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Smartest Investment Book You’ll Ever Read Is One Sentence Long

Posted on the June 6th, 2009 under Beginner Investor, Beginning Investment Strategy, Index Funds, Index Investing For Beginners, Investing Online by Jeff the late investor

Even Ramit Sethi, the newest hottest personal finance guru agrees about this book (The Smartest Investment Book You’ll Ever Read: The Simple, Stress-Free Way to Reach Your Investment Goals.) - he says “this is one of my favorite investing books.” On his blog, I Will teach You How To Be Rich h dissects the book and comes to the conclusion that it is smart, concise, and doesn’t come with any fertilizer to grow the author’s stature. As in, no bullshit. Works for me!
So why do I say the book is only one sentence long?

“In a Smart Investment portfolio, you hold investments in a group of funds that, in turn, have investments in all the securities (stocks or bonds) in a particular index.”

Yup, that’s it. Of course, there are a couple hundred pages afterward explaining the nuts and bolts of how you are going to implement this:

This is from a treatise of the book that further distills the rest of the book (emphasis is mine):

Solin recommends that investors follow Four Steps
1. Determine your asset allocation based upon your personal parameters (Note: author provides a multi-page asset allocation questionnaire to determine a specific score for each individual’s circumstances and risk tolerance).
2. Open an account with Fidelity Investments, Vanguard or T. Rowe Price.
3. Set up your portfolio among three specific no-load, low internal expense index funds in any of the three fund families representing the total U.S. stock market, international market, and U.S. bond market, or purchase three specific similar in composition ETFs.
4. Rebalance the portfolio twice a year.

It’s common-sense advice - particularly when Solin says that you do not need advisors, managers, etc to invest for you - if you’re investing an American family average (my investment fund is obviously much lower than some, but sadly, much higher than many), all they are are extra fees paid to ‘churn’ your investments, making it look like they are trying to make you extra money just by flipping around your portfolio. I’ll talk more on this in a later post, and share an experience a friend of mine had. Furthermore, I have lots more to say about this particular book, which I just happened to pick up from the library not because I knew anything about it or had heard anything about it, but because it was short. Lucky me!