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The first and best book on investing that you should read: A Random Walk Down Wall Street (http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393062457 http

The first and best book on investing that you should read: A Random Walk Down Wall Street (http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393062457 http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/039306...). This book has great investing advice; is funny, interesting, and well-written; and clearly explains what's going on behind different investment approaches. In other words, it doesn't just answer the "what" question, it answers "why" and "how". As for specific advice, investing isn't that difficult. The best approach is to be lazy: decide on an asset allocation (e.g. 50% US stocks, 30% international stocks, 20% bonds), buy index funds, and rebalance to these percentages every now and then. Vanguard (https://personal.vanguard.com/us/home https://personal.vanguard.com/us/home) is probably the most respected provider of index funds; give them a shot. Check out David Swensen's lazy portfolio if you want something more advanced: http://www.npr.org/templates/story/story.php?storyId=6203264 http://www.npr.org/templates/story/story.php?storyId=6203264. For investing discussion, try http://www.bogleheads.org/ http://www.bogleheads.org/.

davidw 18y ago
What do you think of ETF's as opposed to regular old index mutual funds?
- jon_dahl 18y ago
  ETFs are just fine. There are pros and cons to each, but they are minor. Generally, ETFs have lower expense ratios, but you have to pay a commission to buy them (maybe $10 per purchase at a discount broker). Mutual funds are usually free to buy. So if you're going to invest $100/month, go with a mutual fund. If you're buying $5K at a time, an ETF is fine. Never pay more than 2% of your purchase price on a commission, and <1% is better. There's a little more to it than that (the purchase price of an ETF may stray a bit from net asset value, up or down), but that doesn't usually make a difference. ETFs sometimes get a bad rap because there are so many slice-and-dice funds - gold mining ETFs, Alabama mid-size business ETFs, etc. Stick with the basics (stocks and bonds, US and international, developed and emerging, large cap and small cap).
tialys 18y ago
Looks like a great book, and generally good advice. Thanks!
- ideas101 18y ago
  you must read "The Dollar Crisis" before you invest in anything - trust me this will help for the rest of your life !!!
  - comatose_kid 18y ago
    Thanks for the suggestion. Could you be more specific as to why this book is so great?
keven 18y ago
Index fund is the way to go for many people. In fact, it is the suggestion William Sharpe gave to (pre-IPO) Google employees. http://www.sanfranmag.com/print/node/3368 http://www.sanfranmag.com/print/node/3368
- ovi256 18y ago
  Yeah, but be careful, most index funds have gone down recently, suffering equity losses in the 10-15% range for the last year, before inflation. Just take a look at the Vanguard funds [1], which have one of the best reputations though. Of course, index funds simply followed the market downwards. Long term, they're still a great, trouble-free investment. I would also consider buying Berkshire Hathaway stock. Expensive, B-series at about 4K, but worth it, again, long term. Slightly better returns too. Even better, do not listen to me (IANA financier), but read Phill Greenspan's excellent investing advice [2]. [1] https://personal.vanguard.com/us/FundsIndexOnly https://personal.vanguard.com/us/FundsIndexOnly [2] http://philip.greenspun.com/materialism/money http://philip.greenspun.com/materialism/money
  - daveungerer 18y ago
    The fact that index funds have gone down recently should not cause you to be careful. If you believe the long term value is still there, the best time to buy is in fact after they've suffered losses.
brianlash 18y ago
jon_dahl is dead on. Understand Malkiel's Random Walk and the rest is details. But for a really thorough discussion of those details check Investments by Bodie, Kane and Marcus (http://www.amazon.com/Investments-Zvi-Bodie/dp/007293414X/ref=pd_bbs_2?ie=UTF8&s=books&qid=1216317813&sr=8-2 http://www.amazon.com/Investments-Zvi-Bodie/dp/007293414X/re...). My corporate finance prof encouraged me to look into it, then it was required reading for an economics course I took later. I understand it's the standard-bearer in most finance departments, so there's no going wrong if you're willing to work through the technical parts.

davidw 18y ago

What do you think of ETF's as opposed to regular old index mutual funds?

jon_dahl 18y ago
ETFs are just fine. There are pros and cons to each, but they are minor. Generally, ETFs have lower expense ratios, but you have to pay a commission to buy them (maybe $10 per purchase at a discount broker). Mutual funds are usually free to buy. So if you're going to invest $100/month, go with a mutual fund. If you're buying $5K at a time, an ETF is fine. Never pay more than 2% of your purchase price on a commission, and <1% is better. There's a little more to it than that (the purchase price of an ETF may stray a bit from net asset value, up or down), but that doesn't usually make a difference. ETFs sometimes get a bad rap because there are so many slice-and-dice funds - gold mining ETFs, Alabama mid-size business ETFs, etc. Stick with the basics (stocks and bonds, US and international, developed and emerging, large cap and small cap).

tialys 18y ago

Looks like a great book, and generally good advice. Thanks!

ideas101 18y ago
you must read "The Dollar Crisis" before you invest in anything - trust me this will help for the rest of your life !!!
- comatose_kid 18y ago
  Thanks for the suggestion. Could you be more specific as to why this book is so great?

keven 18y ago

Index fund is the way to go for many people. In fact, it is the suggestion William Sharpe gave to (pre-IPO) Google employees. http://www.sanfranmag.com/print/node/3368 http://www.sanfranmag.com/print/node/3368

ovi256 18y ago
Yeah, but be careful, most index funds have gone down recently, suffering equity losses in the 10-15% range for the last year, before inflation. Just take a look at the Vanguard funds [1], which have one of the best reputations though. Of course, index funds simply followed the market downwards. Long term, they're still a great, trouble-free investment. I would also consider buying Berkshire Hathaway stock. Expensive, B-series at about 4K, but worth it, again, long term. Slightly better returns too. Even better, do not listen to me (IANA financier), but read Phill Greenspan's excellent investing advice [2]. [1] https://personal.vanguard.com/us/FundsIndexOnly https://personal.vanguard.com/us/FundsIndexOnly [2] http://philip.greenspun.com/materialism/money http://philip.greenspun.com/materialism/money
- daveungerer 18y ago
  The fact that index funds have gone down recently should not cause you to be careful. If you believe the long term value is still there, the best time to buy is in fact after they've suffered losses.

brianlash 18y ago

jon_dahl is dead on. Understand Malkiel's Random Walk and the rest is details. But for a really thorough discussion of those details check Investments by Bodie, Kane and Marcus (http://www.amazon.com/Investments-Zvi-Bodie/dp/007293414X/ref=pd_bbs_2?ie=UTF8&s=books&qid=1216317813&sr=8-2 http://www.amazon.com/Investments-Zvi-Bodie/dp/007293414X/re...). My corporate finance prof encouraged me to look into it, then it was required reading for an economics course I took later. I understand it's the standard-bearer in most finance departments, so there's no going wrong if you're willing to work through the technical parts.