The Only Investment Guide You'll Ever Need

The Only Investment Guide You’ll Ever Need

By Andrew Tobias

A nice overview of personal financial independence and market and money savvy for the interested and motivated to be free of their financial handicaps and mistakes.

I found a few nice nuggets of information for myself:

-- trust no one, everybody is selling you something with their cut influencing your choices being offered to you. Its true even if you don’t want to believe it.

--invest, don’t speculate. Undervalued companies with steady growth are the best bet. You may have a weakness for beat down companies that need to work out their problems, and you quintuple your value, but the risk here is great and you lose a lot, so be ready to lose.

--taxable holdings hold your risky bets (the losses here are written off up to $3000 per year; and the gains if held > 1 year are at long-term capital gains tax rates, better than income tax rates).

--your steady money should be in tax-sheltered accounts (401K, Roth IRA, deductible Traditional IRA) and should hold steady income stocks. Dividend and interest paying securities here will grow slowly and nicely over time. They will be taxed as ordinary income when withdrawn.

--Tobias advice if you inherit a 5 million dollars

go out to a nice dinner

put 1 years normal living expenses in a money market or bank fund

put equal sums into U.S. Treasury securities maturing in 1,2,3, and 4 years

put the remaining bulk into stock index funds, split domestic and foreign

buy a country place or bigger house if you want one, but not so big that the cost of carrying it will in any way strain you

if inclined you can find value, small rental property, tax shelter, etc.

do not buy a boat

put at most 3% into silver—bags of silver dimes (easier to buy a loaf of bread with a silver dime in a calamity than a $6000 gold coin) see investmentrarities.com

do not tap into the investment principal but do enjoy the extra income it throws off.

If that is too hard split your funds into 3^rd with 1/3 diversified international fund, 1/3 diversified U.S. stock fund, and 1/3 money market or CD funds; rebalance the growth every year back to 33% each.