I recently read Barbara Friedberg’s 20 Minute Guide to Investing.
This guide is an intro to investing that covers the basics of what you need to know, before you start investing. Barbara covers many topics, including the following:
- What should I do before I invest?
- Why should I invest?
- What is investing, and what are some common ways to invest?
- What are index funds, and how can they help me increase my returns?
- How can I set up my asset allocation to serve me best?
What I loved:
- Barbara tells us that we should take care of our security and feeling of safety first by saving up several months worth of expenses and getting rid of credit card debt before we even start to think about investing. This is a great point, and paying down the credit cards gives you a guaranteed high rate of return.
- Barbara covers the impact of expenses and fees on returns and makes the case for index funds. These fees can make a HUGE difference over time, so instead of subsidizing your personal advisor’s Mercedes, why not keep some of those returns for yourself?
- This is an incredibly dense nugget of information. There is more substance in this free eBook than there is in many costly personal finance books.
What I would have liked to see more of:
- Although Barbara mentioned that the first decade of this century has seen lackluster returns on the part of stocks, I am wondering what the overall return would have been if you had invested over that period of time using dollar cost averaging (DCA). While the jury is against dollar cost averaging in favor of lump sums if you have a lump sum, dollar cost averaging is an important tool for investing income for the long term, especially if one has an employer match on income saved for retirement.
- I would have liked to see some more lifestyle stories. Investing and personal finance are there to serve goals in the end, and these goals might include getting out of the rat race. Stories and fables really help to convey these points across.
- This is an impressive amount of information for a 20 minute guide! While it is very concise and to the point, newbies might be overwhelmed!
Barbara has a passion for investing and personal finance, and it’s not easy to compress that down into twenty minutes! I highly recommend you read her guide and get some free investment advice, and then visit her site, Barbara Friedberg Personal Finance. She is a great writer and blogger, and I enjoy reading her wisdom and advice. I look forward to reading more from her in the future.