I hear from people all the time that they want to learn more about personal finances, heck how many of you made it a New Year’s resolution? Of course the standard excuse from them is; it’s too complicated and I don’t know where to begin.
Well there’s a new book out that will help you stick to you resolutions: The Value of Simple: A Practical Guide to Taking the Complexity Out of Investing by John Robertson.
You would think that a book written by a scientist would be intimidating, but Robertson does a great job keeping things simple while walking you through the steps of making your first investment. Don’t worry Robertson does have his geek moments but they are mostly at the end of the book after he’s covered all the basics.
Robertson has also provided me with a copy to giveaway to one reader so keep reading for your chance to win.
Is it really that simple?
I’m going to quote a few of Robertson’s lines and see if it really is as simple as he claims.
“Control what you can – keep fees low, save a decent amount of your income, start early, don’t panic”
When it comes to investing, this pretty much sums it all up. Starting early and saving lots will go a long way; that’s the power of compound interest.
“You could just limit how often you check to see if you’re off course (e.g. once a year), or act only when you’re off course by more than some threshold value”
This is vital for any investor since we tend to make emotional decisions with our money. Basically you want to create some re-balancing rules to keep yourself in check. Stick with your rules and you won’t make rash decisions.
“Getting close enough and making it easy is better than spending the time and effort to try and perfect it down to the last percentage point”
Robertson is referring to asset allocation here and I agree that many new do-it-yourself investors tend to try and build the perfect portfolio depending on the current marking conditions. This is called market timing, don’t do it.
“It’s no good to live your life trying to save so much for the future that you don’t get to enjoy the present, but at the same time you don’t want to fiddle away your productive years and be left with nothing in your old age.”
Finding that fine line between saving and spending can be tough and way too many of us cross over into the spending category. As long as you’re meeting your savings goals, you won’t need to worry about spending.Related: Money well spent
ELI5 How do I start investing?
For those of you who don’t frequent reddit; ELI5 stands for explain like I’m 5 and this is where Robertson’s book excels. No other book has a step-by-step guide when it comes to making your first investment so you really have no excuse for not getting started.
Robertson recommends the couch potato strategy through Tangerine investment funds, TD e-Series, or Questrade. The 3 were picked since they represent beginner, intermediate, and advanced in terms of difficulty of use. Robertson explains the pros and cons of all 3 and then walks you through the entire process from start to finish. It can’t get any easier than this.Related: The top personal finance books for Canadians
Win a free copy
Learning how to invest isn’t the only thing the book covers; inside you’ll find great information about your RRSP, TFSA, RESP, taxes, and much more. Robertson has graciously agreed to giveaway a free copy to one of my readers. For your chance to win simply follow me on Twitter: @barrychoi and send me a tweet. For those who don’t use Twitter, just leave a comment below.
Image courtesy: Carlos Henrique via StockPholio