“A disciplined approach to investing, complemented by understanding, is all you need to enjoy success.”Malkiel and Ellis
The Elements of Investing | Burton Malkiel and Charles Ellis
The theme of this book is dealing with the obsession, greed and fear experienced by the average investor when dealing with their finances and investments.
Malkiel and Ellis aim to remove all the jargon and bullshit the financial industry throws at you, and distil investing down into its most basic and easy to understand form. The big take home – you win by not losing, and not losing means not playing the losers game (stock picking). The book is broken down into five key principles or chapters
- Save: Live below your means, get out of debt, and raise capital to invest.
- Index: Avoid trying to stock pick, actively managed mutual funds or other sketchy investments. Instead enjoy investing in a total stock market index fund
- Diversify: don’t put all your eggs in one basket. Spread your investments between domestic stocks, international stocks, bonds, cash (emergency fund), and real estate.
- Avoid blunders: Stick to the plan and be humble.
- Keep it simple. Simplicity gives peace of mind and is easy to manage