The Only Investment Guide You'll Ever Need

The 1978 original of Andrew Tobias' "The Only Investing Guide You'll Ever Need" has been updated numerous times since then and now covers a wide range of subjects, including retirement planning, stock selection, and money management.

The first lesson to be learned is that investing starts with saving money. Tobias contends that when taxes are taken into account, a penny saved actually results in two pence earned. Hence, he suggests that we come up with innovative ways to save money in many aspects of life, such as buying in bulk, haggling over costs, staying out of credit card debt, and reducing wasteful spending. 

He also advises that we create a financial plan that details our goals, income, expenses, and a way to measure our progress. Before we begin investing, he advises that we should establish an emergency fund of at least a few thousand dollars.

The second lesson is that we shouldn't put more faith in others than in ourselves to manage our finances. Tobias cautions us that the majority of financial advisors are not as skilled or trustworthy as they pretend to be. He claims they frequently impose hefty fees, provide biased advice, and perform below the market. 

He also warns us not to fall for dubious or risky investments like futures, commodities, penny stocks, and annuities. He suggests that we conduct our own investigation and educate ourselves on the fundamentals of investing.

The third lesson is that it is best to put money into index funds that are designed to represent the entire market. Index funds, according to Tobias, have modest fees, are well-diversified, and are tax-effective. Also, they've demonstrated the ability to outperform the majority of actively managed funds over the long term. 

Vanguard index funds, which have some of the lowest costs and best performance in the market, are where the majority of investors should put their money, according to him. He also advises us to divide up our portfolio in accordance with our goals, age, and level of risk tolerance.

The fourth lesson is that we ought to use tax-advantaged accounts and methods. Tobias demonstrates how to use tax-saving accounts like Roth IRAs, 401(k)s, and 529 plans to lessen our tax liability. Also, he illustrates how to use capital gains and losses as an income tax offset. 

He suggests that we refrain from trading frequently and hold onto investments for at least a year in order to be eligible for lower capital gains tax rates.

Our investments and income sources should be diversified, which brings us to the fifth lesson. We shouldn't rely solely on one form of asset or one source of income, says Tobias. He advises us to make investments in a variety of industries, places, and asset classes, including stocks, bonds, gold, real estate, and other financial instruments. 

He also exhorts us to hunt for passive income streams like royalties, dividends, interest, or rent. He claims that diversifying our assets and income sources will make us more financially secure and enable us to weather any economic downturns.

These are just a few of the key ideas from Andrew Tobias' "The Only Investing Handbook You'll Ever Need." 

The book is filled with helpful advice, real-world examples, and humor that make it simple to read and comprehend. I heartily suggest it to everyone who wants to discover how to make sensible investments and reach their financial objectives.

FAQ

The main message of the book is that the simplest way to grow your net worth is to spend less than you make¹. It emphasizes the importance of saving money and avoiding unnecessary expenses.

The author strongly advises against accumulating credit card debt by buying things you don’t need that you can’t afford. He emphasizes the importance of living within your means.

The book suggests setting up a financial plan in this order: 

1) Tally your net worth, 

2) Set goals, 

3) Figure your annual earnings, 

4) Add up your expenses, 

5) Take a second look at your expenses, 

6) Refine your plan, 

7) Find a way to track your progress, 

8) Give yourself a break.

The author suggests that most people can't outperform the market, so it's better to invest in index funds that cover the market as a whole. He also warns against risky investments like annuities, commodities, penny stocks, and futures unless you really know what you’re doing.

The author believes that investment professionals often don't perform better than average investors. He suggests that it's your responsibility to know how to grow, protect, and manage your finances.

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