.