There has been a lot of discussion about buying gold in the media over the past several years. You may have wondered how exactly do you go about making such a purchase. Mark Griffith, a former floor trader with the London International Financial Futures Exchange, gives a concise introduction in this topic. In this EHow video, Mark outlines the options available in purchasing gold in the marketplace.
Further aspects of using precious metals for achieving financial freedom will be presented in future editions of FFN. FFN Editors
(Disclaimer: The views expressed in the above video are strictly those of the presenter. They do not necessarily represent those of FFN. Please use due diligence prior to applying the concepts, recommendations and/or in purchasing any products or services from the presenter). FFN Editors
The road to financial independence is not a simple one. Lisa Smith, writing for Investopedia, outline the issues and dilemmas we face on that journey in the following article. With over 20 years as a financial writer, Ms. Smith offers a very clear analysis of the pitfalls that can slow or even divert us on our way to financial freedom. FFN Editors
Two Roads: Debt Or Financial Independence?
- Get a job
- Start to save
- Get raises
- Save as salary increases
- Take advantage of dollar-cost averaging (DCA)
- Benefit from a bull market
- Hit magic number
It sounds simple and straightforward on paper, but in reality, earning a high income does not automatically translate into a high net worth. This article will explain why.
Income and Expenses
When most people are starting out, they rent a small apartment. Getting married or setting up a living arrangement with a significant other generally results in a higher income, but it is also likely to lead to the desire for more space – often at the cost of the desire to make maximum contributions to a pair of individual retirement accounts (IRAs) or 401(k) plans. Unfortunately,there are many things that people may not know about an IRA, and the opportunity to increase savings often takes a back seat as living accommodations are upgraded to a single family home.
After a decision is made to have children, buying a minivan, paying for clothes, toys, soccer, hockey, ballet, and other associated costs results in an increased outlay of cash, not only eliminating the ability to save more, but potentially resulting in a diminished savings rate. Having children can also result in moving to a larger home in a better school district and,the decision to pay for tuition at a private school, and then maybe even a college education. All of these things start to take precedent over funding your own retirement savings.
Lifestyle decisions can also have negative impacts on savings rates, even as income increases. Scrimping and saving simply isn’t fun. If we can afford to take a luxurious vacation, buy that sports car, upgrade the wardrobe, spend a weekend at the spa, buy that place at the beach or chalet in the mountains, don’t we deserve it for all the hard work we have done?
The desire to spend instead of save is also fostered by a quick look at the shenanigans on Wall Street and the poor investment returns in our portfolios. Anybody holding Enron, Worldcom or dozens of other failed firms in their portfolio aren’t likely to be singing the praises of savings. A look at most investment statements during a bear market also serves as a reminder that a 20% loss is not recovered by a 20% gain. If we’re going to be cheated by the firms we invest in and watch our portfolios decline in value even when we diversify, it’s easy to justify the purchase of something we will at least be able to enjoy in exchange for our money.
Geography can also work against the ability to save. In Silicon Valley, a modest ranch house can sell for $500,000. In New York City, private school tuition for three children can reach six figures and mortgage payments of $150,000 per year are not uncommon. Moving up in the world also places one in a different position on the socioeconomic scale.
If you are living the upscale lifestyle of an investment banker to the rich and famous, driving to a client meeting in a Ford Focus is out of the question. Similarly, if everyone in your social network has a housekeeper and vacations in the Hamptons, those items become an expected part of the lifestyle in order to maintain your social network and class. That correlation between standard of living vs. quality of life is very common.
The Eye of the Beholder
Although it might sound extravagant to those of us earning the national median of around $50,000 (according to Census Bureau figures), having more money (even much more money), doesn’t always put people farther ahead. In fact, those earning more almost always have a lifestyle that leaves them with more things to pay for. That said, before class envy takes hold, those of us at the lower end are also not skipping our lattes, nights on the town, cable television, cell phones, cigarettes, alcohol, new cars, and other nice-to-have-but not-strictly-necessary expenses.
In the end, everybody wants whatever they can afford, and instant gratification is a whole lot more fun than watching a quarterly brokerage statement for 20 years or more. As a result, most of us end up financing our lifestyles with debt. And many are worried that standard of living vs. quality of life is very common.
The Bottom Line
Sticking to the seemingly simple plan of earning more and saving more requires serious discipline and sacrifice. It means living below your means, regardless of the level of your means, and making savings a priority. If requires having a plan, saving and maximizing the amount you invest in our 401(k) and other savings vehicles before spending on the extras. It may not sound like fun, but years from now, when you look back at all the people who seemed to have it all but were really just getting by, you’ll be one of the ones laughing all the way to the bank
Our featured writer, Richard Eisenberg, continues his analysis of the benefits of planning for financial independence instead of retirement. This, the second part of his article, includes a review of several retirement calculators. These calculators can give you a sense of what sort of capital is needed in order to realize the type of retirement you wish to have. As you will see, not all calculators are the same. So, choosing the right one is important. FFN Editors
Plan For Financial Independence, Not Retirement (Continued)
Richard Eisenberg, Contributor to Forbes Magazine, Personal Finance Section (www.forbes.com)
Two Types of Retirement Calculators
If you’re trying to figure out your Financial Independence day, should you bother using an online retirement calculator? I think it depends on the tool.
Most retirement calculators are actually best for people in their 20s, 30s and early 40s who have years to save furiously once they see their “number.” The electronic number crunchers typically ask few questions, partly because younger people can’t possibly determine for sure their retirement income sources or expenses.
“When you’re further away from retirement, these calculators are directional in nature,” says Kent Allison, a PwC partner and leader of the firm’s financial education practice, based in Florham Park, N.J. “When you get closer to retirement, you really have to get into a nitty-gritty cash flow analysis.”
He’s right. If you’re three to 10 years away from retirement, that’s the time to figure out where the money will come from to cover what Pat O’Connell, executive vice president for the Ameriprise Advisor Group, calls the three types of expenses:
Essential expenses that’ll be covered by guaranteed income sources, like bonds, Social Security and a pension.
Lifestyle expenses purchased with money from your investment portfolio.
Unexpected expenses, like health care and long-term care costs, paid for out of your emergency savings fund.
Three Good Calculators for People 50+
There are, however, a few excellent calculators – not always free – that are specifically geared for people in their 50s and 60s. They can help you firm up a retirement cash-flow analysis.
One is Retirement Works2 for You, created by retirement adviser Chuck Yanikoski primarily for what he calls “nonaffluent people trying to play their cards as smartly as they can.” It costs $189 for the first year; annual renewals are $44.50.
RW2, as it’s sometimes called, asks a lot of questions; Yanikoski says you should plan to spend one to three hours answering them. (“Retirement is an extremely complicated thing,” he says.) But the results can be valuable.
As soon as you input your data and answer the questions, you’ll get an online report card with retirement planning advice and letter grades telling you how well you’re set under “normal” circumstances, if you live an extra long lifetime, if your investments don’t perform well, if inflation shoots up and if you run into high medical expenses, including long-term care.
You’ll also see how your cash flow would be affected if you delayed retirement and lowered your standard of living.
Two other calculators worth considering:
The free Ballpark E$timate from the Employee Benefit Research Institute’s Choosetosave.orgsite and the American Savings Education Council; Next Avenue has a link to the Ballpark E$timate calculator.
E$Planner, created by Lawrence Kotlikoff, an economics professor at Boston University. There’s a free version of E$Planner Basic as well as one that costs $40, with “what if” investment scenarios and Social Security options. The downloadable $149 product also offers “retirement spend-down” strategies, helping you determine how much to withdraw from your portfolio.
Use an Adviser to Plot Your Findependence
Whether or not you use a calculator to come up with your Financial Independence Day, I strongly suggest you work with a financial adviser to run the numbers.
“The decisions are major,” Allison says. “A wrong one could cost you a lot. So even if you don’t normally want to spend money on a financial planner, this is the one time to do it.”
Richard Eisenberg is the senior Web editor of the Money & Security and Work & Purpose channels of Next Avenue. Follow Richard on Twitter @richeis315.
(This article is available online at: http://www.forbes.com/sites/nextavenue/2013/07/01/plan-for-financial-independence-not-retirement/)
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Let us know your thoughts regarding this information in the Reply section below. Also, please “Like” and “Share” this article with others who may be interested in achieving financial freedom.
(Disclaimer: The views expressed in the above article are strictly those of the author. They do not necessarily represent those of FFN. Please use due diligence prior to applying the concepts, recommendations and/or purchasing any products or services offered by the author). FFN Editors
Does your goal of retiring seem farther away than ever. Well, you aren’t alone. The reality for many is that normal retirement at age 65 is being postponed to some later date. As a result of the financial crisis of 2007/2008 and the widespread lack of retirement preparation, many have to work longer to reach the financial level necessary to retire.
Putting a retirement plan into effect is a critical step in making retirement a reality. Trent Hamm writing in The Simple Dollar outlines several steps that can get your plan underway. And, perhaps close to where it should be if it has been side-tracked.
Let us know your thoughts about this information in the Comments section at the end of this page. Also, please “Like” and “Share” this information with others you may be interested in achieving financial freedom. FFN Editors
How to Approach Retirement Catch-Up
By Trent Hamm for The Simple Dollar
December 10, 2013
It’s well established that if you start saving about 10 percent of your income for retirement starting at age 25, you’re going to be in excellent shape for retirement when you hit age 65. This fact should be emblazoned on every single college and trade school diploma issued in the United States today: start saving for retirement now, not later.
Unfortunately, that fact doesn’t represent reality. Quite a few of us didn’t save at all during our 20s, and some of us didn’t save during our 30s, either. All the time, I hear from readers in their late 30s or early 40s (or even later) who are just now realizing that they need to start saving for retirement or they’re going to work forever.
If this describes you, the obvious answer is to start saving immediately. Right now. If you’re reading this article and you’re a professional adult without any retirement plan in place, you need to start a retirement plan.
If your employer offers a 401(k) program with matching contributions, run (don’t walk) to the HR office and sign up for that plan. Contribute enough to get every dime of that matching money because it’s essentially free retirement savings for you. If your employer doesn’t offer matching in their 401(k) program, look into opening an individual retirement account. I recommend contributing 10 percent of your income to that IRA, for starters.
So, you’re saving. Now what? The first thing to think about is time. If you’re only contributing 10 percent of your income per year to a typical retirement fund, it’s going to take about 40 years of saving before you can safely retire. Like it or not, that’s the reality of it.
If you’re 30 when you start, that means you’re looking at retiring when you’re 70. If you’re 40 when you start, that means you’re looking at retiring when you’re 80.
Another problem is that simply doubling the contribution doesn’t mean that you can halve the time. You can’t expect to contribute 20 percent for 20 years and match what you would get out of 10 percent over 40 years. That would only work if you were getting no return on your money – in other words, if your retirement plan involves stuffing cash into a mattress.
Saving for retirement once you’re behind the curve looks quite scary. Thankfully, there are a few things you can do to help improve your situation.
1. Get a Social Security estimate. The average American earns 40 percent of his or her retirement income from Social Security benefits, so knowing what you have coming to you can go a long way toward soothing retirement fears. The Social Security Administration offers a calculator to help you figure out how much you’re going to receive in benefits. It’s a good idea to wait until you’re as old as possible to start collecting benefits so you can maximize the income.
2. Look for ways to boost your income. Many mid-career folks find opportunities for freelance work and side businesses that can supplement their current income. Instead of simply spending that money, however, channel all of it into retirement savings (or into a mix of retirement savings and debt repayment). If you’re unsure where to start, visit your local library for information on side businesses and freelance opportunities related to your career path.
3. Hike up your savings. If you wish to retire earlier than 40 years from now, you’re going to have to save more. That means stowing away a higher percentage of your income. A good quick rule to use is that for every 10 years you want to shave off your goal, you need to double how much you’re saving. If you want to make it in 30 years, shoot for 20 percent per year. Twenty years? You should be saving 40 percent of your income per year. You need that boost to make up for the time you lost.
4. Cut out unnecessary expenses. Finally – and this is the tough part – you may have to consider some cutbacks. If you’re living a lifestyle that makes saving for retirement inconceivable, then you’re simply living beyond your means. You can’t assume that your ship will come in someday and everything will be OK. Everyone has expenses that they can cut from their life.
The road to retirement is a challenging road – but it’s not an impossible one.
Trent Hamm is the founder of the personal finance website TheSimpleDollar.com, which provides consumers with resources and tools to make informed financial decisions
(Disclaimer: The views expressed in the above article are strictly those of the author. They do not necessarily represent those of FFN. Please use due diligence prior to applying the concepts, recommendations and/or in purchasing any products or services offered by the author) FFN Editors
As we enter the new year, here are some life planning ideas from one of the best known successful people of our times. While Warren Buffett is often quoted regarding his investment philosophies and approaches, he often offers very sound ideas about living a well-rounded life.
In our featured video clip from the “Warren Buffett Blog Channel”, Mr. Buffett offers some important advice on where one can invest their time and energy to be a success in life.
Let us know your thoughts about this information in the Comments section below. And, please “Like” and “Share” this information with others who may be interested. FFN Editors
(Disclaimer: The views expressed in this video are strictly those of the presenter. They do not necessarily represent those of FFN. Please use due diligence in prior to applying any concepts, recommendations and/or in purchasing products or services from the presenter). FFN Editors
You have probably heard of bitcoins. They are mentioned quite often in the media lately. But, you may not be sure what this so-called new form of currency actually is. So, we are featuring an article from the Investopedia staff published in Forbes magazine that does an excellent job of explaining the nature and use of bitcoins.
Let us know your thoughts about this information in the Comments section at the end of the page. Also, please “Like” and “Share” this information with others who may be interested. FNN Editors
“How Bitcoin Works”
By Investopedia Staff originally in Forbes magazine
Bitcoin is a digital currency that exists almost wholly in the virtual realm, unlike physical currencies like dollars and euros. A growing number of proponents support its use as an alternative currency that can pay for goods and services much like conventional currencies. Bitcoin is the first and easily the most popular cryptocurrency, or currency that uses cryptography1 (see “Definitions and Key Concepts” at end of article) to control its creation, administration and security.
Bitcoin was set up in 2009 by a mysterious individual or group with the pseudonym Satoshi Nakamoto, whose true identity is yet to be revealed and who left the project in 2010. It rocketed to prominence in 2013, when the value of a Bitcoin soared more than 10-fold in a two-month period, from $22 in February to a record $266 in April. At its peak, based on more than 10 million bitcoins issued, the cryptocurrency boasted a market value of over $2 billion.
Bitcoin Versus Conventional Currencies
Bitcoin differs from conventional currencies in some very fundamental ways, as noted below (for the sake of simplicity, we use the U.S. dollar as a proxy for conventional currencies).
•Bitcoin uses P2P technology without a central authority: Bitcoin is a decentralized currency managed by peer-to-peer technology (P2P2), without a central authority. All functions such as Bitcoin issuance, transaction processing and verification are carried out collectively by the network, without a central supervisor or agency to oversee operations. In contrast, a conventional currency is issued by a central bank as part of its mandate to manage national monetary policy. In the U.S., only the Federal Reserve has the power to issue dollars; it is also the central authority that conducts monetary policy, supervises banks, maintains financial system stability, and provides financial services to depository institutions.
•Bitcoin is primarily digital: Although physical Bitcoins are available from companies such as Casascius and BitBills, Bitcoin has been designed primarily to be a digital currency. Physical Bitcoins are somewhat of a novelty, and the very idea of a tangible form defeats the purpose of a digital currency, according to the most ardent supporters of the concept. Conversely, your dollars exist primarily in physical form; the balances that you hold at your bank and online brokerage can be converted into physical dollars within minutes if you so desire.
•Bitcoin has a maximum 21 million limit: The total number of Bitcoins that will be issued is capped at 21 million. The Bitcoin “mining”3 process presently creates 25 Bitcoins every 10 minutes (the number created will be halved every four years), so that limit will not be reached until the year 2140. While Bitcoin critics argue that the maximum limit is not large enough, supporters maintain that since each Bitcoin is divisible to eight decimal places, the number of fractional Bitcoins (called “satoshis”) – at 21 x 1014 – will be more than enough for all conceivable applications. Conventional currencies, on the other hand, can be issued without limit.
•Bitcoin is a complex product: The concepts of cryptocurrencies in general are abstruse and abstract, and understanding how and why Bitcoin works requires a fair degree of technological knowledge.
•Bitcoin has limited acceptance: It has limited acceptance so far and cannot be used at many brick-and-mortar storefronts, although that may eventually change if it continues to gain traction. The dollar, on the other hand, has near-universal acceptance as the world’s global reserve currency.
•Bitcoin transactions have limitations: A Bitcoin transaction can take as long as 10 minutes to confirm. Transactions are also irreversible and can only be refunded by the Bitcoin recipient. These limitations do not exist with conventional currencies, where debit and credit transactions are confirmed within seconds; certain transactions can also be reversed for valid reasons by the originator, without having to rely on the recipient’s largesse.
•Bitcoin balances are not insured: This means that if you lose your Bitcoins for any reason – for example, your hard drive crashes, or a hacker steals the digital wallet in which your Bitcoins are stored, or the Bitcoin exchange where you held a balance went out of business – you have little recourse. Currency balances held at banks, on the other hand, are insured against certain events such as bank failure by agencies like the Federal Deposit Insurance Corporation in the U.S.
How Bitcoin Works
Let’s say you want to test the Bitcoin waters. The first thing you need to do as a new user is install a digital wallet on your computer or mobile device. This wallet is simply a free, open-source software program that will generate your first and subsequent Bitcoin addresses. There are three types of wallets – a software wallet (installed on your computer), a mobile wallet (which resides on your mobile device) or a Web wallet (located on the website of a service provider that hosts bitcoins).
Bitcoin uses public key encryption4 techniques for security. This means that when a new Bitcoin address is created, a cryptographic key pair consisting of a public key and private key – which are essentially unique, long strings of letters and numbers – is generated.
Each address has its own Bitcoins balance, so all you need to do is acquire a number of Bitcoins that will be held at one of the addresses in your wallet. You can acquire Bitcoins through a number of ways – by buying them from a Bitcoin currency exchange such as Mt. Gox or Bitstamp, or through a service like BitInstant that enables fund transfers between Bitcoin exchanges and supports various payment mechanisms.
Note that all Bitcoin transactions are stored publicly and permanently on the Bitcoin network, which means that the balance and transactions of any Bitcoin address are visible to anyone. Experts therefore recommend that Bitcoin owners create a new address for each transaction as a means of ensuring privacy and enhancing security.
Once you have created a Bitcoin address and have acquired Bitcoins, you can use them for an online transaction with a company that accepts Bitcoins as a payment mode. The company will send you the Bitcoin address to which you can send your Bitcoin payment. You direct the payment to that address; while the transaction takes place within seconds, verification can take 10 minutes or longer.
All Bitcoin transactions, without exception, are included in a shared public transaction log known as a “block chain”. This is to confirm that the party spending the Bitcoins really owns them, and also to prevent fraud and double-spending.
Why does transaction verification or confirmation take so long? Because the complex algorithms involved in Bitcoin mining (see description below) take time to solve, even with immense computing power at one’s disposal.
An Example of a Bitcoin Transaction
Let’s assume you want to make an online payment to a company – call it BitChamp – using 5 Bitcoins that you have in an address in your digital wallet. Here are the steps in the transaction:
1.BitChamp creates a new Bitcoin address and directs you to send your payment to it. This creates a private key (known only to BitChamp) and a public key (available to you and anyone else). Note that just as a seller does not need to know your physical identity if you pay cash, you do not need to disclose your real identity to BitChamp and can remain anonymous.
2.You instruct your Bitcoin client (the free Bitcoin software you first installed on your computer) to transfer 5 Bitcoins from your wallet to the BitChamp address. This is the transaction message.
3.Your Bitcoin client will electronically “sign” the transaction request with the private key of the address from where you are transferring the Bitcoins. Recall that your public key is available to anyone for signature verification.
4.Your transaction is broadcast to the Bitcoin network and will be verified in a few minutes. The 5 Bitcoins have been successfully transferred from your address to the BitChamp address.
Note that only the first two steps involve action by the seller and you respectively. The latter two steps are automatically executed by the Bitcoin client software and Bitcoin network. As well, storing the private key attached to an address safely and securely is of the utmost importance; otherwise, anyone who obtains the private key can control the Bitcoins at that address and use them fraudulently.
Bitcoin Pros and Cons
Bitcoin has a number of advantages:
•As the first cryptocurrency to capture the public imagination, Bitcoin has “first mover” advantage and a head start over the competition.
•Total issuance is limited to 21 million, so it is unlikely to be devalued because of the prospect of a massive influx of new bitcoins.
•As a decentralized currency, Bitcoin is free from government interference and manipulation.
•Transaction costs are much lower than with conventional currencies.
On the flip side, Bitcoin’s disadvantages include:•The price of a Bitcoin has been increasingly volatile, making it difficult to assess its real value and increasing the risk of losses for investors in the cryptocurrency.
•The relative anonymity of Bitcoin may encourage its use for illegal and illicit activities such as tax evasion, weapons procurement, gambling and circumvention of currency controls.
•The fact that bitcoins exist primarily in digital form renders them vulnerable to loss.
Bitcoin has made significant progress in its adoption and usage since it was unveiled in 2009. Its evolution over the next few years will determine whether this leading cryptocurrency will become an integral part of the global financial system, or whether it is destined to remain a niche player.
Definitions and Key Concepts
1 Cryptography refers to the practice and technique of using encryption for secure communication and transmission of data and information.
2 In a P2P network, a group of computers is connected to enable the sharing of resources and information by users, and there is no central location for the network. This is diametrically opposed to a typical client-server network, where the central server controls the level of access by users to shared network resources. Popular applications of the P2P concept are Skype and file-sharing services such as BitTorrent.
3 Bitcoin mining refers to the computationally-intensive task of generating Bitcoins. While any computer can be put to the task of Bitcoin mining by using a free mining application, in reality a great deal of computing power is required to solve the extremely complex algorithms involved and to share those solutions with the entire Bitcoin network. The mining process is quite complicated and involves advanced concepts such as cryptographic hashes and nonces.
In simple terms, Bitcoin miners use powerful computers to track and compile pending Bitcoin transactions every 10 minutes into a new block. These miners then set to work doing the intensive number-crunching required to verify all the transactions in the block. This is a competitive process, and the first miner to solve the algorithms and verify the transactions transmits the results to the entire Bitcoin network.
Upon confirmation by the rest of the network, the block is then added to the block chain. Each block includes a certain number of Bitcoins in a “coinbase” transaction that is paid out to the successful miner. This reward was set at 50 Bitcoins when the system first commenced operations in 2009, but was halved to 25 Bitcoins in November 2012, and will reduce by 50% approximately every four years.
4 Public key encryption combines a public key and a private key. While the public key is available to anyone, the matching private key is stored securely in the digital wallet and is generally password-protected. Each Bitcoin transaction is signed by the private key of the initiating user, providing mathematical proof that it has indeed originated from the owner of the address, and preventing the transaction from being altered once it has been issued. Since the key pair is mathematically related, any data or information encrypted with a private key may only be decrypted or deciphered with the corresponding public key and vice versa.
5 Double-spending means spending the same digital currency twice, something that is impossible with physical currencies.
(Disclaimer: The views in the above article are stictly those of the author. They do now necessarily represent those of FFN. Please use du diligence prior to applying the concepts, recommendations and/or in purchasing any productsor services from the author.) FFN Editors
Tim du Toit, founder, analyst and writer for Eurosharelab, shares his top picks of the best investment books to read. If you are currently investing in the financial markets or have entertained a desire to invest, you are probably familiar with many of these titles. However, Tim has taken a lot of the guess work out of deciding which books are the best of breed. (See: Bio below)
So, while not comprehensive and strictly Tim’s view on the matter…the nine books he features are certainly worth the time and energy to peruse.
Let us know what you think of this article in the Comments section at the end of this page. And, please “Like” and “Share” this with others you think may be interested in achieving financial freedom.
“Nine books every investor should read”
by Tim Du Toit, for Eurosharelab,
This article is a list, in no particular order, of the best investing books I have read and the ones I think you will find the most helpful.
Why nine books?
I looked at all the books on my book shelf and audio device and these were the ones I found the most valuable. I would have liked to make the list ten but could not find another that I thought would benefit you as much as the books I had already selected.
Besides, nine books to read does not sound as intimidating as ten.
For inclusion on the list a book must pass the “dog ear” test. When I find something worthwhile in a book I fold the page and mark the text with a pencil. Thus the more folded pages a book has the more valuable it is.
For the best prices look for the books used at Amazon or if you commute or drive a lot, buy them from Audible (www.audible.com) so you can listen to them on your mobile device.
A word of warning. Audible uses its own software that has to be installed on your mobile device, so before buying make sure your device is supported.
The Little Book that Still Beats the Market
by Joel Greenblatt
Hardcover: 183 pages
Don’t let the title of this book fool you. It’s written in an easy to understand way by an outstanding hedge fund manager, Joel Greenblatt, who is also an adjunct professor Columbia Business School.
You can easily finish it over a weekend and probably not think the same about investing thereafter.
I would classify this as one of my must read value investing books
What you will get from this book:
•It will teach you a statistically tested investment strategy with an excellent track record
•It will explain it in easy to understand way
•It will show you how to implement it in easy to understand steps
•It even had a website where you can easily find the companies to invest in (unfortunately in the USA only)
You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits
by Joel Greenblatt
Paperback: 304 pages
This is the first book by Joel Greenblatt.
Do not let the unusual title of the book fool you, it has a lot to offer.
It extensively covers often overlooked areas of the stock market where profitable investment opportunities can be found.
It is not such an easy read as The Little Book that Still Beats the Market but a worthwhile book for more advanced investors.
What you will get from this book:
•You will be introduced to profitable investment areas such as, spin-offs, mergers, risk arbitrage, restructurings, rights offerings, bankruptcies, liquidations, and asset sales, which are not usually considered by the average investor
•It will give you the best places to look for these ideas and also where you can find good ideas you can copy, but you still need to do your own homework
The Little Book of Value Investing
by Christopher H. Browne
Hardcover: 208 pages
This book also has a title that may let you overlook it, but don’t.
It is written by the partner of probably the best value investment fund managers in the world Tweedy Browne (www.tweedy.com).
It’s also a book that you can finish over a weekend. It will teach you the ins and outs of value investing in an entertaining and easy to follow way.
What you will get from this book:
•The book is the distilled wisdom of a successful investor
•It will explain value investing, a method of buying undervalued stocks, in an easy to understand way.
•The book is written in an easy to understand way making it suitable for beginners and advanced investors
•It is an easy read that can be finished over a weekend. Implementing the principles will take a lifetime
•Ample use of examples and historical case studies is used to illustrate points
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel
by Benjamin Graham
Paperback: 640 pages
Since it was first published in 1949, this book by Benjamin Graham the father of value investing, has sold over a million copies.
Warren E. Buffett called it “the best book on investing ever written.”
Look for the Revised Addition with commentary on each chapter and extensive footnotes prepared by senior Money editor, Jason Zweig which has updated the book to fit with the current markets.
This is a value investing classic and another one of my must read value investing books.
What you will get from this book:
•Value investing explained in its purest sense
•Explains how to make unpopular but profitable investments
•Explains the psychology of investing
•Clearly explains how Wall Street works and refutes investment falsehoods
•Gives you a clear check-list to follow when making investments
Contrarian Investment Strategies – The Next Generation
by David Dreman
Hardcover: 464 pages
David Dreman is a long-time fund manager and columnist for Forbes magazine.
He is one of Wall Streets best-known and most articulate contrarian (going against the crowd) investors. This book is an updated version of his 1982 book and includes recent research on investor psychology.
What you will get from this book:
•Investment research explained and combined with how to practically pick winning investments
•You will be shown how going against the crowd adds to your investment returns
•In clear how-to terms be shown how to apply the ideas in the book
•Scientific proof why all forecasting is a waste of time
•Learn how to override your natural tendency to under-perform the market
The Dhandho Investor: The Low – Risk Value Method to High Returns
by Mohnish Pabrai
Hardcover: 208 pages
Mohnish Pabrai is a disciple of Warren Buffett having directly copied his investment partnership structure and investment method.
This book is a worthwhile read giving the reader good insights into value investing principles and the idea of heads I win, tails I do not lose much.
The book is filled with easy to understand examples and written in an easy to understand way.
What you will get from this book:
•Learn how to invest in companies with little downside and lots of upside
•Gives you a keep it simple framework for investing
•Learn how to stack the odds in your favour when investing
•Gives you a plan on when to sell
One Up on Wall Street: How to Use What You Already Know To Make Money in the Market
by Peter/ Rothchild, John Lynch
Publisher: Simon & Schuster (April 3, 2000)
Until retiring in 1990, Peter Lynch was manager of the very successful Fidelity Magellan Fund, America’s biggest mutual fund.
David and Tom Gardner from Motley Fool (www.fool.com) called Peter Lynch the second greatest investor in the world after Warren Buffett.
In this book Peter Lynch explains in a straight forward way that investment opportunities abound for the layperson by simply observing business developments and taking notice of your immediate world, from shopping in the mall to the workplace.
The book has been a national best seller in the USA for good reason. It offers valuable insights in an easily understandable way.
What you will get from this book:
•It will tell you how to beat Wall Street by using information gained from everyday life
•Learn how you have the same opportunities as professional investors to make money in the stock market
•Learn what information you must focus on and how to apply it
•Learn why you really know more about investing than you think
The Essays of Warren Buffett: Lessons for Corporate America, Second Edition
by Warren E. Buffett (Author), Lawrence A. Cunningham
Paperback: 296 pages
Over the years I have read, listened to and looked at numerous books on Warren Buffett. This is the best one I have read and I recommend it wholeheartedly.
If you want to read only one book on Warren Buffett this is the one to get.
I have the first edition but suggest you buy the second edition with added material.
What you will get from this book:
•The summarised and categorised wisdom of Warren Buffett’s business and investing teachings
•Investment and business success explained in a straight forward manner everyone can understand
•The secrets to investing explained in an easy to understand way
Value Investing Made Easy: Benjamin Graham’s Classic Investment Strategy Explained for Everyone
by Janet Lowe
Paperback: 224 pages
This book is another excellent introduction to value investing.
It clearly sets out the main tenets of value investing with reference and quotes to Benjamin Graham and Warren Buffett.
An excellent book for beginners with a summary of Benjamin Graham’s value investment and analysis principles as found in his book Security Analysis.
What you will get from this book:
•Value investing explained in an easy to understand way
•A step by step guide how to apply value investing when investing
•How to manage risk as well as do well irrespective of what the market does
•A practical how-to guide to value investing
More Than You Know: Finding Financial Wisdom in Unconventional Places
by Michael J. Mauboussin
Hardcover: 320 pages
Michael Mauboussin is the chief strategist at Legg Mason a well regarded US based fund manager.
This book is a compilation of his strategy reports, most of which begin with diverse scientific findings, then show why and how you can apply it to your investment activities.
While not directly an investing book it is a book that will help you in your investment decision making.
What you will get from this book:
•The explanation of how scientific findings relate to investing
•Learn a multi-disciplinary approach to investing
•Why financial television should be watched for entertainment value only
•How you can simplify your investment approach while still maximizing your returns
Your reading analyst
Tim du Toit
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|Meet the Expert|
| Tim du Toit
Tim, the founder and editor of Eurosharelab, was born in South Africa in 1967.
After school he wanted to become an electrician. Well, he wasn’t sure of what he wanted to do and his dad said a friend had an electrical contracting business and was making a lot of money. He quickly changed his interest to investing after completing a stock market correspondence course that fascinated him.
When Tim started investing in 1987 he made virtually every investment mistake you can think of until he realised that investing was not a recent human activity and that there must be some good research and books about what has worked in investing. Not in the short term but over long periods of time in up and down markets.
So for over the next 20 years he did exactly that. Reading and studying every article, research paper and book he could find to help him improve his investment performance. Something he still does.
In between his investment activities Tim completed a Bachelor of Commerce (cum laude) and Honours degree in financial management from the University of Pretoria in South Africa. And an MBA degree in finance and strategic management at Indiana University in the USA in 1995 where he graduated in the top 10% of his class.
Tim lives in Hamburg a city he says is the most beautiful (and unknown) city in Germany.
(Disclaimer: The above views are strictly those of the author. They do not necessarily represent those of FFN. Please use due diligence prior to applying the concepts, recommendations and/or in purchasing products or services from the author). FFN Editors