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The 5 Mistakes Every Investor Makes and How to Avoid Them: Getting Investing Right
Identify mistakes standing in the way of investment success With so much at stake in investing and wealth management, investors cannot afford to keep repeating actions that could have serious negative consequences for their financial goals. The Five Mistakes Every Investor Makes and How to Avoid Them focuses on what investors do wrong so often so they can set themselves on the right path to success. In this comprehensive reference, readers learn to navigate the ever-changing variables and market dilemmas that often make investing a risky and daunting endeavor. Well-known and respected author Peter Mallouk shares useful investment techniques, discusses the importance of disciplined investment management, and pinpoints common, avoidable mistakes made by professional and everyday investors alike. Designed to provide a workable, sensible framework for investors, The Five Mistakes Every Investor Makes and How to Avoid Them encourages investors to refrain from certain negative actions, such as fighting the market, misunderstanding performance, and letting one's biases and emotions get in the way of investing success. A reliable resource for investors who want to make more informed choices, this book steers readers away from past investment errors and guides them in the right direction.
208 pages, Hardcover
First published January 1, 2014
102 people are currently reading
1263 people want to read
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Displaying 1 - 30 of 86 reviews
September 13, 2016
This is a short read and high impact. The chapters are to the point and there isn't a lot of fluff.
The author attempts to convince you that active trading is a loosing proposition in the long run and that even those who do beat the market from active trading never do so continuously so over any lengthy investment period (20+ years) and you are better off asset allocating your portfolio with an index ETF as your primary risk lever. He claims with his own cited evidence that funds are charging you to do worse than the market. Even a 1% fee compounded over 20 years has a huge impact.
Another key insight is the difference between a broker and a fiduciary. One can sell you anything that is reasonable for a 3% commission (broker), the other has fiduciary responsibility to pick investments that are in your best interest, so pick an adviser that is only a fiduciary and not a fiduciary and broker. You can wear both hats.
The best thing about this book is it makes me want to invest on automatic and just not worry about it knowing that if I stick to an index ETF I'll be just fine. Don't pull out when markets are down, just buy and hold.
Let the flaming commence!
The author attempts to convince you that active trading is a loosing proposition in the long run and that even those who do beat the market from active trading never do so continuously so over any lengthy investment period (20+ years) and you are better off asset allocating your portfolio with an index ETF as your primary risk lever. He claims with his own cited evidence that funds are charging you to do worse than the market. Even a 1% fee compounded over 20 years has a huge impact.
Another key insight is the difference between a broker and a fiduciary. One can sell you anything that is reasonable for a 3% commission (broker), the other has fiduciary responsibility to pick investments that are in your best interest, so pick an adviser that is only a fiduciary and not a fiduciary and broker. You can wear both hats.
The best thing about this book is it makes me want to invest on automatic and just not worry about it knowing that if I stick to an index ETF I'll be just fine. Don't pull out when markets are down, just buy and hold.
Let the flaming commence!
March 18, 2015
I'm a CPA and a CFP. I'm a fee only advisor and an avid reader of investment books. Most are trash. This one is outstanding. It shares the conclusions you would come to with years of experience and tons of money for research. I highly recommend it. I put it in the top five investment books to read.
April 2, 2021
Quick and compact no-nonsense investment approach.
1- Avoid market timing - invest for the long-run
2- Avoid active trading / managed mutual funds - buy mostly passive indexes (cheaper, less taxes, less cash and outperform actively managed mutual funds)
3- Don't fall for performance claims - skip all the newsletter and media tips, tune out the noise
4- Don't get in your own way - control your behavioral biases
5- Build a portfolio with asset classes that makes sense for your situation (88% of return) avoiding cash and gold that won't keep up with inflation. Always actively work to reduce taxes
- Work with a registered fiduciary investment advisor (governed by SEC) who must work in the best interests of the client (not a financial advisor or broker who has a conflict of interest to work for the best interests of himself or his company). Ensure you maintain custody of your assets with a third party investment brokerage giving the fiduciary limited PoA to place trades and bill the account but not to withdrawal. Monthly statement comes to both of us. Select a competent advisor who works with people in your similar situation. Generally, they bring about 3% added value at a cost of 1% (in periods of big swings, it can be even 10%).
Rule 1- Have a clearly defined plan:
1) Build a net worth statement that lays out all of your assets and liabilities
2) Set a specific and realistic goal - ie I would like to retire at age 60 with a post-tax income of $100,000 per year adjusted for inflation, and I want to assume social security will not be there for me"
3) Run a projection using an online tool. Exclude assets not available to fund retirement (ie funds for car, kids schooling, weddings...). Include social security, pension and other income, potential inheritances
4) Determine if you need to adjust your goal: lower income need, save more or push retirement date out.
5) - Revisit your plan regularly
Rule 2: Avoid asset classes that diminish results - avoid cash and gold
Rule 3:Use Stocks and Bonds as Core Building blocks
- Large cap index
- Bonds deliver positive results 85% of the time. Long-term they underperform stocks. Use them to ensure income needs are met for 3-7 years so that an investor is never at the mercy of the stock market's often random gyrations. Good to own enough bonds to cover about 5 years of retirement.
- Stocks - If an investor has more than 10-20 years before that money is needed, it can make sense for even a 75 year old to have a significant portion of their portfolio in small stocks or emerging market stocks
- Real estate - for higher net-worth investors, adding real estate and/ore energy indexed ETF or index funds can serve as inflation hedges. Avoid holdings that own oil.
- Historical returns (1926-2012) see page 145
80% stocks / 20% bonds = 9,41%
70% stocks / 30% bonds = 9.07%
60% stocks / 40% bonds = 8,68%
100% bonds = 5,54%
100% cash = 3,6%
Rule #4 - take a global approach of 1/3 of stock allocation into international ETF
Rule #5 - Use index based holdings
Rule #6 - Don't blow out of your existing holdings. Likely to not outperform on an after-tax basis. You could lose about 25% or more due to your gains to taxes. If you own an annuity, wait to cash in until the surrender charges are zero or low enough to be offset by the savings in the new portfolio.
Rule #7 - Asset Location matters - focus on after tax results. Calculate your rate of return after taxes (7% return could be a 4% return after taxes. Place the investments that do not create a lot of taxes (like large company stocks) in your taxable retirement plan account.
Rule #8 Be sure you can live with your allocation. Bond market is like a kiddie coaster. Stocks like a big roller coaster. Real estate like Space Mountain at Disney - fast and in the dark.
Rule # 8: Rebalance - keep it aimed at the target. If a rebalance will create taxes or extensive transactions, consider skipping it unless your allocation is totally out of whack. On the other hand, if the market drops, don't wait and take that opportunity.
Rule #10: Revisit the plan - objectives can change
interesting facts:
- Corrections - historic average is 13.5% and most do not evolve into bear markets (bear market is a decline of 20% or more). Bear markets occur every 3-5 years; and last about 1 year.
- Timing - Always better to enter after a market corrects/crashes but also better to invest lump sum with bad timing than sit on cash.
- Estimated earnings - is the only thing the stock market cares about. Everything else is noise. The stock market tends to move up before a recession is over in anticipation. P/E ratio = stock price divided by the company's earnings
- Be careful of negativity bias. Investors feel the pain of losses twice as much as gains. Even for a marriage to last, the ratio is five positive interactions for each negative one.
1- Avoid market timing - invest for the long-run
2- Avoid active trading / managed mutual funds - buy mostly passive indexes (cheaper, less taxes, less cash and outperform actively managed mutual funds)
3- Don't fall for performance claims - skip all the newsletter and media tips, tune out the noise
4- Don't get in your own way - control your behavioral biases
5- Build a portfolio with asset classes that makes sense for your situation (88% of return) avoiding cash and gold that won't keep up with inflation. Always actively work to reduce taxes
- Work with a registered fiduciary investment advisor (governed by SEC) who must work in the best interests of the client (not a financial advisor or broker who has a conflict of interest to work for the best interests of himself or his company). Ensure you maintain custody of your assets with a third party investment brokerage giving the fiduciary limited PoA to place trades and bill the account but not to withdrawal. Monthly statement comes to both of us. Select a competent advisor who works with people in your similar situation. Generally, they bring about 3% added value at a cost of 1% (in periods of big swings, it can be even 10%).
Rule 1- Have a clearly defined plan:
1) Build a net worth statement that lays out all of your assets and liabilities
2) Set a specific and realistic goal - ie I would like to retire at age 60 with a post-tax income of $100,000 per year adjusted for inflation, and I want to assume social security will not be there for me"
3) Run a projection using an online tool. Exclude assets not available to fund retirement (ie funds for car, kids schooling, weddings...). Include social security, pension and other income, potential inheritances
4) Determine if you need to adjust your goal: lower income need, save more or push retirement date out.
5) - Revisit your plan regularly
Rule 2: Avoid asset classes that diminish results - avoid cash and gold
Rule 3:Use Stocks and Bonds as Core Building blocks
- Large cap index
- Bonds deliver positive results 85% of the time. Long-term they underperform stocks. Use them to ensure income needs are met for 3-7 years so that an investor is never at the mercy of the stock market's often random gyrations. Good to own enough bonds to cover about 5 years of retirement.
- Stocks - If an investor has more than 10-20 years before that money is needed, it can make sense for even a 75 year old to have a significant portion of their portfolio in small stocks or emerging market stocks
- Real estate - for higher net-worth investors, adding real estate and/ore energy indexed ETF or index funds can serve as inflation hedges. Avoid holdings that own oil.
- Historical returns (1926-2012) see page 145
80% stocks / 20% bonds = 9,41%
70% stocks / 30% bonds = 9.07%
60% stocks / 40% bonds = 8,68%
100% bonds = 5,54%
100% cash = 3,6%
Rule #4 - take a global approach of 1/3 of stock allocation into international ETF
Rule #5 - Use index based holdings
Rule #6 - Don't blow out of your existing holdings. Likely to not outperform on an after-tax basis. You could lose about 25% or more due to your gains to taxes. If you own an annuity, wait to cash in until the surrender charges are zero or low enough to be offset by the savings in the new portfolio.
Rule #7 - Asset Location matters - focus on after tax results. Calculate your rate of return after taxes (7% return could be a 4% return after taxes. Place the investments that do not create a lot of taxes (like large company stocks) in your taxable retirement plan account.
Rule #8 Be sure you can live with your allocation. Bond market is like a kiddie coaster. Stocks like a big roller coaster. Real estate like Space Mountain at Disney - fast and in the dark.
Rule # 8: Rebalance - keep it aimed at the target. If a rebalance will create taxes or extensive transactions, consider skipping it unless your allocation is totally out of whack. On the other hand, if the market drops, don't wait and take that opportunity.
Rule #10: Revisit the plan - objectives can change
interesting facts:
- Corrections - historic average is 13.5% and most do not evolve into bear markets (bear market is a decline of 20% or more). Bear markets occur every 3-5 years; and last about 1 year.
- Timing - Always better to enter after a market corrects/crashes but also better to invest lump sum with bad timing than sit on cash.
- Estimated earnings - is the only thing the stock market cares about. Everything else is noise. The stock market tends to move up before a recession is over in anticipation. P/E ratio = stock price divided by the company's earnings
- Be careful of negativity bias. Investors feel the pain of losses twice as much as gains. Even for a marriage to last, the ratio is five positive interactions for each negative one.
This entire review has been hidden because of spoilers.
August 15, 2020
كتب بيتر مالوك هذا الكتاب دون أن يذكر أي إدعاء إلا بدراسات تثبت تلك النقاط وقد لخص الأخطاء التي فندها في الكتاب إلى خمس أخطاء يتخللها بعض النقاط وهي :
١-توقيت السوق : وقد ذكر أنه لا يوجد أحد يستطيع توقيت السوق حتى كبار المستثمرين المشاهير والذين يشهد عليهم التاريخ بأنهم لم ينجحوا في ذلك، وأيضا حذر من القنوات الإخبارية المالية والتي تعتمد في دخلها على الإثارة ولا تتحقق تلك الإثارة إلا بوجود عامل توقيت السوق.
٢-التداول النشط.
٣-سوء فهم بيانات الأداء والمعلومات
٤-لا تجعل أفكارك تعرقلك: شرح في هذا الباب العقبات النفسية في الأسواق المالية وكيف تؤثر على قرارات المستثمرين.
٥-الإستعانة بالمستشار المالي غير الملائم :وقد أوجد إختبار مصغر تستخدمه عند إجتماعك مع مستشارك المالي لمعرفة كفائته، وتضارب المصالح، وهل هو صالح لما تربوا له في خطتك الحياتية.
وفي آخر باب شرح الطرق الصحيحة في الإستثمار بشتى المنتجات المالية بشكل عام وكيف بناء المحافظ طبقا لوضعك وخططك المستقبلية و أثرى حديثه عنها بالعديد من الدراسات على الأداء في الفترات السابقة.
١-توقيت السوق : وقد ذكر أنه لا يوجد أحد يستطيع توقيت السوق حتى كبار المستثمرين المشاهير والذين يشهد عليهم التاريخ بأنهم لم ينجحوا في ذلك، وأيضا حذر من القنوات الإخبارية المالية والتي تعتمد في دخلها على الإثارة ولا تتحقق تلك الإثارة إلا بوجود عامل توقيت السوق.
٢-التداول النشط.
٣-سوء فهم بيانات الأداء والمعلومات
٤-لا تجعل أفكارك تعرقلك: شرح في هذا الباب العقبات النفسية في الأسواق المالية وكيف تؤثر على قرارات المستثمرين.
٥-الإستعانة بالمستشار المالي غير الملائم :وقد أوجد إختبار مصغر تستخدمه عند إجتماعك مع مستشارك المالي لمعرفة كفائته، وتضارب المصالح، وهل هو صالح لما تربوا له في خطتك الحياتية.
وفي آخر باب شرح الطرق الصحيحة في الإستثمار بشتى المنتجات المالية بشكل عام وكيف بناء المحافظ طبقا لوضعك وخططك المستقبلية و أثرى حديثه عنها بالعديد من الدراسات على الأداء في الفترات السابقة.
August 5, 2021
كتاب مختصر.. يتحدث عن اهم الاخطاء التي تواجه المستثمرين.. الكتاب يتحدث معظمه عن ما يجب أن لا تفعله في الاستثمار.
الكتاب مدعوم بالبيانات والاحصائيات التي تدعم افكاره.
اهم وأول نقطه في الكتاب نفي المؤلف قدرة المستثمر بضبط توقيت السوق، ويخبرك لماذا انه مجرد محاولتك بهذا الأمر، ستجلب لك الخسارة، أو ستفوت عليك ارباحا
الكتاب مدعوم بالبيانات والاحصائيات التي تدعم افكاره.
اهم وأول نقطه في الكتاب نفي المؤلف قدرة المستثمر بضبط توقيت السوق، ويخبرك لماذا انه مجرد محاولتك بهذا الأمر، ستجلب لك الخسارة، أو ستفوت عليك ارباحا
September 25, 2024
- Avoid market timing: instead, invest for the long run.
- Avoid active trading: buy mostly passive investments.
- Don’t fall for performance claims, get scared by the media, and the like; tune out the noise.
Don’t get in your own way: be aware of your behavioral biases, recognize them when they appear, and control them.
- Build a portfolio with asset classes that makes sense for your situation.
Rule 1- Have a clearly defined plan:
1) Build a net worth statement that lays out all of your assets and liabilities
2) Set a specific and realistic goal - ie I would like to retire at age 60 with a post-tax income of $100,000 per year adjusted for inflation, and I want to assume social security will not be there for me"
3) Run a projection using an online tool. Exclude assets not available to fund retirement (ie funds for car, kids schooling, weddings...). Include social security, pension and other income, potential inheritances
4) Determine if you need to adjust your goal: lower income need, save more or push retirement date out.
5) - Revisit your plan regularly
Rule 2 - Avoid asset classes that diminish results - avoid cash and gold
Rule 3 - Use Stocks and Bonds as Core Building blocks
- Large cap index
- Bonds deliver positive results 85% of the time. Long-term they underperform stocks. Use them to ensure income needs are met for 3-7 years so that an investor is never at the mercy of the stock market's often random gyrations. Good to own enough bonds to cover about 5 years of retirement.
- Stocks - If an investor has more than 10-20 years before that money is needed, it can make sense for even a 75 year old to have a significant portion of their portfolio in small stocks or emerging market stocks
- Real estate - for higher net-worth investors, adding real estate and/or energy indexed ETF or index funds can serve as inflation hedges. Avoid holdings that own oil.
Rule #4 - take a global approach of 1/3 of stock allocation into international ETF
Rule #5 - Use index based holdings
Rule #6 - Don't blow out of your existing holdings.
Likely to not outperform on an after-tax basis. You could lose about 25% or more due to your gains to taxes. If you own an annuity, wait to cash in until the surrender charges are zero or low enough to be offset by the savings in the new portfolio.
Rule #7 - Asset Location matters - focus on after tax results. Calculate your rate of return after taxes (7% return could be a 4% return after taxes. Place the investments that do not create a lot of taxes (like large company stocks) in your taxable retirement plan account.
Rule #8 Be sure you can live with your allocation. Bond market is like a kiddie coaster. Stocks like a big roller coaster. Real estate like Space Mountain at Disney - fast and in the dark.
Rule # 9 - Rebalance - keep it aimed at the target. If a rebalance will create taxes or extensive transactions, consider skipping it unless your allocation is totally out of whack. On the other hand, if the market drops, don't wait and take that opportunity.
Rule #10 - Revisit the plan - objectives can change
“I want to beat the market” Portfolio
- 10% international stocks
- 10% small cap
- 40% large cap
- 40% emerging markets
“I need 7% to hit my long-term goal” Portfolio
- 40% bonds
- 20% large cap
- 15% small cap
-25% international
- Avoid active trading: buy mostly passive investments.
- Don’t fall for performance claims, get scared by the media, and the like; tune out the noise.
Don’t get in your own way: be aware of your behavioral biases, recognize them when they appear, and control them.
- Build a portfolio with asset classes that makes sense for your situation.
Rule 1- Have a clearly defined plan:
1) Build a net worth statement that lays out all of your assets and liabilities
2) Set a specific and realistic goal - ie I would like to retire at age 60 with a post-tax income of $100,000 per year adjusted for inflation, and I want to assume social security will not be there for me"
3) Run a projection using an online tool. Exclude assets not available to fund retirement (ie funds for car, kids schooling, weddings...). Include social security, pension and other income, potential inheritances
4) Determine if you need to adjust your goal: lower income need, save more or push retirement date out.
5) - Revisit your plan regularly
Rule 2 - Avoid asset classes that diminish results - avoid cash and gold
Rule 3 - Use Stocks and Bonds as Core Building blocks
- Large cap index
- Bonds deliver positive results 85% of the time. Long-term they underperform stocks. Use them to ensure income needs are met for 3-7 years so that an investor is never at the mercy of the stock market's often random gyrations. Good to own enough bonds to cover about 5 years of retirement.
- Stocks - If an investor has more than 10-20 years before that money is needed, it can make sense for even a 75 year old to have a significant portion of their portfolio in small stocks or emerging market stocks
- Real estate - for higher net-worth investors, adding real estate and/or energy indexed ETF or index funds can serve as inflation hedges. Avoid holdings that own oil.
Rule #4 - take a global approach of 1/3 of stock allocation into international ETF
Rule #5 - Use index based holdings
Rule #6 - Don't blow out of your existing holdings.
Likely to not outperform on an after-tax basis. You could lose about 25% or more due to your gains to taxes. If you own an annuity, wait to cash in until the surrender charges are zero or low enough to be offset by the savings in the new portfolio.
Rule #7 - Asset Location matters - focus on after tax results. Calculate your rate of return after taxes (7% return could be a 4% return after taxes. Place the investments that do not create a lot of taxes (like large company stocks) in your taxable retirement plan account.
Rule #8 Be sure you can live with your allocation. Bond market is like a kiddie coaster. Stocks like a big roller coaster. Real estate like Space Mountain at Disney - fast and in the dark.
Rule # 9 - Rebalance - keep it aimed at the target. If a rebalance will create taxes or extensive transactions, consider skipping it unless your allocation is totally out of whack. On the other hand, if the market drops, don't wait and take that opportunity.
Rule #10 - Revisit the plan - objectives can change
“I want to beat the market” Portfolio
- 10% international stocks
- 10% small cap
- 40% large cap
- 40% emerging markets
“I need 7% to hit my long-term goal” Portfolio
- 40% bonds
- 20% large cap
- 15% small cap
-25% international
This entire review has been hidden because of spoilers.
November 26, 2025
Don’t time the market ( anybody who claims to tell you otherwise is a charlatan)
Ditto with asset class rotation
Active trading is always a disaster ( activity is almost always regarded higher than achievement)
Survivorship bias is rampant in the investment industry
Better small cap index than private equity
Avoid the media
Beware of Psychology bias
Volatility is a gift if you can control your emotions
Read mental accounting
Ditto with asset class rotation
Active trading is always a disaster ( activity is almost always regarded higher than achievement)
Survivorship bias is rampant in the investment industry
Better small cap index than private equity
Avoid the media
Beware of Psychology bias
Volatility is a gift if you can control your emotions
Read mental accounting
October 10, 2023
This book was highly recommended by a respected friend and advisor. Not misplaced. Common sense approach that disagrees with media and pundits. I especially liked the first chapter on market timing errors.
September 15, 2025
Good insights and seemingly solid advice!
April 17, 2021
مفيد جداً، قد يكون أحد المراجع المهمة في عالم الإستثمار
July 28, 2018
This is by far the most pragmatic book on investing I have read to date. The author is an estate planning attorney who founded what is now the number one registered investment advisory (RIA) firm in the country (Per Barron’s), Creative Planning. The book is a fast read due to Mallouk’s highly entertaining writing style (not to mention its brevity). This will be the book I will likely gift more than any other due to its game-changing, life-enhancing potential. The key lessons: market timing will always sub-optimize performance, active trading will always underperform passive trading (especially after fees and taxes) and only work with an advisor that has a fiduciary obligation to act in the client’s best interest (which means one should only work with an RIA who is not dually registered as a broker). Finally, it’s important to note that Mallouk’s philosophy is in complete synchronicity with that of Warren Buffett.
October 11, 2024
I watched Industry on HBO and turned into a capitalist
February 22, 2023
Outstanding resource for educating on a sensible and strategic financial plan towards an investment portfolio. This book was grounded, precise and enhanced in the derogation of the charlatans and showman who lure and undermine sensible investing solutions. By illuminating these schemes, this book beautifully educated on how to remain unperturbed by this endless noise of financial advice continually tempting towards financial ruin.
This book was thoughtful, and we should be very fortunate Peter Mallouk has summarised an effective process to aid in selecting and pursing an appropriate path to financial stability, in diversified portfolio management.
Firstly, this book is not a get rich quick scheme, this isn’t flashy, this won’t make you a big shot at parties with conversations about recent huge trades and newly invested hedge funds. This book outlines tried and tested approaches, which are implemented and effective through patience. So, this is the sensible and ‘party pooper’ boring investment approach. However, this financial introduction and education is a necessary foundation towards realistic, financial security.
A brilliant component to this book was the education of the numerous methods which don’t work. The common methods loudly broadcasted but only cause derailment of sensible, financial investment strategies.
These sensible strategies predominantly revolve around managed funds, and while they can be complex, this book greatly assists in simplifying and comprehending. Likely, managed fund management will remain a complex category, but through following the processes of acquiring a reputable and registered financial manager. The complexities will be alleviated and absorbed, to ensure a low maintenance path to a diversified investment portfolio.
If fund malmanagement has appeared to be an overwhelming, foreign entity, this book will absolutely educate, simplify, and build confidence in adopting and importantly, maintaining this style of investment class.
As the title infers, this book comprises of common investment mistakes and these mistakes are broken down into easy-to-follow sub themes. Numerous quotes complement each chapter and enhanced by modern case studies and examples. Including, the mass exodus of the financial markets to cash during Covid. This example highlighted the endless perils of investors aka gamblers attempting to time the market. This derailed many, as the market rebounded by a whopping 49%!! Ensuring the market timing hall of fame stayed empty.
Such examples were brilliant and the famous quotes throughout underpin and enhance the messaging excellently. As well as the reminder of the roller coaster ride the portfolio investment will be, but maintaining the goal of staying on the ride, will ensure happy investors on completion. As the author highlights, there is no joy in attempting to get off the roller coaster at the halfway point.
This book is strongly recommended, and builds a worthy financial foundation on a path to a composed, and realistic financial security and freedom. This well written book will suit everyone, such as homeowners looking to diversify their portfolio, or a young at heart with disappointment in recent alternative investment choices.
Predominately, this is catered for everyone and is a worthy instalment on portfolio education with the relatable and easy to follow content. The highlights I made were many, and my plan is to refer to these on my uphill battle of dissuading friends and colleagues on some of their more unguided investment aspirations.
There is no shortcut within these pages, but a long, patient, and worthy investment strategy. This is a non-sexy version that won’t excite too many at the bar, however, when followed and maintained, has a proven history of being effective
Who knows perhaps at the end of the roller coaster you can purchase your own bar, where you can control the narrative.
This book was thoughtful, and we should be very fortunate Peter Mallouk has summarised an effective process to aid in selecting and pursing an appropriate path to financial stability, in diversified portfolio management.
Firstly, this book is not a get rich quick scheme, this isn’t flashy, this won’t make you a big shot at parties with conversations about recent huge trades and newly invested hedge funds. This book outlines tried and tested approaches, which are implemented and effective through patience. So, this is the sensible and ‘party pooper’ boring investment approach. However, this financial introduction and education is a necessary foundation towards realistic, financial security.
A brilliant component to this book was the education of the numerous methods which don’t work. The common methods loudly broadcasted but only cause derailment of sensible, financial investment strategies.
These sensible strategies predominantly revolve around managed funds, and while they can be complex, this book greatly assists in simplifying and comprehending. Likely, managed fund management will remain a complex category, but through following the processes of acquiring a reputable and registered financial manager. The complexities will be alleviated and absorbed, to ensure a low maintenance path to a diversified investment portfolio.
If fund malmanagement has appeared to be an overwhelming, foreign entity, this book will absolutely educate, simplify, and build confidence in adopting and importantly, maintaining this style of investment class.
As the title infers, this book comprises of common investment mistakes and these mistakes are broken down into easy-to-follow sub themes. Numerous quotes complement each chapter and enhanced by modern case studies and examples. Including, the mass exodus of the financial markets to cash during Covid. This example highlighted the endless perils of investors aka gamblers attempting to time the market. This derailed many, as the market rebounded by a whopping 49%!! Ensuring the market timing hall of fame stayed empty.
Such examples were brilliant and the famous quotes throughout underpin and enhance the messaging excellently. As well as the reminder of the roller coaster ride the portfolio investment will be, but maintaining the goal of staying on the ride, will ensure happy investors on completion. As the author highlights, there is no joy in attempting to get off the roller coaster at the halfway point.
This book is strongly recommended, and builds a worthy financial foundation on a path to a composed, and realistic financial security and freedom. This well written book will suit everyone, such as homeowners looking to diversify their portfolio, or a young at heart with disappointment in recent alternative investment choices.
Predominately, this is catered for everyone and is a worthy instalment on portfolio education with the relatable and easy to follow content. The highlights I made were many, and my plan is to refer to these on my uphill battle of dissuading friends and colleagues on some of their more unguided investment aspirations.
There is no shortcut within these pages, but a long, patient, and worthy investment strategy. This is a non-sexy version that won’t excite too many at the bar, however, when followed and maintained, has a proven history of being effective
Who knows perhaps at the end of the roller coaster you can purchase your own bar, where you can control the narrative.
March 5, 2023
This review is for the 2nd edition (2021).
I have a lot of friends who through work have exercised options or have received RSUs which results in a windfall of anywhere between $10,000 and even north of $500,000. This means that they need to think about how they want to mange their money. This is a useful book for avoiding blunders (more in a bit).
The endpoint of this book is that you want to get a Certified Financial Planner (CFP), who works as your fiduciary (i.e., in your interests); so not a broker. [And by the way, there are people out there who are both a fiduciary and a broker, and it can often be hard to tell when they're acting in your interests and when they're selling you something; ideally you want a CFP only.] Furthermore, invest everything in indexed stock funds, except for enough in bonds to provide a cushion for risk ("you should look at owning enough bonds to cover about five years of retirement to avoid the scenario of selling stock holdings during a bear market that may appear at the beginning stage of your [retirement]" (p. 132). Mallouk justifies these points: He doesn't just state them.
But the reading journey in the rest of the book is worth it. I am pretty sure that intelligent people who are the audience for this book already know that indexed funds beat managed funds over the medium and long term, but the book is just brutal in its citation of evidence. The book kills off a number of dumb things people do, like think that they shouldn't invest during a bear market, that they should engage in active trading, that they should keep a lot in cash, etc. There are a number of funny footnotes. I think the core audience for the book is people who are 55 or so, but, really, it's for anyone that actually has cause to think about a chunk of money.
Full disclosure: I have a Certified Financial Planner because my mom did, and that firm was recently acquired by Creative Planning, which is the firm for which the author is the CEO. I think the author has provided enough apparatus so that you can check his claims.
If you just want a summary, read this review; but I think you want the detail. The book is short, too.
One last thing: Why am I not giving the book 5 stars? Here and there, e.g., pp. 141-142, Mallouk gets into personal stories about people he has advised: These are very, very interesting, and I wish there were more. In another place, he has this funny bit where he says (paraphrase) "buy a new car, for god's sake": There are financial reasons for saying this and I wish he would unwind a bit on the direct advice.
I have a lot of friends who through work have exercised options or have received RSUs which results in a windfall of anywhere between $10,000 and even north of $500,000. This means that they need to think about how they want to mange their money. This is a useful book for avoiding blunders (more in a bit).
The endpoint of this book is that you want to get a Certified Financial Planner (CFP), who works as your fiduciary (i.e., in your interests); so not a broker. [And by the way, there are people out there who are both a fiduciary and a broker, and it can often be hard to tell when they're acting in your interests and when they're selling you something; ideally you want a CFP only.] Furthermore, invest everything in indexed stock funds, except for enough in bonds to provide a cushion for risk ("you should look at owning enough bonds to cover about five years of retirement to avoid the scenario of selling stock holdings during a bear market that may appear at the beginning stage of your [retirement]" (p. 132). Mallouk justifies these points: He doesn't just state them.
But the reading journey in the rest of the book is worth it. I am pretty sure that intelligent people who are the audience for this book already know that indexed funds beat managed funds over the medium and long term, but the book is just brutal in its citation of evidence. The book kills off a number of dumb things people do, like think that they shouldn't invest during a bear market, that they should engage in active trading, that they should keep a lot in cash, etc. There are a number of funny footnotes. I think the core audience for the book is people who are 55 or so, but, really, it's for anyone that actually has cause to think about a chunk of money.
Full disclosure: I have a Certified Financial Planner because my mom did, and that firm was recently acquired by Creative Planning, which is the firm for which the author is the CEO. I think the author has provided enough apparatus so that you can check his claims.
If you just want a summary, read this review; but I think you want the detail. The book is short, too.
One last thing: Why am I not giving the book 5 stars? Here and there, e.g., pp. 141-142, Mallouk gets into personal stories about people he has advised: These are very, very interesting, and I wish there were more. In another place, he has this funny bit where he says (paraphrase) "buy a new car, for god's sake": There are financial reasons for saying this and I wish he would unwind a bit on the direct advice.
June 20, 2020
This book was given to me for free by a Certified Financial Planner (tm) which made me suspect that it was going to consist entirely of an admonition to hire a Certified Financial Planner (tm). For this reason, it sat on my shelf collecting dust for over a year before, having found myself on the wrong end of a library hold queue for more interesting fare, I picked it up and read it over the course of a few evenings.
Refreshingly, this book is anything but an admonition to hire a financial advisor. There is of course a chapter devoted to finding the right sort of advisor at the end, but everything else is directed at the investor themselves, with the presumption that you are generally interested in managing your own money.
The advice is good (as far as I, a novice investor can tell), and it's delivered with a healthy dose of solid data plus a good sense of humor. It strays very little from the mainstream investment advice I have read in every other book on the topic, which is generally "put most of your money into index funds, and leave them alone".
In fact, if you have read "The Four Pillars of Investing," you can skip this book entirely, as the authors have almost the same advice. The primary difference is that the author of that tome suggests that your financial adviser is servicing you in the same way that Bonnie and Clyde serviced banks, whereas Mallouk (himself an adviser) of course disagrees. Notably, and to his credit, Mallouk never suggests "increased portfolio returns" as a reason to hire an adviser.
All told, this is a great book to read if you are getting started with investing; it is full of time-tested advice plus a list of some very common pitfalls to avoid. But I'd suggest reading The Four Pillars of Investing instead, or at the very least in addition to, this book.
Refreshingly, this book is anything but an admonition to hire a financial advisor. There is of course a chapter devoted to finding the right sort of advisor at the end, but everything else is directed at the investor themselves, with the presumption that you are generally interested in managing your own money.
The advice is good (as far as I, a novice investor can tell), and it's delivered with a healthy dose of solid data plus a good sense of humor. It strays very little from the mainstream investment advice I have read in every other book on the topic, which is generally "put most of your money into index funds, and leave them alone".
In fact, if you have read "The Four Pillars of Investing," you can skip this book entirely, as the authors have almost the same advice. The primary difference is that the author of that tome suggests that your financial adviser is servicing you in the same way that Bonnie and Clyde serviced banks, whereas Mallouk (himself an adviser) of course disagrees. Notably, and to his credit, Mallouk never suggests "increased portfolio returns" as a reason to hire an adviser.
All told, this is a great book to read if you are getting started with investing; it is full of time-tested advice plus a list of some very common pitfalls to avoid. But I'd suggest reading The Four Pillars of Investing instead, or at the very least in addition to, this book.
February 6, 2025
Personal Rating: 10/10
Genre: Personal Finance/Investments
Review:
This is a book I had to read for my college wealth management class, and I had never heard of it before. Wow, was it a valuable read! This book is written by Peter Mallouk, the president of Creative Planning and an advisor himself. In it, he covers the five mistakes that every investor makes and provides solutions on how to avoid them. The five mistakes are market timing, active trading, misunderstanding performance and financial information, letting yourself get in the way, and working with the wrong advisor. I definitely fell victim to a few of these mistakes as a young investor, and reading this book has truly changed my perspective. It is relatively short, easy to read, and entertaining. I highly recommend it to everyone who is about to start their investing journey!
Lessons Learned:
Nobody can time the market, Passive Investing>Active Investing, so-called finance "experts" on TV aren't very good at their jobs, and bear markets are a great time to invest.
Who Should Read It: Financial Advisors, Experienced Investors, and BEGINNERS Entering the Market
Genre: Personal Finance/Investments
Review:
This is a book I had to read for my college wealth management class, and I had never heard of it before. Wow, was it a valuable read! This book is written by Peter Mallouk, the president of Creative Planning and an advisor himself. In it, he covers the five mistakes that every investor makes and provides solutions on how to avoid them. The five mistakes are market timing, active trading, misunderstanding performance and financial information, letting yourself get in the way, and working with the wrong advisor. I definitely fell victim to a few of these mistakes as a young investor, and reading this book has truly changed my perspective. It is relatively short, easy to read, and entertaining. I highly recommend it to everyone who is about to start their investing journey!
Lessons Learned:
Nobody can time the market, Passive Investing>Active Investing, so-called finance "experts" on TV aren't very good at their jobs, and bear markets are a great time to invest.
Who Should Read It: Financial Advisors, Experienced Investors, and BEGINNERS Entering the Market
March 21, 2017
If you have a discussion with the average person about investing, they will often quite frankly tell you that they don't understand how it works and are intimidated by the process. In their minds, it's best left up to those who have a deep understanding of P/E ratios, cash flow, and a plethora of other accounting and finance terminology. The default course of action for these individuals is to either do nothing or hand all their money over to a financial advisor and hope for the best.
Authors like Peter Mallouk do a huge service for the uninitiated. In plain terms, he hits just about every mistake that a rookie investor tends to make and goes into depth, using a multitude of references along the way, why many in the finance industry do not have your best interests in mind.
Getting investing right is quite a simple concept that does not require much time (hint: invest in index funds and don't try to time the market). It's the follow through and maintaining your course through the good and the bad times that is difficult to do.
Authors like Peter Mallouk do a huge service for the uninitiated. In plain terms, he hits just about every mistake that a rookie investor tends to make and goes into depth, using a multitude of references along the way, why many in the finance industry do not have your best interests in mind.
Getting investing right is quite a simple concept that does not require much time (hint: invest in index funds and don't try to time the market). It's the follow through and maintaining your course through the good and the bad times that is difficult to do.
April 4, 2023
I would recommend this book to anyone who’s getting started with investing or is considering making any changes to their retirement portfolio. Easy read. No financial background required. This book doesn’t teach you how to invest; however, Warren Buffett would say the #1 rule in investing is not losing money, and this is a fairly comprehensive guide at how to avoid the traps most investors fall into, whether managing your own investments or hiring a financial advisor to do so. While a lot of it felt like a review of principles I’d read elsewhere, some of the material was new to me, and the fact I wanted to argue several of the points (about why I think I can beat the market) is likely evidence that I needed to read it. Considered giving it four stars only because I wish it provided more detail on how to manage your own portfolio (the author states that it’s not quite as simple as indexing), but the title is pretty clear: this book is avoid avoiding mistakes. Just about anyone who’s tempted to manage their own investments would benefit from this advice.
January 4, 2020
A brief (166pg) and very informative guide to the stock market. Similar thesis to Malkiel's "Random Walk," but in a streamlined text. I recommend this for total newbies before taking a deeper dive with Malkiel. While this was a very well written book, it loses a star for its persistent, distracting, and cornball* footnotes. If you just followed my asterisk, you got an idea of the type of footnotes the author included. Rarely did they add to the text; often did they detract. Overall though, a very good book, strongly recommended. 4+ stars.
*Mmmm! Now I'm craving grandma's deep fried cornballs!
*Mmmm! Now I'm craving grandma's deep fried cornballs!
November 11, 2020
I'm lucky enough that, having lived long enough with a job, my steady drip of savings has grown large enough that I can think about where to put it. Of course there are thousands of books in a similar vein, and I'm not one to argue the merits of one over the other. I can say about this one that Mallouk has a pleasant voice and I'm sold on his particular philosophy about investing. There's nothing clever about his ideas. In fact, they are essentially dull: index funds, hold for the long haul, no active trading, take out emotion. However dull, these are nevertheless sound principles. (I hope. Reader, you should seek your own counsel in these matters. Not mine.)
April 6, 2024
A Financial Planner recommended this book to me and I have to say, it was EXCELLENT! If you want to invest money in the market or have family who do, this book is a MUST READ. As the title indicates, there are serious mistakes that are easily made by investors, and they are actually easy to avoid. Mostly the message is: "do no harm." Do nothing. Buy a stock and let it ride. Don't try to "play the market" just wait. Mallouk backs up his advice with a lot of details and stories and does so in an engaging and chatty style that I enjoyed, so if you're into investing at all, I recommend this book above all the others I've read so far. It's short and worth the read.
November 5, 2019
This is, bar none, my favorite book on investing, and likely my favorite Business Read That Everyone Should Read (a very close second is Cialdini's INFLUENCE). You should invest, and you should read this book before doing so, and then do what it says. More importantly, heed what he says about "market corrections" and Recessions, that they are inevitable, and something akin to a natural disaster: prepare for it, without panicking about it or fretting over it. Absolute MUST READ, plenty of great used copies available in hardcover; order two and give one to someone you care about.
December 21, 2020
5 гріхів інвестора та що робити в кризу
На початку березня у фейсбук-групі «Українські інвестори» розгорнулася бурхлива дискусія під постом про статистику коронавірусу. Багато учасників групи впевнено радили дочекатися дна ринку й купувати акції.
В інших одразу виникли питання: «Що таке дно?» та «Коли воно настане?»
У п’ятницю 13 березня 2020 року ми запитали в більше як 4 тисяч читачів телеграм-каналу про інвестиції @iplanua, коли ж купувати акції американських компаній, і отримали такі відповіді:
https://dou.ua/lenta/articles/5-inves...
На початку березня у фейсбук-групі «Українські інвестори» розгорнулася бурхлива дискусія під постом про статистику коронавірусу. Багато учасників групи впевнено радили дочекатися дна ринку й купувати акції.
В інших одразу виникли питання: «Що таке дно?» та «Коли воно настане?»
У п’ятницю 13 березня 2020 року ми запитали в більше як 4 тисяч читачів телеграм-каналу про інвестиції @iplanua, коли ж купувати акції американських компаній, і отримали такі відповіді:
https://dou.ua/lenta/articles/5-inves...
October 24, 2017
Every investor who thinks (s)he can time the market or beat the market should read this book. This book disproves a number of popular myths (for example, October is the worst month for investment) based on studies from reputed scholars and historical data. A lot of relevant (and funny) quotes from Warren Buffet, John Bogle, Peter Lynch and others. An easy read with less than a couple of hundred pages with lot of charts and graphs. Highly recommended.
June 19, 2020
I've read my share of personal investment books and I'd out this up there with the top ones. It's a fun (if you're into this sort of thing), easy read filled with good examples, hard data and really practical advice. I bought several more copies for family members and will likely read it again at some point. Well done and worth the small bit of time to consume it relative to the long-term value you're likely to gain.
June 25, 2020
Explains concepts and terminologies in a very simple manner with examples that can be understood by anyone at any level of investing . This book is short, enjoyable and straight to the point no nonsense . I’ve learned quite a lot and was pleased with how the content was organized . It’s a prerequisite to reading other investments books and must read for anyone wanting to start in the investing world
July 11, 2024
Overall this was an excellent, well-rounded book. Great advice for the normal person. Some information, such as allocation to bonds, can be slightly misleading with the recent bond yields being so low. Additionally, he quotes Warren Buffett and Peter Lynch (rightfully so) but most of the book has a bent against individual stock picking. Most people cannot pick stocks well, but the two aforementioned demonstrate that some can.
August 29, 2025
A quick, easy read that will without a doubt make you smarter about investing. One example - I knew that seeking out a fiduciary is important if you're going to work with a financial advisor, but wasn't aware that some fiduciaries also sell commissioned product and that the line can get really blurry. Now I know what to look for AND what to avoid in an advisory. I'm always up for educating myself and this book provided easily usable education.
December 21, 2019
Good reminder that timing market does not work well.
Good reminder of good advice that is hard to follow without revisiting the examples and data once in awhile. I would have been interested in the author's view on different retirement plans like 401k vs SEP vs defined benefit. I also would have been interested in his view on insurance and annuity based investments.
Good reminder of good advice that is hard to follow without revisiting the examples and data once in awhile. I would have been interested in the author's view on different retirement plans like 401k vs SEP vs defined benefit. I also would have been interested in his view on insurance and annuity based investments.
June 21, 2020
Moreover, it wasn't what I expected to get out of this read. However, I completed in two to three sittings and taken brief notes from it. The five to six mistakes, and 10 rules, and learned a minimal amount that helped such as hiring a broker vs. Investment advisor.
Disclaimer: I borrowed an ebook from the library and giving my honest review.
Disclaimer: I borrowed an ebook from the library and giving my honest review.
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