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Personal Finance Book Suggestions?
luc13n asks: "I've seen others making requests for books or reading suggestions. I've been out of college and working professionally in the IT field for two years now. I have some money in the checking account and the savings account and I've started wondering... is there a better way to manage my money? Kinda the old adage 'make your money work fo you'. Does anyone have any good suggested readings to teach a 'young'n' how to 'make his money work for him'?"
Check out the Motley Fool website. They have good advice on saving up based on your goals -- saving for that new car(dont lose principal) vs. saving for retirement (maximise returns). They also have a book and pretty decent advice in general. If you want one piece of advice, dont play the markets by buying individual stocks, just invest in an index fund.
A great first book is A Random Walk Down Wall Street,... . If Wall Street, etc. seems dark & mysterious (and even if it doesnt) this is a great book. It starts by giving you a background in some of the mania that has surronded stock-markets, going all the way back to the Dutch Tulip bubble of several hundred years ago. If you're wondering how pratical something like that could be, just think of the dot-com boom of the late 90's. It proceeds to explain clearly & elegantly various things such as technical & fundamental analysis, the theory of efficent markets, and ultimetly, the value of index funds like the S&P 500.
After having started a few "HOW TO PICK STOCKS" books, this was probably the first solid financial book I found that made sense, was able to round out of my financial knowledge & give pratical advice at the same time.
If Random Walk seems to weighty, Rich Dad, Poor Dad: What the Rich Teach... isn't bad. The author, Robert T. Kiyosaki, has several books in this series, this one being the first. It's written in a non-intimidating way, with much of book conveying ideas easily as converstations between the author & his rich friend's father (aka Rich Dad). He compares his dad's common viewpoint on finacial matters (aka Poor Dad) to Rich Dad's method, and hence the title.
If you're only two years out of school, some of initial steps are just doing good math:
Credit cards are great & really convient, but they have an AMAZINGLY high interest rate. They're 2nd only to the QuickCash/PayDay Advance places for screwing over the average joe. Pay those suckers off!
If you reach that point -- no debt, regular contributions to 401k, an annual 3k contribution to your IRA, you're going to be in pretty good shape. Best of all, you're starting young, and in a down market, so you'll really give compond interest a chance to work it's magic on your hard earned cash.
-Bill
SlashSig Karma: Excellent (mostly affected by moderatio
"The Richest Man in Babylon" - Simple, timeless ways for getting ahead. An easy read, and short to boot.
"The Millionaire Next Door" and "The Millionaire Mind" - The results of a broad survey of millionaires. What they're actually like, how they got there. They may not be who you think.
"Rich Dad, Poor Dad" series - attitudes of the rich, educating yourself financially, and some strategies for doing.
-Uberhund
Websites:
http://www.fool.comt p://www.canadianmoneysaver.ca
http://www.bylo.org
http://stingyinvestor.com
http://www.moneysense.ca
ht
Books:
Random Walk down Wall Street (by Walkel)
The Intelligent Investor (by Graham)
This is the book I point my friends to when they ask this question - Get A Financial Life : Personal Finance In Your Twenties And Thirties by Beth Kobliner. Amazon link. They've all been happy with it. Slim, readable, complete, good advice. I believe Kobliner was a columnist for Money Magazine for many years. She now has her own website.
Other classics, good to move on to once you've read that one: A Random Walk Down Wall Street by Burton G. Malkiel. Good book to understand what happens when your money is in the stock market. Amazon link.And I like Jane Bryant Quinn's Making the Most of Your Money, though I don't think it's as generally well-received as the first two. However, it does a pretty good job of saying something about any financial situation you can think of. Amazon link.
Stocks, money markets, etc are all different ways of doing that same thing: letting someone else use your money.
There is one and only one class of entities that will use your money and reliably give it back to you with interest. And that is a government based on the anglo-saxon tradition.
Look at these fucks telling your that the stock market reliably gives %10 on investment. What bull crap; the studies that say that ignore delisted stocks and anyway if it was so how come some big house doesn't offer a gauranteed 9.5% and spread their investments and losses over the decades and take teh spread ? Because things happen like the the 20 years it took the stock market to get back to 750 from 1929, or what is happening in Japan now. How do you know that the Japanese aren't just a decade ahead of us as usual, and just as they are spending two decades of non-growth absorbing a vast class of non-essential jobs disappearing, we aren't about to spend two decades absorbing the replacement of SBC and WorldCom with a few dozen routers ? SBC has a quarter million employees. All of them are going to hit the bread line in the next five years (except for Ed Whitacre who earns 80 million a year, but that's a separate issue.)
Off the rant and back to real advice: use http://treasurydirect.gov to lend your money to the US Federal Government. This is the only entity that will pay you back, and they will do so if it means bankrupting all your neighbors to do it. You set up a direct withdrawal / deposit system, and it's in increments of $1,000 dollars; the $1,000 disappears from your account for 90 days, then appears back with an extra bit of interest. If you put in a third or so every thirty days, they rotate and preserve a bit of your liquidity. You can check the box to have them automatically keep the money and keep paying interest, or you can just do it as a one-shot. It's a pdf you download, print, fill out and mail in.
The "auction" is set up so that all the big guys like Soros and Gates put in their bids on how much yeild they want, and the Gov. goes as steep as it has to to get all the money it needs for the next 30 days. It then gives everyone that rate, so you aren't screwed by being a small guy, you get the same rate as Soros or Trump.
George Bush is going to cut the governments income by several hundred billion with a tax cut, and then spend another 80 billion on patching up the new colony of Haliburtonia, so you can bet he's going to be borrowing a lot. God knows he won't be cutting spending anywhere, he's an American politician. This means the yeilds on bonds are going up.
As a side note, this also means that the banks will get a better deal in bonds than lending money to some poor shmoe who wants to buy a house. Except mortgages to tighten up and the inflated housing market to crater like a MOAB on an Iraqi bunker.
Stay away from mutual funds (and in fact the stock market as a whole unless you are willing to spend a lot of time researching individual companies, etc.). The market is still way over it's long term base line, and with a glut of baby boomers just waiting for the prices to rise a bit so they call sell (they're hitting retierment soon, if they haven't already), we aren't going to see a bubble like the 90's for another 20+ years--or if we do it will burst a lot worse than this one did at which point having your cash in a jar will turn out to have been the smart move.
I've made a profit in the market every year since I started (including the last three) but it's about the effort level of being a kernel hacker--if you don't do a lot of reading and a lot of thinking you're going to be in a lot of trouble.
--MarkusQ
P.S. The best advise I ever got about the market: ignore press releases. Turn off the sound and watch the money. (e.g. no matter how rosy a picture a company paints, if they are burning money fast enough to be broke in six months, they're in deep do-do. But you won't see this by reading the one line summary of their annual report. You need to read the report, and then research it (where does this number come from?), to figure out what they aren't telling you.)