A Management in a Minute Book Overview of The Only Investment Guide You’ll Ever Need by Andrew Tobias
This summary and review of the book, The Only Investment Guide You’ll Ever Need, was prepared by Shelby Law while an Accounting student in the College of Business at Southeastern Louisiana University in Hammond, Louisiana.
This book gives a great deal of amazing advice for anyone who is interested and looking to invest. The majority of the first half focuses more on what not to do rather than what to do. A lot of people fall into to typical traps, but if you know what not to do, you can avoid them. For example, if you are considering playing the “commodities game,” you should definitely read and study the first few chapters. Generally, 10% of people, and sometimes even less, who play the “commodities game” comes out a loser. There are only two possible things to consider: one, which is that everything is based off of luck; and two, that it isn’t. Either way, there are many other ways to invest that are smarter, less risky, and will give you a greater return. Basically, stay away from commodities. The majority of people who mess with them are experts, so if you aren’t, you shouldn’t try competing with those who are.
The next few chapters emphasize a great deal on saving money. Spending less and saving money is basically like receiving tax-free income. You won’t be forced to pay extra taxes just because you chose to save money and you will also have more disposable income. There are all kinds of different ways to save money that won’t force you to have to sacrifice too much. For example, you can buy in bulk. Usually, there is some kind of discount associated with buying more at a time. Your money may be tied up initially, but in the long-run, it adds up and you save money. You can also pay off all your credit cards. Most people don’t realize how much they’re actually paying in interest. A lot of times, more money goes toward the interest payment rather than the actual principle.
The next part of the book is about developing a budget. Finding out where you stand is crucial to knowing where you can go. Once you establish where you stand, you can set attainable goals and actually reach them following the steps given. You may have to occasionally sacrifice, but if you make smart decisions and save more, spend less, and set realistic goals, you can get to where you need to be.
The second half of the book begins with tax strategies. If you invest and reap a reward, the last thing anyone would want is to have to pay a bulk of their gain in taxes. There are a lot of different ways to lessen the amount of taxes you have to pay depending on which type of investment you choose. For example, if you are young and in a low tax bracket, you should consider contributing to a Roth IRA. Your contributions will be taxed in your current tax bracket, and you won’t have to pay taxes when you withdraw. Usually with time you will progress into higher tax brackets so if you choose a Roth IRA instead of a traditional IRA, you will be able to pay taxes based on your lower tax rate.
The last part of the book is all about the stock market. While stocks seem risky, they actually usually outperform other investments. They also keep up with inflation and can provide a tax shelter. There is a lot of great advice when it comes to investing in the stock market. The main thing to keep in mind is that you can’t outsmart the stock market so the best thing you can do is keep it simple. Buy your stock and hold on to it; don’t sell it just because you’re scared. The stock market rewards risk and long-term investments.
Published in: Personal Finance