This little book by two New York Times bestselling authors has been written in response to the problems investors have been experiencing following the 2008 financial crisis. The book openly discourages stockholders and high net-worth individuals from using big Wall Street outfits, explaining how they are primarily there to make money for themselves.
Among the many good pieces of advice dispensed in the different chapters, the most important probably is that we have to take care of our own wealth, and should not look for “a surrogate parent who will take responsibility for our investment”.
The authors extol the importance of a “master financial plan”, which then can be tweaked according to changed circumstances.
Instead of the portfolio investors used to have before the financial crisis – in other words, one which resembled gambling more than investing, the pair puts together an adequately diversified and balanced portfolio that is able to mitigate risk. They advise revisiting any investment portfolio about every three years to see if it requires rebalancing and lead people in the direction of saving and minimising expenses and taxes.
We get a good glimpse into the psyche of investors – which, the authors say, Wall Street uses to its benefit. With this understanding, one should be able to resist investing into “sexy” stocks which stroke the ego and invest passively, simplify, over-rule emotions and disregard forecasts offered by the financial media. Following up with advice on retirement, the pair extends their attention to the finer details such as passing away and charitable givings.
The book’s only problem is that it wants to address all ages. The parts extolling the importance of studying and how to find a job stand out strangely from the story line and seem quite unnecessary.
