Friday, April 12, 2013
Do You Want to Get Better at Managing Your Money?
Do you want to get better at managing your money? Find someone who knows more than you know. Ask her questions. Be eager to learn. Forget your preconceptions and prejudices. Open your mind to new possibilities. Then listen; evaluate; experiment; learn. Even if you disagree with a teacher or discover a path is not for you, ask yourself is there even one thing I can learn from this person. The answer is almost always, “Yes!” Since I went on that last long vacation prior to my retirement, I have been blessed with the opportunity to learn from both some recognized masters and a rising star. Books are a wonderful opportunity to meet and learn from people with encyclopedic knowledge of their subject. Think about the amount of time that went into writing that book. How much would John C. Bogle, the founder of the Vanguard family of funds, charge for an hour of his time? If someone like that writes a book, don’t miss the opportunity to read it. Go to your public library. How can you beat consulting with world renowned experts at no charge? Even if you end up paying $25.00 for a quality hardback, what a bargain. Be sure and share that book with others. Never miss the chance to be a blessing. It is written, “When a blind man carries a lame man, they both go forward.” Here is a brief list of some of my recent consultations with some of the best. One Up on Wall Street by Peter Lynch One of the classics. I was honored to be given this book as a gift at my retirement. It challenges some of my basic assumptions on how to evaluate small cap stocks. I still need to experiment with his methods using annual reports and research papers on stocks that I already own before I start putting my money down on companies that the stodgy old conservative value investor inside of me still considers risky. I intend to learn everything I can from this book. I never want to stop learning. I Will Teach You to Be Rich by Ramit Sethi This young man particularly addresses the problems of well educated, intelligent, ambitious, young people in language they understand. His advice on creating or bettering a career (mostly found on his blog) is of particular value. He has challenged me to better utilize some of the “cloud” type resources that are free on the Internet. He has also reminded me I could do better with my pure cash by utilizing a high interest account at an electronic bank. These services are offered by Schwab, who is already my broker. I have known about these opportunities, but a combination of sloth, fear of a bank without a building, as well as loyalty to my credit union has stopped me from taking advantage of the higher rates found at online banks. I might have to use an ATM, a very scary thought. On Investing: The First 50 Years by John C. Bogle If you want well documented statistical proof that investing in low cost index funds beats paying retail for products sold by commission salesmen, here it is. He also reminds those of us who pick individual stocks to be very careful. Really, this man should be honored by his country. He invented the index fund. He structured his company in such a way that the shares (hence the investors) own the company. It uniquely benefits the investor with low costs. Vanguard is no longer alone. Fidelity, BlackRock, and Schwab to name just a few of the companies that are now offering competitive products, particularly in the new field of Exchange Traded Funds. The Future for Investors by Jeremy Siegel Benefit from a lifetime of academic research by one of the best known professors from the Wharton School of Business. This man has quite a record, including his notorious prediction of the dotcom collapse of 2000. I haven’t finished reading this book, but I am really excited by the depth of his research and the power of his logic. He must be smart. He agrees with me. One more thing, no one has all the answers. Not even me. As always, remember managing money contains risk. That is to say, it contains elements of both skill and luck. If you are blessed, thank God. He is your provider. It is God alone who judges; he decides who will rise and who will fall. Perhaps the most basic and oft repeated premise of this blog can be found in James 1:5, “If you need wisdom, ask our generous God, and he will give it to you. He will not rebuke you for asking.”