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Books Media The Almighty Buck

Personal Finance Book Suggestions? 78

Posted by Cliff from the making-your-money-work-for-you dept.
luc13n asks: "I've seen others making requests for books or reading suggestions. I've been out of college and working professionally in the IT field for two years now. I have some money in the checking account and the savings account and I've started wondering... is there a better way to manage my money? Kinda the old adage 'make your money work fo you'. Does anyone have any good suggested readings to teach a 'young'n' how to 'make his money work for him'?"
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Personal Finance Book Suggestions? More

Personal Finance Book Suggestions?

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  • "Your money or your life" (Score:4, Insightful)

    by Nutcase ( 86887 ) on Thursday April 17, 2003 @04:34PM (#5754261) Homepage Journal
    Before you run off and start investing and "making your money work for you" in the traditional sense, have a look at this [barnesandnoble.com]. It certainly doesn't fall into the traditional "more more more" mindset of most people - instead if focuses on "what is enough" and making you happy.

    In the words of the late, great Douglas Adams - "these people were extraordinarilly unhappy and attempted to correct their problem by spending all their time moving small pieces of green paper around - which is odd because on the whole it wasn't the pieces of green paper that were unhappy."

    Just a different perspective from the norm - but one that may do more for you than any book on the money markets ever could.

    • Re:"Your money or your life" (Score:3, Insightful)

      by PD ( 9577 )
      Right. There's two kinds of money - enough, and not enough. When I was in college I had no money. Just like a lot of people. I determined back then that when I reached the point where I could decide to go to the theater and see a movie, on a whim, any time I liked, without worrying about paying the phone bill, that would meet my definition of "enough" money. Everything past that would be gravy.

      What I discovered was that it takes a surprisingly small amount of money to meet that definition. I'm not saying t

      • Right out of college (Score:5, Interesting)

        by Glonoinha ( 587375 ) on Thursday April 17, 2003 @07:03PM (#5755367) Journal
        Honestly you will never be as rich as you feel the first three months of gainful employment right out of college (assuming you can find a job.)

        The reason for this is you go from the +/- minimum wage paying job you had taking home $425 a month so you could afford Ramen and Peanut Butter and Dr. Pepper and Bacardi Rum and live in a small apartment with three other roommates ... have about $25 a month left over after bills, food, etc... to buy whatever you wanted - to a job bringing home $2250 a month after taxes, still living with 3 roommates still paying about $400 a month for bills and rent. All of a sudden you have 80x the amount of 'fun money.'

        Then you go out, buy a new car, rent your own place, fill it up with stuff (all charged on your MasterCard,) start running the air conditioner, eat out all the time, pay the entire set of bills yourself (not split 4 ways anymore), actually get full coverage insurance on your car, have pizza delivered 5 times a week and Bingo! you are right back to $25 a month left over after you pay all the bills.

        I think my monthly liquor bill now runs more than my entire monthly living budget when I was in college (+/- $400 a month) Granted I have been out of college for a little while now, but still.

        -:-

        Another thing to note - if you take the above and stretch it a little, anybody making $20k a year more than you is rich simply because you would consider yourself rich if you had another $20k a year. Problem is if you start earning another $20k a year you actually only take home about another $1000 a month and within a few months your lifestyle grows to absorb that.

        -:-

        Original Poster :

        If your boss offers you a 401(k) and offers any matching whatsoever (ie matches $1 for each $1 you put in up to x% of your salary) be sure you are putting in as much as possible to maximize his matching funds. Even if the stock market is losing 10% a year, if your employer matches your contributions you are still earning 80% on your money the first year (which is AWESOME.)

        Another thing, arrange credit NOW. While you have good cashflow look into overdraft protection on your checking account (no more bounced checks, not that you ever did that anyways, but having a $1,000 credit line attached to a checking account is one of the best things I ever did.) Build your good credit file, buy big work related items on your personal credit cards (travel works too) and pay them back in full at the end of the month (expense account.) In 5 years when you have awesome big credit and can buy a $250,000 house at 5% instead of at 8% you will really, reall thank me for this.

        Find out what it takes to get the MBNA Quantum card. Do those things. Getting the card is less important than being able to get it.
        • That's a great Idea, my wife and I struggled for years to improve our credit, and buy a house, then once we got the house we broke the bank again. Now we are geting dinged with a couple of late pays, and one or two NSFs a month, because we didn't save enough. I say that, because we worked for five solid years to repay all of our debt, and get things in order... the last 16 months of our credit looked great, but then then wall hit. It has taken two months to distroy our credit file again. We will eventua
        • Well, I went the opposite way - I went from living alone paying all my bills alone to living w/ 3 room mates. Unfortunately I also moved from Illinois to San Francisco so my rent doubled even though I have room mates now. But my place is way bigger than my place in college and my room mates are really cool so it works out. Also: my income more than quadrupled which helps just a little bit. ;-) (my fun money increased by a factor of 100 as well; my cost of fun increased by approximately a factor of 4 (SF vs.

  • Suze Orman (Score:3, Interesting)

    by stefanlasiewski ( 63134 ) <slashdotNO@SPAMstefanco.com> on Thursday April 17, 2003 @04:39PM (#5754305) Homepage Journal
    Suze Orman [suzeorman.com]

    Yes, this is that peppy blonde lady that you see on PBS.

    She writes good, down to earth, easy to understand books on finances which clarify issues and simplify many financial concepts (which aren't actually that complex, once you think about them the right way).

    Not a "make money fast" type of author, but she writes alot on "make and save money for retirement", or "How to save money for when you are laid off and can't find work for 8 months".
    • Didn't care for her. Lots of imprecise suggestions for how you should feel about your money and very few instances of good solid advice.
      • Guess I don't agree.

        She can't give precice suggestions, because she doesn't know your individual situation.

        I really enjoy her simple techniques.

        Once such example: At the end of every day, put your pocket change in a jar. At the end of a month, you have $100. Now, chances are you didn't miss that $100 at all, you simply spent less money on useless or frivilous things.

        I'm always suprised by the people around me who don't have a retirement plan, and who don't take advantage of those Employeer Matching Cont
      • I'm not a fan of Suze Orman either. Before CNET radio stopped broadcasting, I listened to Rob Black [robblack.com] quite often. He has a two CD set of his last Stock Talk [robblack.com] show, and it's great info. Rob's got good ideas and a good sense of humor.

        The other advice I have is to hire a Financial Planner [cfp.net]. He or she can look at the big picture with investing, savings, finances, insurance, etc. and make sure you have all the bases covered.

        Good Luck!

  • Go ask a fool (Score:3, Informative)

    by hariya ( 88607 ) on Thursday April 17, 2003 @04:42PM (#5754327)
    Check out the Motley Fool website. They have good advice on saving up based on your goals -- saving for that new car(dont lose principal) vs. saving for retirement (maximise returns). They also have a book and pretty decent advice in general. If you want one piece of advice, dont play the markets by buying individual stocks, just invest in an index fund.
  • .. Enron: An Insiders Guide
  • Comment removed based on user account deletion
    • i have to second this

      two words: Merril Lynch

      I've had very good luck with them.

      • Re:money manager (Score:3, Interesting)

        by Urox ( 603916 )
        Two more words: be assertive.

        Don't let them run you over with what they think is best and don't let them cower you into it (I guess this is more for people who feel very uncertain about what type of investment they should do). I used American Express and what they had me do was layout what I wanted as a goal for a flat fee. They would then offer "services" which are sold hard to help me attain that goal. I haven't heard from my manager in months. I haven't had the time and was wise enough not to give t
        • Second, they wanted me to invest money in the stock market indexes when I was clearly observing a downward trend. I only gave them the first thousand because I wanted to see where it went. It was guaranteed not to lose money, but had a cap at 6% return. So far, it has not made a dime while my fixed interest CDs are rocking away at 3.75 %.

          Please don't pay too much attention to short-term trends (anything less than 10-20 years). The immediate past is a poor predicter of future returns. It's impossible to
          • Please don't pay too much attention to short-term trends (anything less than 10-20 years). The immediate past is a poor predicter of future returns. It's impossible to routinely predict the direction of the market.

            Actually, I'm paying attention to the long term trends. If you look at the past 10 years, there is a significant peak of overinflated values just as there has been over the past 100 years at times. And on those previous overinflated times, the market has seriously corrected itself to underinfl

        • Warning, the above poster gave a lot of bad advice. Not all of it was bad, but some of it.

          First of all, it is a fact that young people can risk more. Risk is NOT defined as the odds that you will lose all your money. Risk is defined as the odds that your money will grow any given year. Bonds are considered unrisky because you always know for any given bond exactly how much you will have in the end. When you buy a bond paying 10% you pay $1000, and get $100 every year until it "matures" and then get

          • Warning, the above poster gave a lot of bad advice. Not all of it was bad, but some of it.

            I think that this is a result of my not defining my terms and not being the best (or good at all ;) ) in explaining things. I'm a mathematician.. I'm supposed to be confusing, right? In any case, I appreciate your ability to come across clearly.

            Risk is defined as the odds that your money will grow any given year. ... The only risk is that the company might to bankrupt.

            Both are something I am seriously worried

    • I'll second it too, but instead of Merrill Lynch, check out A.G. Edwards or Edward Jones. They tied for the top spot in J.D. Powers' customer satisfaction survey last year.

    • I'm going to have to respectfully disagree adamently. Having someone else handling your bills may be alright, but no one is going to be as conscious of your situation as you are. And if you don't have a good eye on your finances, don't be surprised if you run into problems that could have easily been avoided.

      As for preparing for retirement, don't trust your money with any manager, plan it out yourself. Brokers are salesmen. There are few industries that are as fundamentally at odds with their customers
  • "How to Make Money in Stocks" by O'Neill.
    He's the guy behind IBD and http://investors.com.
    Coupled with "Paper Money" by Adam Smith and you'll be a force to be reckoned with.
  • First thing to do is lose your checking and savings accounts. Replace them with a single brokerage account from someone like Charles Schwab. You'll be able to get checks and a Visa check card for use with the cash in your brokerage account and can then store your savings in a mutual fund. The difference will be that the money you would normally have had in a checking account now earns twice as much interest as you current savings account and the money in the mutual fund should over time grow much better tha
    • I would agree with this, in general, as I have done the same -- however, it really only applies to a comparison with major banks. Local banks and credit unions can still offer great services if you can find them.

    • Stay away from mutual funds (and in fact the stock market as a whole unless you are willing to spend a lot of time researching individual companies, etc.). The market is still way over it's long term base line, and with a glut of baby boomers just waiting for the prices to rise a bit so they call sell (they're hitting retierment soon, if they haven't already), we aren't going to see a bubble like the 90's for another 20+ years--or if we do it will burst a lot worse than this one did at which point having
  • Read several books and talk to lots of people and you'll start to get a feel for what the right thing to do is. Ask someone, family/friend, that you trust.

    The only specific book I'll mention is _Making the Most of Your Money_ by Jane Bryant Quinn. It is a good general monkey book which is probably the place to start rather than diving into the investing side of the equation.

    I also like the general approach of the Motley Fool guys although I haven't spent much time at their site in a couple years.
  • and I'll start forwarding my spam to you instead of uce@ftc.gov.

    There are lots of people who would like to manage your money. Most of them are in Nigeria. I know it all sounds too good to be true, by a friend of mine actually... <plonk>

  • Sock in the Stock Market! That thing never goes down!
  • It's not being stupid. I highly recomend Dave Ramsey. [daveramsey.com] His advice has really helped me out.

    • I would agree with that too. Don't worry about investing and all the other crap until you can get a working and sustainable budget worked out. Include as much saving in it as you can. Then after life is under control somewhat (it never is fully), then start with the investment guides after you have some money to work with.

  • The Art of Money Getting:

  • ...you're on the right track. It appears you have learned the first lessons, grasshopper. You have apparently avoided the siren call of every consumer good well enough to save some money and you have started young. It is tough to overestimate the value of both of those.

    My wife and several friends are fans of Rob Black [robblack.com] (formerly on CNET radio until they ceased broadcast operations). I started to recommend some books but then noticed all of the ones I planned to mention plus many more were on his book list. [robblack.com]

  • I also recommend The Only Investment Guide You'll Ever Need by Andrew Tobias. Both are excellent for people who have money, but don't want to spend a ton of time worrying about it.

    I read one of Suze Orman's books, and it was really sort of a basket case type of book, that probably won't apply to a young person who has a steady job and manageable debt. Part of her advice was to cash in the old coin jar to get a head start. Another part was about how to recover financially from a divorce. Good to read for
  • IF you are in a reasonably stable place, where you think you might be around for a while, then buying a house makes sense.

    You get 3 "bangs for your buck":
    1. You get a place to live
    2. You build equity (a house is a savings plan you live in).
    3. You build up your credit rating

    NOTE that I didn't say a house was a tax break. True, you get to shave money of what you pay to Uncle Sugar, but look at it like this: if you are giving US$10K to the bank in interest payments to avoid giving US$3K to Uncle Sam, are you re

    • Define "stable." You might have a job that you know you will be in for life (you'll know if this is you) but around you the world is going to hell in a handbasket. In Silicon Valley, there was a report on the radio about how 12,500 people left the area just last year. That speaks of a reduction in the housing market (not that I can see yet). So your investment may not be so good in a house if the prices are going to go lower. Then again, interest rates are at an incredible low.

      • Your best guess. Seriously, I bought a house because it "felt right". I had worked the same job for a few years, and my buddie that I rented from needed more space at home. So I bought a house and moved out. I love living alone, nobody complains about my mandolin, I can walk in nude from the shower to my bedroom, instead of needing to carry a change of clothes to the shower. (My buddie had a wife and kid, I know some are renting from more relaxed places). That pond out back with the Blue Heron on i

  • My recommendations (Score:3, Informative)

    by wdr1 ( 31310 ) <wdr1&pobox,com> on Thursday April 17, 2003 @05:38PM (#5754798) Homepage Journal
    Here are a few books I found helpful:

    A great first book is A Random Walk Down Wall Street,... [amazon.com] . If Wall Street, etc. seems dark & mysterious (and even if it doesnt) this is a great book. It starts by giving you a background in some of the mania that has surronded stock-markets, going all the way back to the Dutch Tulip bubble of several hundred years ago. If you're wondering how pratical something like that could be, just think of the dot-com boom of the late 90's. It proceeds to explain clearly & elegantly various things such as technical & fundamental analysis, the theory of efficent markets, and ultimetly, the value of index funds like the S&P 500.

    After having started a few "HOW TO PICK STOCKS" books, this was probably the first solid financial book I found that made sense, was able to round out of my financial knowledge & give pratical advice at the same time.

    If Random Walk seems to weighty, Rich Dad, Poor Dad: What the Rich Teach... [amazon.com] isn't bad. The author, Robert T. Kiyosaki, has several books in this series, this one being the first. It's written in a non-intimidating way, with much of book conveying ideas easily as converstations between the author & his rich friend's father (aka Rich Dad). He compares his dad's common viewpoint on finacial matters (aka Poor Dad) to Rich Dad's method, and hence the title.

    If you're only two years out of school, some of initial steps are just doing good math:
    • Pay off your credit cards!

      Credit cards are great & really convient, but they have an AMAZINGLY high interest rate. They're 2nd only to the QuickCash/PayDay Advance places for screwing over the average joe. Pay those suckers off!

    • Pay off your other loans (e.g., college loans) & move the most aggresively towards the highest interest ones first. (This is just good math.)

    • Invest in your 401k. Good for two reasons -- first companies usually match you contributions (or a portion thereof), so hey, free money is always a good thing, and secondly the earnings aren't taxed. If you haven't learned the evils of the taxman yet, you're about to. Hiding from the taxman, with his huge take of the pie, leaves more money in your pocket.

    • Open an IRA (Roth if possible, Traditional if not). Another great way to hide from the tax man. Basically another way to get free $$ from the government.


    If you reach that point -- no debt, regular contributions to 401k, an annual 3k contribution to your IRA, you're going to be in pretty good shape. Best of all, you're starting young, and in a down market, so you'll really give compond interest a chance to work it's magic on your hard earned cash.

    -Bill

    • I agree with wdr1. Random walk down wall street is an excellent introduction to the market works.

      Other books depend upon what level you want to learn about finance. If, for example, you are just looking for some personal finance tip books than many other people here have made good recommendations.

      If you are looking to get your hands wet by opening a brokerage account and buying some stocks/options, then I recommend that you start with Random Walk Down Wall Street. If you are inclined to try some simple c

    • Paying off high interest loans first is good math, but it might not be terribly good finance to pay off all your debt quickly.

      If you've got access to a 401k, then that will almost automatically be the best investment you can make, if only because it's tax free until you retire. At that point, presumably, there will be things you can do to minimize your taxable income.

      Even if you're in the 25% tax range, the interest/capGains that you'll get out of the 401k investment will FAR outpace paying off your stud
  • You'll be glad you did when the stock market tanks again :-) (I'm glad I didn't get round to investing anything during the late 1990s.)

    I'd actually recommend reading Burton Malkiel's "A Random Walk down Wall Street" for a good overview of how people try to pick investments, and why they don't always make a good job of it.

  • Advice from a Linus Torvalds look-alike (Score:3, Funny)

    by Ashurbanipal ( 578639 ) on Thursday April 17, 2003 @05:53PM (#5754927)
    James the Mad Pengiun sez:

    "If you had bought $1000.00 worth of Nortel stock one year ago, it would now be worth $49.00.

    With Enron, you would have $16.50 of the original $1,000.00.

    With Worldcom, you would have less than $5.00 left.

    If you had bought $1,000.00 worth of Budweiser (the beer, not the stock) one year ago, drank all the beer, then turned in the cans for the 10 cent deposit, you would have $214.00.

    Based on the above, my current investment advice is to drink heavily and recycle."

  • managing your $$$ (Score:1, Insightful)

    by Anonymous Coward
    some tips from a self-employed IT guy who likes finance:

    *) Always be aware of your finances. That means using a spreadsheet or software like GnuCash. You want to be able to see where your money is going. For instance, many people don't realize just how much credit card interest they pay in a year, or how much they spend on starbucks coffee or whatever. Get the big picture.

    *) Always be emotionless. Don't buy stocks because you like the company's products. Don't keep credit cards around that you don't need.
  • was the Complete idiots guide to Personal Finance in your 20's and 30's. It's really good for setting out the kind of things someone in their 20's can do to start saving money. Obviously it doesn't go into great detail, but sumarizes a lot of different areas pretty well. My two cents.
  • Try Getting Loaded [amazon.com] by Peter Bielagus. It's specifically targeted at people in your situation.
  • I'm a code geek, but have paid attention to finance a bit (hey, gotta be able to manage my millions that I'm going to have... someday).
    • Put money away pre-tax. This means 401k's and IRAs. This lowers your income, meaning you'll pay less tax to the government. =)
    • "Pay yourself first" Probably the cheesiest, but best line of advice I've heard. That means put money either by direct deposit or manually into a separate checking account just for your everyday things like rent, food, utilites, etc. Then fig

    • Put money away pre-tax. This means 401k's and IRAs. This lowers your income, meaning you'll pay less tax to the government. =)

      Be sure to check out a RothIRA too. 401k's use pretax money, meaning you haven't paid taxes on it, yet. You will when you take out funds. With a Roth, taxes are paid now, which means all the interest, income, and gains are tax free (along with the principal). Then at retirement you can pull some from your 401k, some from your Roth, and keep your tax liability lower than if it

    • I hope you're getting better than a 2% return, otherwise you won't even keep up with inflation. At that rate you'll have less real money at the end than you started with!
    • Pay off your credit card debt first. Seriously. There's no such thing as "money in savings" if you're paying 12% or more on credit card debt.
    • Are you saving for something in the 5yr horizon (i.e. down payment on house)? If so, money goes right to money market. Nothing risky. So many people ask for advice that goes like this, "I want to buy a house in 3 years, so how do I invest my money now to maximize my profit and minimize my risk?" Answer, you don't. You put it in a nice safe money market and get

  • It's a philisophy, a way of life!

    Part of the problem is we aren't thought how to think about money. I would recommend "Personal Finances for Dummies". It's a good book that teaches you the fundamental understanding of how to view your money, and how to view life in terms of spending your cash.

    For example, do you go to starbuck's every morning for that cup of $3 coffee every working day? If so, you will spend $15 a week (assuming you purchase only one cup a day). You spend about $345 a year. You could g

  • "The Richest Man in Babylon" - Simple, timeless ways for getting ahead. An easy read, and short to boot.

    "The Millionaire Next Door" and "The Millionaire Mind" - The results of a broad survey of millionaires. What they're actually like, how they got there. They may not be who you think.

    "Rich Dad, Poor Dad" series - attitudes of the rich, educating yourself financially, and some strategies for doing.
  • Check out Personal Finance for Dummies (3ed) by Eric Tyson. This is THE book about personal finance. Don't let the 'for Dummies' title fool you, it is a GREAT book.

    Also, check out usenet: misc.invest.financial-plan. that group is great also.

    Good luck, that book changed my life for the better.

  • Investing Help ... (Score:4, Informative)

    by vorwerk ( 543034 ) on Thursday April 17, 2003 @07:47PM (#5755638)
    Websites:

    http://www.bylo.org
    http://stingyinvestor.com
    http://www.fool.com
    http://www.moneysense.ca
    htt p://www.canadianmoneysaver.ca

    Books:

    Random Walk down Wall Street (by Walkel)
    The Intelligent Investor (by Graham)

    • 1. Be careful that you know the target audience for the material you are reading. Some of the Canadian material doesn't apply to Americans and vice-versa.

      2. As lame as it sounds, I actually found Personal Finance for Dummies to be quite good.

      3. I have a page with additional Canadian-oriented information: Money [akerman.ca]

  • Any decent financial planner should be able to put together a simple investment plan for your for about $400. I had an American Express advisor do it for me. We met in person, exchanged information, filled out some forms. Over a few weeks of e-mails and simple questions, I had a solid plan to follow for several years. It was a good idea, as he knew way more than I did, and I could spend my time learning Python instead of every nook and cranny of the finance world.

  • This is the book I point my friends to when they ask this question - Get A Financial Life : Personal Finance In Your Twenties And Thirties by Beth Kobliner. Amazon link [amazon.com]. They've all been happy with it. Slim, readable, complete, good advice. I believe Kobliner was a columnist for Money Magazine for many years. She now has her own website [kobliner.com].

    Other classics, good to move on to once you've read that one: A Random Walk Down Wall Street by Burton G. Malkiel. Good book to understand what happens when your money is

    • Agreed on "Get a Financial Life" choice. Its especially writen for the young and financially uneducated. But even someone who atleast can claim some "financial acumen" like myself :), learnt a lot from it as well.

      Its written without a lot of jargon and gives real world examples and general steps to start good discussions from which advisors you may talk to.

      I felt so strongly about this book, that I was actually gonna post this as a separate comment upon reading the question, but I figured someone else m

  • public debt (Score:1, Informative)

    by Anonymous Coward
    Stocks, money markets, etc are all different ways of doing that same thing: letting someone else use your money.

    There is one and only one class of entities that will use your money and reliably give it back to you with interest. And that is a government based on the anglo-saxon tradition.

    Look at these fucks telling your that the stock market reliably gives %10 on investment. What bull crap; the studies that say that ignore delisted stocks and anyway if it was so how come some big house doesn't offer a g
  • See Larry Burkett's site [crown.org]. His radio programs are broadcast on 700 stations from Guam to South Africa.

    Some of his books are: Debt-Free Living, How to Save Money Every Day, Money Management for College Students, and Money Matters for Newlyweds.

    Then there are the pocket guides. The World's Easiest Pocket Guide to ... Buying Your First Car, Renting Your First Apartment, Starting Your First Savings Plan, Creating Your First Financial Plan, Buying Your First House, and many more.

  • a contrary position (Score:2, Interesting)

    by zogger ( 617870 )
    I offer a contrary to most advice here:

    Stay AWAY from credit, don't use it, ever, despite what almost everyone says, you honestly don't need it. If you need one small card for purchases online, that is different, you never spend what you don't have, just use the CC as a service, not a loan.

    Land. Land is the oldest form of accumulated and stored and useful wealth. Pay for your property, then build as you go on it. When the structure is "good enough" move into it. Make sure it is rural property with good
  • Personal Finance for Dummies by Eric Tyson (don't be put off by the title, Eric Tyson is really good. His personal finance related books are easy to read and thorough.)

    The only Investment guide you will ever need by Andrew Tobias (Covers more then just the investing stuff. Gets you in the right frame of mind).

    Die Broke and Live Rich by Stephan Pollan and Mark Levine (An interesting whole life approach.)

    Common Sense on Mutual Funds by John Bogle (Founder of Vanguard and big-time advocate, of n

  • Book list and suggestions (Score:3, Insightful)

    by XDG ( 39932 ) on Friday April 18, 2003 @12:31PM (#5759940) Journal
    Many good posts so far. Here are my contributions. I work in financial services and have perspective from the "other side", as well as my own research managing my own finances.

    First, I highly recommend you use Quicken/Money religiously. I only bank/etc with companies that I can download direct to Quicken. Watching your net-worth chart over months/years can be inspiring. Seeing each month if you made more than you spent is crucial.

    Second, the best piece of advice is to invest at least 10% of what you make. To follow common advice, "pay yourself first"! This means making that 10% disappear from your paycheck before you even think of it as money to use to pay bills, buy pizza, etc. If you can put this in a 401k, great! If not, do it anyway.

    Third, the vast majority of people investing should probably be using index funds. Yes, some people make money in the market, but it's probably just luck. (Really! There are some 30,000 or so mutual funds -- half don't beat the market each year. Imagine beating the market equal to flipping heads on a coin. Now watch 30,000 people flip a coin once a year for 10 years or so. You're still going to have some lucky few who flip heads 9/10 times. Ever wonder why mutual fund companies have so many funds? It's so they always have at least one or two that do well last year that they can advertise. If professional money managers can't do better than 50/50, why do you hear about so many successful individuals? You're not talking about 30,000, now you're talking millions. At 50/50 odds -- or worse -- you'll always hear about someone who made a lot of money.) My advise for anyone starting out is to open an account at Vanguard and stick your money is a broadly diversified index fund.

    Four, make sure you have an emergency fund -- three months expenses is usually cited. Once that's topped up, you should think about investing most of the rest. Weight investments heavily towards stocks when you're young, and shift gradually towards bonds as you retire.

    Books that are useful:

    Random Walk Down Wall Street [amazon.com] -- by the founder of Vanguard

    Stocks For The Long Run [amazon.com] -- a top academic perspective on investing

    When I was very young (high school), I found that Smart Money, by Ken & Daria Dolan [amazon.com] was a good overview. That's old, but they have more recents texts.

    In the "funny story" model of teaching basics of financial planning, you might consider The Wealthy Barber [amazon.com] (recommended by a friend of mine, though I found it too simple by the time I got around to it) and/or The Richest Man In Babylon [amazon.com] (parables about money originally written in 1926 and still applicable -- see the Amazon reviews!).

    For why not to confuse chance with skill, try Fooled by Randomness [amazon.com]. It has a lot of snide commentary at industry insiders, but makes a good point about why humans mistake luck for skill, broadly.

    I hope those are a helpful start. Best of luck!

    -XDG

    • Peter Lynch managed to beat the market most of the years he ran mutual funds. There are a few other star managers who have managed similear feats. Many of the maganers who don't beat the average don't because their funds can't invest in anything. If utilities are down this year and a fund that invests only in utilities beats the market you should hang the fund manager for fraud. (Either the results are fiction, or they are real, but the money wasn't in utilities).

      That said, beware of funds that claim

  • I got The Wealthy Barber for Christmas one year and saw both TV specials the next. It is incredibly readable, and gives very common-sense advice.

    The main advantage of the book, other than being told as a fictional story, is that it assumes you're basically lazy and don't want to have to be disciplined all the time. You don't have to.

    Pay yourself first, i.e., put away 10% of your check over and above your maxed-out 401(k) contribution. I do this, and it's amazing how little I miss the money. Then I basical
  • Not your enemy.

    Simple.

    Compound interest is a really nasty, evil concept that causes untold grief worldwide. I don't agree with it at all. However, it's a fact of life and since it's a fact of life, plan to be on it's good side.

  • Buying a house is still the main way the average joe builds wealth in America.

    First, you have to live somewhere, so you're better off paying into your own home equity than throwing the money out the window in rent. Second, with very few exceptions, real estate in most of the US has appreciated steadily over the last 30 years, and will continue to do so. Some places more (CA), some less (Cowfuck, TX) -- but for the most part, there has been an annual rate of raturn of around 4-7%. Even places like Orange
  • Firstly, always pay off debt before you invest. This includes mortgages, personal loans, credit card debt etc. The saving is zero risk and usually a decent level of return compared with putting the money in bank deposits.

    Secondly, learn as much as you can about the alternatives you ahve. You will need to know about the tax effects etc. as well as returns and risk. So do you want money in equities, a pension scheme or what?

    Thirdly, remember proffessional investment managers will tend to be cautious. The pr
  • I'll have to second any motions for Suze Orman. She's genuinely good person with the ability to help people boil down their complex money problems to the simple key issues.

    Most financial books are crap. They talk about how to make money on the stock market, get rich quick, and appeal to the people "it's that easy" mentality.

    There's also a class of books that really only relates to fairly rich people, but appeal to those who aren't rich, but wish to be. Kind of like reading magazines about Ferrari's whe
  • ...is the name of a great book targeted at people in their 20s and 30s, written by a lady of the same age.

    She nets out a nice set of priorities and explains the impact of different decisions.

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