For more than 25 years, The Only Investment Guide You'll Ever Need by Andrew Tobias has been a favorite financial guide for millions of readers. I first read it many years ago and have benefited from its friendly design and easily understandable advice. Below are excerpts from the book's paperback (2005) edition. Enjoy and learn:
"The welter of investment choices and the thicket of jargon and pitches have grown a great deal more dense. Perhaps this book can be your machete."
"There is no dignity quite so impressive, and no independence quite so important, as living within your means." Calvin Coolidge quote
"It is a fact that 90% or more of the people who play the commodities game get burned."
"The simplest, safest, most sensible way to earn 18% or 20% on your money is to pay off your credit cards."
"Buy a used car. That 'new-car smell' is the most expensive fragrance in the world."
"Insurance salesmen are eager to sell whole-life policies because their commissions are so much higher. But you would be wiser to buy renewable term insurance and do your savings separately."
"Don't miss fairmark.com to help you with tax questions."
"Trust no one. You've got to take responsibility for your own affairs."
"The simple investments are very often the best. And that goes, too, for the simple loans, the simple insurance, and the simple financial plans."
"A very basic thing to know about your money is that, over the really long run, people who by stocks will almost surely make a lot more money (if they're at all sensible in how they do it) then people who make 'safer' investments."
"I have never bought a Treasury bill in my life. For me, it's easier just to use money-market funds."
"If anything, you should shy away from bonds that pay exceptional interest: there is a reason they pay so well."
"The one thing on which there is nearly unanimous agreement is the difficulty of predicting interest rates."
"Never buy long-term bonds unless they are 'noncallable' and the general level of interest rates is very high."
"Picking individual stocks doesn't make sense for most people. The way to invest for stock-market appreciation is by investing in no-load mutual funds."
"A terrific alternative or supplement to the education savings account is the Qualified Tuition Program, known as a 529 plan. -- Right now, the Nevada plan offers my three favorite mutual funds from Vanguard: a domestic stick stock index fund, an international index fund, and a fund that invests in Treasury Inflation-Protected Securities."
"If you're young and/or in a low tax bracket, but even if you're not, you should probably open a Roth IRA and fund it to the maximum every year."
"If you were thinking of a variable annuity, buy a no-load stock-market mutual fund instead. You'll save sales fees and insurance charges; you'll suffer no penalty for early withdrawal; and you'll enjoy considerable, albeit different, tax advantages."
"If you write large checks to charity each year, you can save a lot of money in taxes by giving appreciated securities instead."
"There are three compelling reasons to invest a large portion of your funds in stocks: 1) Unlike bonds, stocks offer at least the potential of keeping up with inflation; 2) Over the long run--and it may be a very long run--stocks will outperform 'safer' investments; 3) If all goes well, stocks can act as a tax shelter."
"Most people should do their stock-market investing through no-load index funds--mutual fund that don't attempt to actively pick the best stocks, but just passively invest in all the stocks in the index they are designed to match. If you do, you will outperform at least 90% of all your friends and neighbors."
"A lifetime of periodic investments--adding to your investment fund $100 a month or $750 a montrh or whatever you can comfortably afford--is the ticket to financial security."
"Buy and large, for your long-term money, 'buy and hold' is the way to go."
"Just because it's easy to buy and sell stocks on a moment's notice, or get an up-to-the-minute quote, doesn't mean you should."
"Don't waste money subscribing to investment letters or expensive services."
"If you have both taxable and tax-sheltered portfolios, keep your riskiest holding outside your tax-sheltered accounts."
"There are no brokers who can beat the market consistently and by enough of a margin to more than make up for their brokerage fees."
"If you get 256 people into a room and give them each a coin to flip, -- one will flip heads eight times in a row. What talent! What genius! What nonsense."
"The random walk theory naturally is anathema to the men and women whose livelihoods and self-esteem depend on convincing clients they know which way stock prices will go."
"There is an old joke on Wall Street: 'The broker made money and the firm made money--and two out of three ain't bad."
"If you get a hot tip, make a note of it and pretend to be very interested. But don't buy."
"Charts look like they should work, but they don't. Everybody uses them anyway, just as everyone consults astrology columns in newspapers.--To quote Malkiel: 'The results reveal conclusively that past movements in stock prices cannot be used to foretell future movements. The stock market has no memory.' "
"Internet investing positively teases you to play. It make you feel powerful--moving thousand of dollars in and out, click, click, click. Talk about computer games! -- Four things will surely get you: the commissions, the spreads, the taxes, and human nature (addictive gambling)."
"You can find a fee-only planner through napfa.org or garrettplannningnetwork.com."
"What to do, then, should you have the ill fortune to inherit a million dollars? Do not buy a boat."
"A U.S. investor in 1929 who was wise enough to place 50% in foreign stocks would have needed only five years to recover from the worst crash in American history."
"What you are looking for is that rare mutual fund that does better than average in both up and down markets. Many elaborate studies have been conducted to identify such funds. None has worked. -- Studies have shown that funds with low expenses consistently outperform funds with high expenses."
"This is a very simple concept but profound: just by investing all the money you have earmarked for the stock market in the Vanguard S&P 500 Index Fund, you will generally do better than most bank trust department, mutual fund managers, and private investors--with far less effort."
ETFs vs. Mutual Funds: "When all is said and done, it largely comes down to what's most convenient: If you already have a deep-discount brokerage account, buy VIPERs. If you already invest with Vanguard, buy its fund."
"John Bogle founded Vanguard in 1974 with the clear intention of making it the low-cost provider in the mutual fund field. He succeeded brilliantly."
Thank you Andy Tobias!
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