I couldn't wait to get my hands on a copy of this groundbreaking, new, investment book from two of most respected marketwatchers around today! Princeton economics professor, Burton G. Malkiel, and influential non-profit chairman, Charles D. Ellis, have put their brains together to come up with one of the most surefire investment strategies out there. The Elements of Investing is intelligently written in a pared-down-to-the-absolute-basics sort of way. It's one of the rare books written in this vein that actually takes the reader's ambitions seriously. It's a pleasure to read, because it is peppered with real life examples of people exhibiting good and bad investment behavior and the twists and turns their lives take as a result.
Right off the bat, Malkiel and Ellis admonish readers to start saving as early as possible and continue saving regularly throughout their lives. Granted, in a runaway consumerist culture like ours, characterized by its easy credit and debt-addicted millions, this task is so often easier said than done. But a prudent, evenhanded approach to spending and saving is possible--and Malkiel and Ellis show you how with smart suggestions that range from the banal, to the downright devious. The real plus to becoming a habitual saver, the authors explain, is that it helps you keep your real priorities in perspective. According to Malkiel and Ellis, your number-one priority, along with that of every other, gainfully employed, taxpaying American, should be to gradually grow your net worth so that your safety net's intact when your finally reach retirement age. Think of saving, they say, as investing in your future self!
Next, Malkiel and Ellis explore some innovative ways to grow your asset pool, focusing specifically on index funds because they are affordable, intelligently managed and because their unique formulations allow for risk to parsed out over a wide, representative swatch of the market. The authors inform readers about various other index products they may not have considered before, including index bonds and international index funds.
Malkiel and Ellis use statistics and compelling anecdotal evidence to reiterate the time-honored benefits of diversification for a new generation of investors. The authors emphasize the singular importance of diversifying across asset classes (stocks, bonds, money market instruments, commodities, etc.), across markets and over time. They explain how having a diversified portfolio gives the savvy investor a leg up as the market undergoes the upsetting process of rebalancing in the wake of a serious stumble like the one which followed the housing bubble burst of last spring.
In a final, bonus section, Malkiel and Ellis offer an insightfully rendered and detailed menu of IRA's and other tax-deferred, savings options available to investors.
The Elements of Investing is a veritable goldmine of investing wisdom backed by two of the most trusted names in the investment industry. Malkiel and Ellis' clear goal is to inspire readers to believe in their basic competency as investors and to chase their dream of financial independence and security!
For those interested in further, reliable reading on the subjects of developing good money habits, investing and personal finance, check out Thomas C. Scott's Fasten Your Financial Seatbelt: What A Fatal Plane Crash Taught Me About Retirement Planning and John E. Girouard's The Ten Truths of Wealth Creation.