Three excellent books on long-term investments

It’s easy to forget about fundamentals of personal investment when stock prices hit the new high one week, dropped abruptly on their neighbor and then got up again in no dependable model, as they are doing this year. Now is an ideal time to review – or perhaps for the first time – three excellent books of people particularly good at explaining the blocks of a solid portfolio.

In the first of these, Andrew Tobias promises in his title that he is offering “The only investment guide you’ll ever need” ($ 15.95, Mariner Books). And in the book, which has been continually updated since it was published in 1978, covers a large land area, though some of the tips now seem familiar. Includes nostrum like this: Buy only the investments you understand. If the projected performance seems too good to be true, stay away. You are about taking a risk and taking action to keep up with inflation. Never forget the impact taxes can have on the returns.

Solid advice, but it’s not because the book is worth reading. The ideas of Mr. Tobias on saving money – you can not build a portfolio without saving – are his real gems. And the reason for this is his approach. Combines humor – begins with dedication, “to my broker, though he did from time to time he did it this way” – with common sense presented in an unknown way.

For example, you might already know that you should not bring your credit card debt because interest rates can slip off what you can afford; You can lower insurance premiums by increasing franchises (saving you more) and buying in bulk if the items you are selling are on sale.

But when Mr. Tobias explains to her, doing things like this seem to be a financial brilliance on your part instead of fatigue.

“Why put $ 1,000 in shares of some utility and earn $ 40 in taxable annuities if you can put the same money in isolation and save $ 350 – no taxes – on your account?” He asks.

But what should you do if you actually save money by following Mr. Tobias’s suggestions? John C. Bogle has some good ideas in The Little Book of Common Investing Sense (Wiley, $ 24.95).

Let’s first take the negative. Mr. Bogle can be thrown. (“You ignore these rules at your own risk”) And perhaps because it was published a decade ago, the idea of ​​possessing international bonds or bonds does not pay much attention.

That said, in a clear and convincing way, it expresses a solid strategy for achieving “your fair share of stock market performance”. It’s not difficult, he writes. “Investing successfully is all about common sense.”

Among his common sense ideas:

■ Since the market is virtually impossible, you need to buy and keep stocks.

■ Being diversified minimizes the risk.

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■ Because transaction costs and brokerage commissions can consume a significant return on investment, they invest heavily with low-cost index funds.

The latter is not surprising since Mr. Bogle is founder and former executive director of Vanguard, a mutual funds fund for index funds. But he claims that everyone should be a fundraiser.

“The simple arithmetic suggests, and history confirms, the winning strategy is to own all publicly owned companies at national level at very low cost,” he writes. “By doing so, you are guaranteed to capture almost the entire return that you generate in the form of dividends and profit growth. The best way to implement this strategy is really simple: buy a fund holding this market portfolio. Index fund “.

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