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If you could recommend 1 book for this situation...
Old 12-30-2011, 07:00 PM   #1
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If you could recommend 1 book for this situation...

Long long time reader (and very occasional poster)...

Wanted to get some opinions on this. Sorry if this is turning out to be long.

My brother-in-law and sister-in-law are a hard working couple, who have always avoided debt, budgeted well, etc. Good short-term finances for a couple just starting out. My SIL in particular has a good head on her shoulders, but has never spent any time educating herself on investments. But they've also not had a ton to invest up until this point, based on their decision to get a house and start a family soon after marriage. Recently though, my in-laws decided to make a gift to each of their daughters, which has given my B/S-IL the chance to invest for the first time.

We never talk finances (strategies or numbers) around family, and normally I wouldn't volunteer much - we figure it's up to everyone to figure out their own path. But my wife indicated my SIL wanted to talk to me at some point for advice. So I was primed for a conversation at some point.

And then my BIL asked tonight whether we invest, indicating he had just bought a few books and was thinking of starting. I broadly describe our priorities/layers of investments that we've worked on for the last decade (emergency fund, 401k/403b max, Roth, then taxable, then additional towards mortgage - all investments in index funds following our predefined allocation strategy that will adjust over time). Spent a little time talking about the rationale for passive vs. active investing.

Then I asked what books he had bought - all 3 were on day trading and/or penny stocks. Evidently he had a friend make a few hundred bucks and wanted to read up on the "opportunities". I offered very gentle criticism (if it was that easy, wouldn't everyone just do that?), and suggested he may want to look at starting with a Roth IRA at Vanguard. Then we went back to taking care of the kids and the rest of the evening.

After reflection with DW, I thought I might jot them a little email broadly outlining how we've layered our investments as an example, and send them a single book to read as a gift. From there - they can figure it out (or not).

Problem is - no idea which book. Our personal (Bogleheadish) style evolved through education (MBA), lots of reading on the internet, etc. I've actually read very little in terms of 4 Pillars, or similar books. So I'm hoping for suggestions for a book that:
  • Is short. Just something to get them started with a basic framework and direction
  • Gives some basic guidance on how to structure and investment portfolio, while also addressing the need for emergency funds, where college savings fits in relative to retirement savings, etc.
  • Outlines basic investment types (i.e. stock vs. bonds, mutual funds vs. individual stocks, active vs. passive funds)

The book doesn't really need to address living below their means, paying down debt etc. They really do a pretty decent job with that already.

Any suggestions?


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Old 12-30-2011, 07:26 PM   #2
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Here is an online book I would recommend: Investing Essentials A Primer


Numbers is hard.

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Old 12-30-2011, 07:46 PM   #3
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Old 12-30-2011, 07:55 PM   #4
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The Investor's Manifesto or The Four Pillars of Investing, both by Bernstein.
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Old 12-30-2011, 08:35 PM   #5
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How about the "Investing for Dummies" book?

Simple, and easy to understand; can be a good basic book for establishing a foundation for further education.
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Old 12-30-2011, 10:07 PM   #6
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I like the Bogleheads Guide to Investing, too.

It's not as comprehensive as Bernstein but it'll serve as a gateway drug.

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Old 12-31-2011, 11:16 AM   #7
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Thanks all for the suggestions - I'll take the time to review them all and pick one out in the next day or so. Appreciate the help!
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Old 12-31-2011, 01:48 PM   #8
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The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits)
John C. Bogle
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Old 12-31-2011, 02:09 PM   #9
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Can't beat the Bogleheads Guide to Investing for sensible advice, and the price is right too.
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Old 12-31-2011, 02:27 PM   #10
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I'll second "Investor's Manifesto" by Bernstein and "Bogleheads' Guide." Also Ferri's "All About Asset Allocation."
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Old 12-31-2011, 07:12 PM   #11
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Old 12-31-2011, 07:16 PM   #12
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What's wrong with day trading? It will serve to teach them a lesson: Either they are good at it and make money or they are bad at it and lose lots of money. Either way, they learn something.

So I would tell them, "If you are good at it, quit your jobs and become full-time traders until ...."

"If you are bad at it, when you are ready, please come ask me about some other investing books that many others have found very helpful."
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Old 12-31-2011, 07:35 PM   #13
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The Investment Answer, by Daniel Goldie and Gordon Murray. The subtitle "Five Key Decisions Every Investor Needs to Make", gives the contents in a nutshell. It's under a hundred pages including the index and appendices.

For the curious, the five questions are:
1. DIY or use an advisor?
2. What asset allocation (stocks vs bonds, large vs small cap, growth vs value)?
3. Invest in US only or international too?
4. Invest actively or passively?
5. Should I rebalance?

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