Taking stock of investing

REVIEWS BY STEPHANIE SWILLEY

Over the last two years some $7 trillion in investor wealth evaporated as the market tumbled 40 percent. With the recent upswing, investors are diving back in. Mistakes are costly in investing, so let investors who've been around the block show you what works—and what doesn't.

Stripped down investing

Burton Malkiel's A Random Walk Down Wall Street (1973) is truly an investing classic. The 500-page book contains all kinds of wisdom, but it's a tough, dense read for everyday investors. Now 30 years later, Malkiel has written The Random Walk Guide to Investing, a blessedly brief—only 160 pages—bare-bones guide to investing. Not that Malkiel skimps on the advice; he's comprehensive without the jargon or academic stuff. In fact, he claims it's "truly the only investment guide you need."

Malkiel backs up that bold claim by saying that achieving above-average returns is strikingly easy. After you master the basics (fire your advisor, focus on just four investment categories, understand the risk/return relationship), you're ready for the 10 "simple, time-tested" rules. Yes, saving is one of them, and he has some innovative strategies for socking away extra dollars. Learn how to stiff the tax collector and how to balance your portfolio with Malkiel's favorite—index funds. Invest in indexes of all kinds—stocks, bonds, real estate. Put your money in a broad-based fund (he gives a list) that buys and holds almost all of the stocks in the market, he advises. Investing strategy changes with age, so check out the life-cycle investment guide and start beating the professionals.


School of hard knocks

"You can read all the investment books you want, but there is no substitute for lessons learned in life," writes Jack Brennan, chairman and CEO of The Vanguard Group, in the foreword to Wealth of Experience. This fascinating book gathers the advice of 600 Vanguard shareholders, 80 percent of whom are "high-net-worth investors" whose portfolios are worth $2 million on average.

Feeling out of your league? It's interesting to note that, of that group, 18 percent never graduated from college, and 16 percent are still in the workforce earning less than $100,000 a year. The sharp, common-sense advice they impart shows you don't have to be a genius to be a smart investor—just have stick-to-it-iveness on a few basic principles.

Author Andrew Clarke distills the many investor experiences and suggestions into a simple, practical program. He covers important ground on saving (the most important key to investment success) and creating a long-term strategy, then moves into the nitty-gritty details of taxes, estate planning and diversification. In addition, he peppers the chapters with quotes from real folks, thus enlivening topics that can sometimes feel like homework. Learning how real people cope with financial ups and downs proves to be both cautionary and encouraging. Each chapter also includes action steps from Vanguard's advisors.


Real estate riches

Russ Whitney was a high school dropout working in a slaughterhouse when he picked up a $10 real estate how-to book. Now the multimillionaire has written his own real estate how-to guide with Millionaire Real Estate Mentor. Whitney gives a simple overview of how the real estate market works and delves into auctions, wholesale real estate, foreclosure and mobile homes, which he calls "little boxes that spit out cash."

This isn't a passive program that assures returns in 20 years. Whitney strives to make money fast and he loves the control real estate gives, saying it puts you in the driver's seat for your future. But he doesn't advocate going it alone. Nope, every real estate guru needs a "power team" that includes a banker, a mortgage broker, an insurance agent and a few others—all people willing to help make you a success because it puts money in their pockets.

For those worried about the potential cash outlay, Whitney insists that "no money down" deals are everywhere and describes six ways to make these happen. His advice is tailored to beginners, and he goes to great lengths to demystify the market.


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