Personal Finance Book Suggestions? 78
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'?"
"Your money or your life" (Score:4, Insightful)
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)
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)
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
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.
Re:Right out of college (Score:2)
Re:Room mates rule! (Score:1)
Suze Orman (Score:3, Interesting)
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".
Re:Suze Orman (Score:2)
Re:Suze Orman (Score:2)
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
Re:Suze Orman (Score:1)
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)
I cut my taxes by reading... (Score:2)
Re: (Score:2)
Re:money manager (Score:2)
two words: Merril Lynch
I've had very good luck with them.
Re:money manager (Score:3, Interesting)
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
Re:money manager (Score:2)
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
Re:money manager (Score:1)
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
A lot of bad advice mixed in above! (Score:2)
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
Re:A lot of bad advice mixed in above! (Score:2)
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
Re:money manager (Score:1)
Re:money manager (Score:2)
Re:money manager (Score:2)
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
Bill O'Neill (Score:2)
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.
Not a book, but advise (Score:2)
Re:Not a book, but advise (Score:2)
Mutual funds are a bad idea (Score:3, Informative)
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
Don't take any *one* person or book's advice (Score:2, Insightful)
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.
Re:Don't take any *one* person or book's advice (Score:2)
Thats the worst monkey book I've ever seen. I recommend:
The Pictorial Guide to the Living Primates [amazon.com].
-metric
Gimme your addy... (Score:1)
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>
Dude! (Score:2)
The trick with money isn't being smart... (Score:1)
Re:The trick with money isn't being smart... (Score:1)
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 (Score:1)
Re:the art of money getting (Score:1)
The Art of Money Getting: http://www.fourmilab.ch/etexts/www/barnum/moneyge
Congratulations... (Score:2)
...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]
Andrew Tobias, My Vast Fortune (Score:2)
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
Buy a house (Score:2)
You get 3 "bangs for your buck":
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
Re:Buy a house (Score:2)
Re:Buy a house (Score:2)
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)
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:
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!
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
Re:My recommendations (Score:2)
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
Re:Paying off your other loans (Score:2)
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
Procrastinate! (Score:1)
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)
Re:Advice from a Linus Torvalds look-alike (Score:2)
managing your $$$ (Score:1, Insightful)
*) 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.
A book that I found useful (Score:1)
Getting Loaded (Score:1)
Free Advice (Score:2)
Re:Free Advice (Score:1)
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
Re:Free Advice (Score:1)
All the standard advice... (Score:2)
Re:All the standard advice... (Score:1)
Managing Money is more than just tips... (Score:1)
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
Babylon, Millionaires, Kiyosaki (Score:2, Informative)
"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.
Personal Finance for Dummies, 3ed. (Score:1)
Also, check out usenet: misc.invest.financial-plan. that group is great also.
Good luck, that book changed my life for the better.
Seconded: Personal Finance for Dummies, 3ed. (Score:2)
Investing Help ... (Score:4, Informative)
http://www.bylo.org
http://stingyinvestor.com
http://www.moneysense.ca
ht
Books:
Random Walk down Wall Street (by Walkel)
The Intelligent Investor (by Graham)
Re:Investing Help ... (Score:2)
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]
Get a financial planner (Score:2)
Recommended: Get A Financial Life by Kobliner (Score:2, Informative)
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
Re:Recommended: Get A Financial Life by Kobliner (Score:1)
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)
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
Budgeting and Personal Finance (Score:2)
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)
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
book recomendatiins (Score:2)
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)
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
But some do beat the market year after year (Score:2)
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
The Wealthy Barber (Score:2)
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
Make compound interest your friend... (Score:2)
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.
Get your finances in order and buy a house... (Score:2)
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
The basics (Score:1)
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
Suze Orman (Score:1)
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
Get a Financial Life (Score:1)
She nets out a nice set of priorities and explains the impact of different decisions.