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The Investor's Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between
A timeless approach to investing wisely over an investment lifetime
With the current market maelstrom as a background, this timely guide describes just how to plan a lifetime of investing, in good times and bad, discussing stocks and bonds as well as the relationship between risk and return.
Filled with in-depth insights and practical advice, "The Investor's Manifesto" will help you understand the nuts and bolts of executing a lifetime investment plan, including: how to survive dealing with the investment industry, the practical meaning of market efficiency, how much to save, how to maintain discipline in the face of panics and manias, and what vehicles to use to achieve financial security and freedom.Written by bestselling author William J. Bernstein, well known for his insights on how individual investors can manage their personal wealth and retirement funds wiselyExamines how the financial landscape has radically altered in the past two years, and what investors should do about itContains practical insights that the everyday investor can understandFocuses on the concept of Pascal's Wager-identifying and avoiding worst-case scenarios, and planning investment decisions on that basis
With "The Investor's Manifesto" as your guide, you'll quickly discover the timeless investment approaches that can put you in a better position to prosper over time.
With the current market maelstrom as a background, this timely guide describes just how to plan a lifetime of investing, in good times and bad, discussing stocks and bonds as well as the relationship between risk and return.
Filled with in-depth insights and practical advice, "The Investor's Manifesto" will help you understand the nuts and bolts of executing a lifetime investment plan, including: how to survive dealing with the investment industry, the practical meaning of market efficiency, how much to save, how to maintain discipline in the face of panics and manias, and what vehicles to use to achieve financial security and freedom.Written by bestselling author William J. Bernstein, well known for his insights on how individual investors can manage their personal wealth and retirement funds wiselyExamines how the financial landscape has radically altered in the past two years, and what investors should do about itContains practical insights that the everyday investor can understandFocuses on the concept of Pascal's Wager-identifying and avoiding worst-case scenarios, and planning investment decisions on that basis
With "The Investor's Manifesto" as your guide, you'll quickly discover the timeless investment approaches that can put you in a better position to prosper over time.
224 pages, Kindle Edition
First published November 9, 2004
251 people are currently reading
3168 people want to read
About the author
William J. Bernstein
24 books465 followersWilliam J. Bernstein is an American financial theorist and neurologist. His research is in the field of modern portfolio theory and he has published books for individual investors who wish to manage their own equity portfolios. He lives in Portland, Oregon.
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Displaying 1 - 30 of 137 reviews
December 2, 2014
TL;DR:
-Investing should not be 'fun' or 'enjoyable'. Spend your money on skydiving if that is what you want.
-The goal of investing is to maximise the chances of a comfortable retirement and minimise the chances of you starving penniless on the streets when old. It is NOT to strike it multi-millionaire rich.
-Nothing is more likely to make you poor than your emotions.
Legislation that favours borrowers over creditors makes the latter less liable to lend, ultimately causing more harm than good to the borrower. This is the trade-off of bankruptcy law.
During times of great social, political and military turbulence, the prices of both stocks and bonds usually decline precipitously. Most often, this sets the stage for high future returns. Less frequently, the losses can be permanent and total.
Investment wisdom begins with the realisation that long-term returns are the only returns that matter.
The single most reliable indicator of fraud is the promise of high returns with low risk.
Investors cannot earn high returns without occasionally bearing great loss. If the investor desires safety, then they are doomed to receive low returns.
Do not trust historical data, especially recent data, to estimate the returns of stocks and bonds. Instead, rely on interest and dividend payouts and their growth/failure rates. The Gordon equation is simply adding the dividend rate to the growth rate.
Home ownership is not an investment. It is the exact opposite, a consumption item. After taking into consideration maintenance costs and taxes, you are often better off renting. If the own-to-rent ratio exceeds 20, it is a warning that housing prices are becoming excessive.
One of the dumbest things any investor can do is to own stock in the company they work for, since you can lose both a job and a portfolio simultaneously.
"What happens to my portfolio - and future - if I am wrong?
Trading individual stocks is like playing tennis against an invisible opponent, what you don't realise is that you are volleying with the Williams sisters.
In the long run, the advantages of the indexed and passive approaches over traditional active stock-picking are nearly insurmountable.
Performance comes and goes, but for active mutual fund managers and their clients, expenses are forever.
If you cannot save, don't waste your time on this book. The definition of investment is deferring current consumption for future consumption. If you cannot defer current consumption, you WILL die poor, even if you possess Warren-Buffett-like investment acumen.
For money needed in less than five years, the play book is thin.
Keep such funds in the safest, short duration vehicles as possible, such as high grade short term bonds and CDs. If you decide to buy bonds or a bond fund, make sure the average maturity is less than the time horizon of the savings.
The elderly recognised the pessimism and low equity prices from their depression-era youth and understood fully what they meant - high returns ahead.
Long and deep market declines are wasted on the young. They should be invested heavily in equities, but are too frightened by their first encounter with the bear to buy.
The essence of portfolio construction: selecting assets that occasionally move in different directions lowers risk, and if the investor is lucky, even raises returns because of the rebalancing process.
Tiger got to hunt, Bird got to fly. Man have to ask 'Why, why, why?' Tiger got to sleep, Bird got to land, Man have to say he understand.
The trouble is, in the world of finance things get complicated quickly.
IPOs are the investment equivalent of the lottery ticket, with high entertainment values and low investment returns.
The most obscure companies in the most unglamorous businesses often have the highest returns.
The 'celebrity physician' equivalent of the investment world is the hedge fund.
If its excitement you seek, take up bungee jumping. If you want to be entertained go to New York for a month's worth of Broadway shows.
Never forget that the market is a mechanism designed to humiliate the maximum number of its participants.
Never forget John Templeton's warning that the four most expensive words in the English language are "This time it's different."
The most important investment ability of all is emotional discipline.
Unlike your doctor, lawyer or accountant, your broker is not a fiduciary. That is, he is under no legal obligation to place your interests above his own.
The most important financial bequest to your heirs will not be cold hard cash, but rather the ability to save, spend and invest prudently.
Inform your children that when their friends' parents seem to have more money than you do, that all you can be sure of is that they have SPENT more money than you have.
Beware that financial stability of the insurers themselves is not a sure thing.
-Investing should not be 'fun' or 'enjoyable'. Spend your money on skydiving if that is what you want.
-The goal of investing is to maximise the chances of a comfortable retirement and minimise the chances of you starving penniless on the streets when old. It is NOT to strike it multi-millionaire rich.
-Nothing is more likely to make you poor than your emotions.
Legislation that favours borrowers over creditors makes the latter less liable to lend, ultimately causing more harm than good to the borrower. This is the trade-off of bankruptcy law.
During times of great social, political and military turbulence, the prices of both stocks and bonds usually decline precipitously. Most often, this sets the stage for high future returns. Less frequently, the losses can be permanent and total.
Investment wisdom begins with the realisation that long-term returns are the only returns that matter.
The single most reliable indicator of fraud is the promise of high returns with low risk.
Investors cannot earn high returns without occasionally bearing great loss. If the investor desires safety, then they are doomed to receive low returns.
Do not trust historical data, especially recent data, to estimate the returns of stocks and bonds. Instead, rely on interest and dividend payouts and their growth/failure rates. The Gordon equation is simply adding the dividend rate to the growth rate.
Home ownership is not an investment. It is the exact opposite, a consumption item. After taking into consideration maintenance costs and taxes, you are often better off renting. If the own-to-rent ratio exceeds 20, it is a warning that housing prices are becoming excessive.
One of the dumbest things any investor can do is to own stock in the company they work for, since you can lose both a job and a portfolio simultaneously.
"What happens to my portfolio - and future - if I am wrong?
Trading individual stocks is like playing tennis against an invisible opponent, what you don't realise is that you are volleying with the Williams sisters.
In the long run, the advantages of the indexed and passive approaches over traditional active stock-picking are nearly insurmountable.
Performance comes and goes, but for active mutual fund managers and their clients, expenses are forever.
If you cannot save, don't waste your time on this book. The definition of investment is deferring current consumption for future consumption. If you cannot defer current consumption, you WILL die poor, even if you possess Warren-Buffett-like investment acumen.
For money needed in less than five years, the play book is thin.
Keep such funds in the safest, short duration vehicles as possible, such as high grade short term bonds and CDs. If you decide to buy bonds or a bond fund, make sure the average maturity is less than the time horizon of the savings.
The elderly recognised the pessimism and low equity prices from their depression-era youth and understood fully what they meant - high returns ahead.
Long and deep market declines are wasted on the young. They should be invested heavily in equities, but are too frightened by their first encounter with the bear to buy.
The essence of portfolio construction: selecting assets that occasionally move in different directions lowers risk, and if the investor is lucky, even raises returns because of the rebalancing process.
Tiger got to hunt, Bird got to fly. Man have to ask 'Why, why, why?' Tiger got to sleep, Bird got to land, Man have to say he understand.
The trouble is, in the world of finance things get complicated quickly.
IPOs are the investment equivalent of the lottery ticket, with high entertainment values and low investment returns.
The most obscure companies in the most unglamorous businesses often have the highest returns.
The 'celebrity physician' equivalent of the investment world is the hedge fund.
If its excitement you seek, take up bungee jumping. If you want to be entertained go to New York for a month's worth of Broadway shows.
Never forget that the market is a mechanism designed to humiliate the maximum number of its participants.
Never forget John Templeton's warning that the four most expensive words in the English language are "This time it's different."
The most important investment ability of all is emotional discipline.
Unlike your doctor, lawyer or accountant, your broker is not a fiduciary. That is, he is under no legal obligation to place your interests above his own.
The most important financial bequest to your heirs will not be cold hard cash, but rather the ability to save, spend and invest prudently.
Inform your children that when their friends' parents seem to have more money than you do, that all you can be sure of is that they have SPENT more money than you have.
Beware that financial stability of the insurers themselves is not a sure thing.
November 8, 2009
A new book by Dr. William J. Bernstein, MD, Ph.D. is an exciting event to us true believers in passive investing. This is this third book covering the same territory, and he hopes this time you will get it through your thick skull. In this third try he has written the most concise and readable overview of modern portfolio theory that I have read. (It took about five hours to read with no skimming or skipping.)
Helping to make the book more concise and useful is the Great Recession of 2008. Dr. Bernstein states several times that he doesn't need to have to go to great lengths to discuss risk aversion or imagining a drop in the stock market. He rightly assumes that the average investor is still shaken by it.
Dr. Bernstein's take on the 2008 recession and how it applies to modern portfolio theory/passive investing is worth the price of the book alone. Using the trusty Gordon equation he estimates future real returns on bonds and stocks (2% and 6-8%, respectively).
Some differences from his previous two books on this topic (The Intelligent Asset Allocator and The Four Pillars of Investing):
- He is now advocating a 2% withdrawal rate to be safe in retirement. This means to retire on a paltry $50k/year you need a whopping $2.5M in your retirement account.
- For more than a 4% withdrawal rate he actually recommends buying an annuity, but first waiting to see which insurance companies actually survive over the next few years.
- This book opens more pessimistically, saying that less than 1% of the population probably has all four skills necessary to manage their own finances successfully. (By the way, they are 1. knowledge of investing, 2. knowledge of financial history, 3. mathematical skills, 4. emotional control.)
- Railing against defined contribution plans and some misplaced nostalgia for defined benefit plans (especially for a financial historian like him).
- Much less math, though he still can't resist a few mathematical sidebars here and there.
This book is now *the one* book I would recommend to someone interested in learning about investing. Previously it was The Four Pillars of Investing. If they are more mathematically inclined I would recommend The Intelligent Asset Allocator and then this book.
Helping to make the book more concise and useful is the Great Recession of 2008. Dr. Bernstein states several times that he doesn't need to have to go to great lengths to discuss risk aversion or imagining a drop in the stock market. He rightly assumes that the average investor is still shaken by it.
Dr. Bernstein's take on the 2008 recession and how it applies to modern portfolio theory/passive investing is worth the price of the book alone. Using the trusty Gordon equation he estimates future real returns on bonds and stocks (2% and 6-8%, respectively).
Some differences from his previous two books on this topic (The Intelligent Asset Allocator and The Four Pillars of Investing):
- He is now advocating a 2% withdrawal rate to be safe in retirement. This means to retire on a paltry $50k/year you need a whopping $2.5M in your retirement account.
- For more than a 4% withdrawal rate he actually recommends buying an annuity, but first waiting to see which insurance companies actually survive over the next few years.
- This book opens more pessimistically, saying that less than 1% of the population probably has all four skills necessary to manage their own finances successfully. (By the way, they are 1. knowledge of investing, 2. knowledge of financial history, 3. mathematical skills, 4. emotional control.)
- Railing against defined contribution plans and some misplaced nostalgia for defined benefit plans (especially for a financial historian like him).
- Much less math, though he still can't resist a few mathematical sidebars here and there.
This book is now *the one* book I would recommend to someone interested in learning about investing. Previously it was The Four Pillars of Investing. If they are more mathematically inclined I would recommend The Intelligent Asset Allocator and then this book.
February 20, 2010
Bernstein slaps you right in the face and tells you why you are your own worst enemy in making financial investment decisions. Then, while your cheek still stings, he punches you in the gut and explains why you can't win at this game even if you were to get control over your emotional decisions.
In the end, he helps you back up on your feet, dusts you off and describes a very attainable future blending thrift, risk tolerance and glamor reduction. Very contrarian view to what you'll read in typical investment books and magazines.
In the end, he helps you back up on your feet, dusts you off and describes a very attainable future blending thrift, risk tolerance and glamor reduction. Very contrarian view to what you'll read in typical investment books and magazines.
November 27, 2019
In the sewage of bad personal finance book this author managed to write a fantastic piece. A great mix of micro and macro Econ topics. I truly enjoyed this and intend to read it again and again.
December 28, 2009
A good description of basic investment strategy, written in a familiar, mildly humorous style. Bernstein's approach draws heavily on an investment version of Pascal's wager: Financial ruin in retirement if markets turn south is worse than living modestly (now and in retirement) even if markets are booming. Bernstein advocates for simple, unglamorous investing:
"The name of the game is not to get rich, but rather to avoid dying poor. In fact, if you follow the advice in this book, I can guarantee you that you will not get fabulously wealthy. Rather, I've striven to simultaneously maximize your chances of a comfortable retirement and minimize your chances of living out your final years in poverty. I know of no more laudable or more worthy investment goal." (183)
As a starting point, Bernstein cites the "age rule" for asset allocation: The percentage of bonds in your portfolio should be roughly the same as your age. This percentage should be increased or decreased up to 20 percentage points depending on your risk tolerance. Then, Bernstein recommends between 60-80% domestic stocks and 20-40% foreign stocks, and suggests that money should be placed in low-expense index or passively managed mutual funds. "Does this portfolio seem overly simplistic, even amateurish?" Bernstein asks---"Get over it. Over the next few decades, the overwhelming majority of all professional investors will not be able to beat it" (89). Investors interested in a more complex allocation could divide the stocks into small and large, value and market companies; but, Bernstein indicates that growth companies should be avoided, as they have a small dividend stream relative to stock price, and the dividend growth rate is a better predictor of future performance than growth of stock price.
Chapter 1, "A Brief History of Financial Time," gives an overview of the history of financial markets and lays down a number of important principles of how markets work that undergird Bernstein's investment philosophy. Chapter 2, "The Nature of the Beast," describes the core of the philosophy. Chapter 3, "The Nature of the Portfolio," applies Bernstein's philosophy to creation of a portfolio. Chapter 4, "The Enemy in the Mirror," presents a number of neuro-psychological effects and common mistakes that investors make that derail them from their investing goals. Chapter 5, "Muggers and Worse," warns against brokerage houses and the like. Chapter 6, "Building Your Portfolio," introduces dollar cost averaging and value averaging, and provides four example scenarios of prototypical investors. Finally, chapter 7, "The Nature of the Game," provides a summary of the principal lessons from the book, suitable for sticking to the refrigerator for frequent review.
The book is approachable for beginning investors, though some experience with investment vocabulary is helpful. Important points are placed in call-out boxes, and mathematical details are relegated to sidebars that can be skipped or skimmed without losing the overall message. Each chapter has a bullet-point summary of the most important topics for review.
August 17, 2014
fairly funny style, very focused content coverage -- why you should stick to basic investing strategies for retirement planning such as....
defer taking social security till 70
annuitize a portion of your nest egg to provide longevity insurance [as long as you trust the insurance company selling it to you to still be around in 20+ years)
try to withdraw only 2-3%/year. Once you hit 5% or more, he indicates that you better like cat food!
save "as much as you can" your whole life
a good bit on asset allocation, rebalancing, dollar cost averaging etc.
buy index funds and don't pay some shyster to pretend s/he can generate consistent alpha by stock-picking for you [especially contemptuous of brokers, pretty tough on mutual funds other than Vanguard due to conflict of interest between customers OF the fund and shareholders in the fund, though there was a relatively nice comment about the fund company to which my brother devoted his career]
buy and hold, don't panic-sell when the turbulence hits.
------------
Most of this is seemingly sensible advice and consistent with what others I read say. Everybody writes it as though it's contrarian, though, so there must be someone somewhere advocating that you get started late, save only as much as you feel you can easily afford, teach your kids YOLO so spend it all now, troll the internet for stock tips, etc. etc.
My only quibble with the blanket advice to get index funds is that it ignores social screening. I might be able to make money owning stock in cigarette companies, for instance, but I'd prefer not to.
with that exception, i thought this was a very good basic guide to a conservative, sound approach.
defer taking social security till 70
annuitize a portion of your nest egg to provide longevity insurance [as long as you trust the insurance company selling it to you to still be around in 20+ years)
try to withdraw only 2-3%/year. Once you hit 5% or more, he indicates that you better like cat food!
save "as much as you can" your whole life
a good bit on asset allocation, rebalancing, dollar cost averaging etc.
buy index funds and don't pay some shyster to pretend s/he can generate consistent alpha by stock-picking for you [especially contemptuous of brokers, pretty tough on mutual funds other than Vanguard due to conflict of interest between customers OF the fund and shareholders in the fund, though there was a relatively nice comment about the fund company to which my brother devoted his career]
buy and hold, don't panic-sell when the turbulence hits.
------------
Most of this is seemingly sensible advice and consistent with what others I read say. Everybody writes it as though it's contrarian, though, so there must be someone somewhere advocating that you get started late, save only as much as you feel you can easily afford, teach your kids YOLO so spend it all now, troll the internet for stock tips, etc. etc.
My only quibble with the blanket advice to get index funds is that it ignores social screening. I might be able to make money owning stock in cigarette companies, for instance, but I'd prefer not to.
with that exception, i thought this was a very good basic guide to a conservative, sound approach.
October 25, 2020
«Манифест инвестора» — интересная книга, которая будет полезна как совсем начинающим частным инвесторам, так и чуть более опытным. Хотя опытным инвесторам многие моменты могут показаться очевидными и достаточно банальными.
Примечателен анализ и рекомендации, которыми автор делится в контексте событий, связанных с крупнейшими мировыми экономическими кризисами.
Согласен с комментариями, что не все практические советы по выбору инвестиционных инструментов применимы в РФ, из-за их недоступности либо необходимости получать статус квалифицированного инвестора, но общие концепции по формированию портфеля действительно полезны.
После этой книги можно переходить к книгам:
★ "Разумный инвестор" Бенджамина Грэма,
★"Случайная прогулка по Уолл-стрит" Бертона Мэлкила, о которую, кстати, Уильям Бернстайн хорошо отзывается.
Тем же читателям, которым хочется больше погрузиться в тему фондового рынка и инвестиции непосредственно в России я бы рекомендовал книги:
★ Сергея Гуриева "Мифы Экономики. Заблуждения, которые распространяют СМИ и политики";
★ Андрея Мовчана "Россия в эпоху постправды";
★ Елены Котовой "Откуда берутся деньги, Карл? Природа богатства и причины бедности";
Примечателен анализ и рекомендации, которыми автор делится в контексте событий, связанных с крупнейшими мировыми экономическими кризисами.
Согласен с комментариями, что не все практические советы по выбору инвестиционных инструментов применимы в РФ, из-за их недоступности либо необходимости получать статус квалифицированного инвестора, но общие концепции по формированию портфеля действительно полезны.
После этой книги можно переходить к книгам:
★ "Разумный инвестор" Бенджамина Грэма,
★"Случайная прогулка по Уолл-стрит" Бертона Мэлкила, о которую, кстати, Уильям Бернстайн хорошо отзывается.
Тем же читателям, которым хочется больше погрузиться в тему фондового рынка и инвестиции непосредственно в России я бы рекомендовал книги:
★ Сергея Гуриева "Мифы Экономики. Заблуждения, которые распространяют СМИ и политики";
★ Андрея Мовчана "Россия в эпоху постправды";
★ Елены Котовой "Откуда берутся деньги, Карл? Природа богатства и причины бедности";
October 7, 2014
Everyone should read this. Do you have a "financial advisor"? Do you know how much money your financial advisor is getting for his/her services? Do you know that s/he has no fiduciary obligation to look out for your best interests, and that his/her motivation to make money by selling you products is most likely his/her most compelling motivation when s/he gives you advice? Do you know what kind of training s/he had in order to claim the title and supposed expertise that caused you to rely on him/her? Did you know that research demonstrates that you can invest your own money without a lot of hassle, and get better results than you would if you had a "financial advisor" doing it for you?
Read this book.
Read this book.
December 19, 2023
Amazone
The Intelligent Asset Allocator... for Dummies
4/10
I loved Bernstein's first book on asset allocation. It so thoroughly covered the subject matter, that all other books on asset allocation seem like pale substitutes. Additionally, the book went into the underlying math, which really helped me grasp some of the more abstract concepts.
In contrast, The Investor's Manifesto has more in common with the aforementioned pale substitutes than it has with Bernstein's first book. It rehashes the same material, but dumbed down.
Anyone who needs an investment book this dumbed down really should stay away from investing, which is ironically the gist of Bernstein's thesis.
Other than an expanded history section, this book has little to offer the reader.
So, do yourself a favor. Read The Intelligent Asset Allocator or save yourself a fortune and avoid investment like the plague.
Kphrogg
January 15, 2024
- Risk and return are intimately related. Returns without risk are indicators of fraud.
- Review long-term history to understand expected returns. The expected returns over a 20 year period are 4-8% for stocks.
- The main question an investor must face is the percentage of Bonds to Stocks, a good guide is 100 minus your age as a percentage of Stocks, with the rest in Bonds. As you learn about your true risk tolerance by being in the market, you can add + or - 5 based on your ability to sleep at night. Do not pay too much attention to its best or worst performing asset.
- You are your own worst enemy and the sin is overconfidence. Most people overestimate their ability.
- Am to spend no more than 3% of your retirement savings when you retire with 2% being ideal.
- Review long-term history to understand expected returns. The expected returns over a 20 year period are 4-8% for stocks.
- The main question an investor must face is the percentage of Bonds to Stocks, a good guide is 100 minus your age as a percentage of Stocks, with the rest in Bonds. As you learn about your true risk tolerance by being in the market, you can add + or - 5 based on your ability to sleep at night. Do not pay too much attention to its best or worst performing asset.
- You are your own worst enemy and the sin is overconfidence. Most people overestimate their ability.
- Am to spend no more than 3% of your retirement savings when you retire with 2% being ideal.
August 7, 2024
I’m a white straight male so I read investment books and tell everyone
Beautiful Ulysses palette cleanser
Beautiful Ulysses palette cleanser
July 28, 2011
Very good book. My only complaint is how American it is. Otherwise, here are the many things I want to remember about this book:
Is this house/condo listed at fair market value? Ask the realtor how much it would reasonably rent for, multiply that number by 150 (# of months in 12.5 years) for the home's fair market value compared to the listing price.
Best risk analysis tool for those of us under 70: at 2% withdrawl rate, your nest egg will survive all but catastrophic institutional and military collapse; at 3%, you are probably safe; at 4%, you are taking reall chances; and at 5% and beyond, you should consider annuitizing most, if not all, of your nest egg.[my note: aim for 2.5% = 40 years of $]
Stocks/Bonds 60/40 split - hard to improve on this balanced portfolio: 42% Cdn stock market (index funds), 18% international, 40% bonds
The most expensive words in the English language: "This time is different".
You are engaged in a life-and-death struggle with the financial services industry. Every dollar in fees, expenses, and spreads you pay them comes directly out of your pocket. If you act on the assumption that every broker, insurance salesman, mutual fund salesperson, and financial advisor you encounter is a hardened criminal, you will do just fine.
Invest, if you can, only with nonprofit mutual fund companies. If you must work with profit-making entities, they should be privately owned. If forced to work with a financial services company that belongs to a publically traded parent, buy only those products that come with the lowest expenses and turnover, which usually means ETFs.
The Gordon Equation is important - but I can't quite grasp it: for stocks, you add the dividend yield of the market to its expected per-share growth rate; for bonds, subtract the default rate from the interest rate.
Is this house/condo listed at fair market value? Ask the realtor how much it would reasonably rent for, multiply that number by 150 (# of months in 12.5 years) for the home's fair market value compared to the listing price.
Best risk analysis tool for those of us under 70: at 2% withdrawl rate, your nest egg will survive all but catastrophic institutional and military collapse; at 3%, you are probably safe; at 4%, you are taking reall chances; and at 5% and beyond, you should consider annuitizing most, if not all, of your nest egg.[my note: aim for 2.5% = 40 years of $]
Stocks/Bonds 60/40 split - hard to improve on this balanced portfolio: 42% Cdn stock market (index funds), 18% international, 40% bonds
The most expensive words in the English language: "This time is different".
You are engaged in a life-and-death struggle with the financial services industry. Every dollar in fees, expenses, and spreads you pay them comes directly out of your pocket. If you act on the assumption that every broker, insurance salesman, mutual fund salesperson, and financial advisor you encounter is a hardened criminal, you will do just fine.
Invest, if you can, only with nonprofit mutual fund companies. If you must work with profit-making entities, they should be privately owned. If forced to work with a financial services company that belongs to a publically traded parent, buy only those products that come with the lowest expenses and turnover, which usually means ETFs.
The Gordon Equation is important - but I can't quite grasp it: for stocks, you add the dividend yield of the market to its expected per-share growth rate; for bonds, subtract the default rate from the interest rate.
March 1, 2014
I think that The Investor's Manifesto, by William J. Bernstein, is intellectually challenging, while still making sense and captivating the reader. In this book, Bernstein not only outlines the fundamental principles of finance, but also gives a brief financial history so trends in the market are better understood. I believe that William Bernstein wrote this book as not only a prerequisite to more advanced finance books, he also offers a chance for young readers, such as myself, a book that contains simpler text. Throughout the short, 187 page book that is The Investor's Manifesto, there are many terms and theories that I either learned for the first time or was able to truly grasp to a full extent. A select few of these include risk premium and its effects on the return rate of your stocks and bonds, dividend yield, and the formula for calculating an expected return rate. Overall, I would recommend this book to anyone (high school or above) who is interested in the basics of finance.
February 7, 2013
This book is intended primarily for relative novices to investing and serves well in that regard. It may also be useful to more experienced investors (without economics degrees) that want a refresher of with Bernstein's earlier works, as well as the works he cites (Fama, French, Bogle, Zweig, etc.) I would recommend this book to anyone getting started in investing, whether overconfident or overwhelmed, to help avoid the most common pitfalls and fallacies, and to keep their eyes on the prize. The biggest message I took from the book is the one that I haven't seen elsewhere: the goal of retirement investing is not to be rich, but to avoid being poor when you are old.
The only immediate issue I have is with the title: the book says nothing about preparing for a true armageddon. (Several years supply of water, food, ammunition, and a bunker in a relatively rural area would be a start.)
The only immediate issue I have is with the title: the book says nothing about preparing for a true armageddon. (Several years supply of water, food, ammunition, and a bunker in a relatively rural area would be a start.)
January 16, 2015
Among the top tier books in how to invest from the early earning days through retirement. Based on solid economic theory of the Efficient Market Hypothesis, asset allocation using low cost index funds is a proven way to accumulate savings when compared to all other methods. Regardless of your financial perspective (that is to say you believe you are the next Warren Buffet), this is an important personal finance book to read and understand. It's very easy reading, approachable and well thought out. As with all books on detailed financial planning, things change over time (such as state tax laws, IRA regulations, new discoveries in financial planning) so it's important to ensure you are reading relatively recent books on this topic.
This is a re-read of the book for me.
This is a re-read of the book for me.
December 21, 2017
So, so, SO well-structured. It really builds your knowledge of investing from the ground up, beginning with the history of finance (i.e., the roots of credit and development of markets) and ending with asset allocation suggestions for archetypal investors. The language and concepts were accessible, and the more complicated math was visually isolated and thereby easy to tune out. Though his pragmatism could seem gloomy ("if you follow the advice in this book, I can guarantee that you will not get fabulously wealthy"), I ended up feeling more confident in the future than anything else. The end-of-chapter summaries were super helpful for retention; definitely going to re-read them and take notes.
July 9, 2015
A mix of repetitive investment ra-ra and dense mathematical descriptions. The latter are rushed, the author is worried about losing his readers - but it's precisely there that he has to take more time.
The neuro investing section was unreadable.
Here are some questions that I wish were answered:
1) more discussion of tax law, for example: can I buy California and not pay tax? State tax? What about federal - and do I have to be a resident?
2) If everyone does indexing won't that lead to a blind market and an inflated market?
3) If peripheral investors know what a fund is going to buy (ie when a new company joins the S+P) why can't they crush by buying before the fund?
The neuro investing section was unreadable.
Here are some questions that I wish were answered:
1) more discussion of tax law, for example: can I buy California and not pay tax? State tax? What about federal - and do I have to be a resident?
2) If everyone does indexing won't that lead to a blind market and an inflated market?
3) If peripheral investors know what a fund is going to buy (ie when a new company joins the S+P) why can't they crush by buying before the fund?
Read
January 30, 2010This is probably one of the best quotes I've ever read:
Always remember the textbook definition of investment: the deferral of current consumption for future consumption. If you cannot defer current consumption, you will die poor, even if you are possessed of Warren-Buffett-like investment acumen.
Always remember the textbook definition of investment: the deferral of current consumption for future consumption. If you cannot defer current consumption, you will die poor, even if you are possessed of Warren-Buffett-like investment acumen.
July 2, 2015
Without knowing anything about investing, this was a pretty decent introduction. It was definitely very dry at times. In a few places, he recited numbers from a table for 5+ minutes. I'd prefer to be directed to a web site before I hear numbers listed for 5+ minutes straight. Otherwise, seemed very logical and good overall message.
August 24, 2015
This was a pretty solid read on investing for the person interested in not dying poor. The author wrote the book soon after the 2008-2009 financial meltdown which I think helps add some usefulness to the topics included. This might not be a great book for someone who is new to these topics but it could be in an 201 investing level class.
March 31, 2016
I actually didn't really like this, but that's my problem, not the book's. I didn't read this for pleasure so it was suuuper hard to pay attention to at times, but it was well written, had humor, and above all, I know a lot more about investing than I did when I started it. It gives great tips for all age groups and honest suggestions on how to invest wisely.
April 10, 2016
If this is the first investing book you have ever read, you may find this incredibility insightful and a game changer. If you have been around the block a few times, much of this book will rehash topics others have written about at length. Overall this is well written, organized, and worth the read to validate commonly pronounced best practices of investing.
March 21, 2011
Well, after reading this one, I didn't feel the need to read more than a few articles further before settling on my long-term investment strategy, so I guess that's a good measure of how it impressed me. Doesn't cover a ton of topics, but it covered the ones I was interested in.
March 4, 2014
While a lot of this book probably went over my head, it does give a lot of good information and advice for investing wisely. I appreciate the author trying to balance making money but also not taking unneeded risks. I could probably have used something a little more basic, but still a good book.
January 23, 2015
Excellent book for investment virgins. It confirms what you suspected about financial advisers, brokers and the like, i.e., that they're all crooks, but also offers an alternative plan of action so you don't have to turn to the: basically, invest in low-cost index funds and for the long-term.
April 8, 2015
A great starting point for anyone who is serious about their retirement-age financial well-being. The summaries were the stand-outs to me; I'm not a finance or numbers person so a lot of the content went over my head or bored me.
June 16, 2015
The book presented solid investing concepts, but it was a little too technical at times for a new investor, and a little too elementary for someone who is more familiar with the concepts. The examples were helpful, though.
June 15, 2014
Great summary of important concepts.
July 22, 2014
Didn't get as much out of it as I'd hoped. Probably 1 chapter of new ideas for me - otherwise too much history/theory and not enough practical advice.
August 30, 2015
If you are a fan of the slow and steady approach you will like this book. Contains psychology of investing, risks and much common sense.
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