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Personal Finance- Book Reviews!

Discussion in 'Education & Personal Growth' started by nuss, Apr 16, 2020.

  1. nuss

    nuss Finest Post Winner

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    This is probably not a timely topic when the economy is doing worse than ever and our 401k have taken a big hit. However, before the shelter in place orders in my city I borrowed three books from the library and still have these since everything is closed.

    I had been wanting to read personal finance books for a while but never got a chance. So it was an opportunity for me to read and see if I can learn something new. I have been following a few personal finance blogs: Mr.MoneyMustache, Making sense of cents, and budgets are sexy etc. but hadn’t read a book yet.

    Disclaimer: I do not use budget. I tried a couple of times but I found that I am more of a conscious shopper instead of someone who can stick to a budget.

    So the books I read:
    1. Nine steps to financial freedom by Suze Orman.
    I liked this book quite a bit. It aligns with my philosophy of not just earning money but creating and sharing wealth. It is a great beginner book (Personal finance 101) and walks through different investment portfolio etc. It also helped us actually take time and write a will. If you are a personal finance novice, I would recommend this book.


    2. The soul of money: Reclaiming the wealth of our inner resources. By Lynne Twist.
    This is not really a personal finance book per se but I enjoyed reading it nevertheless. There were parts that I didn’t care much but generally the book does a good job in examining our attitude towards money. Giving is a powerful feeling and Lynne brings this message home. The book offers an insight into our values and shows how the feeling of scarcity can be replaced by sufficiency.
    This is book more about the dharma of money.

    3. Your Money Life: Your 40s. By Peter Dunn. Both my spouse and I turned 40 last year so it seemed an appropriate book for us in early 40s.
    This was by far the least useful book for me. It is well suited for people who are not well organized and have a lot of debt. Half of the book is about debt management and other half actually talks about the finance management.
    It would have been a good book when I first moved to the USA and started managing my own finances. I can see that there are some useful tips and budget tables with suggested percentages in each category.
    All in all, it was refreshing to read the different book on a subject different from my usual reading.
    It was also nice to know that we are doing well financially. I will talk about my own financial journey in another post.

     
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  2. Thyagarajan

    Thyagarajan IL Hall of Fame

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    There were so many black days a nd period in the past decades, but when economy resilient as always pick up in a big way and core sector and fmcg would go up by leaps and bounds. In any case one saved through stocks via 401k or direct with stock exchange for a long term. So that way, the loss calculated on prevailing prices are just notional. Stay afloat and wait for economy to kick start. There is going to be a boom. I see good volumes daily and people are picking value stocks and blue chips dirt cheap.
    The books you had picked up seemed to be good reads. Certainly these studies would stand in good stead in the long run. Berkshire man is great help. Following his principle or just invest in the stock he had chosen people minted money.
    Wish you all the best.

    Thanks and Regards.
     
    Last edited: Apr 16, 2020
    nuss likes this.
  3. Viswamitra

    Viswamitra IL Hall of Fame

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    @nuss,

    Disclaimer: This is not investment advice

    "A good investor is one who is looking for gems when the market is down" and "a disciplined investor is one who whither through ups and downs and trust his/her judgment or his/her financial advisors". No one can predict whether the market had hit the bottom as yet or not but when DOW went down to 20,000 from 29,000, I knew many large-scale institutional investors pitched in looking for the best in the market. Remember the recession encountered in 2008 just before President Obama took office? During those days, some of the best stocks were sold at a price unimaginable and those who invested during that period had enjoyed the best appreciation in value of all of their investments.

    Budgeting is a discipline that is essential whether it is for personal or business. Putting a plan in the paper helps us to visualize where every dollar is spent. We will have a piechart in our head about where most of our money was going. Calculating how much of earnings are saved for long-terms is essential and a floor of how much minimum needs to be saved should be established.

    Most investment managers use something called "Montecarlo simulation" in order to manage the portfolio of their clients. They determine the risk that the investor is willing to take considering the age, current investment profile, short-term and long-term fund requirements, debt that they are currently servicing, children's educational needs, etc. As one gets older the investor is supposed to become conservative in their investments to reduce the risk. The allocation of funds across various asset classes is done based on the risk factor of each investor.

    While 401(K), life insurance, Prepaid children's education, investment in a primary residence, etc. are long-term investments and general brokerage accounts, bank accounts, certificates of deposit, etc. are short-term investments.

    Those who invest in stock out of cash directly always allocate a certain fund of their total net worth for risk-taking and make investments after analyzing the fundamentals of each company or companies in various industries. Risking all investments in one industry is also considered as a risk. Direct investment in stock requires fundamental knowledge to study historical performance, skills on ratio analysis, etc. Even then, predicting future performance based on past results is a risk. A lot of time is needed for such a study before investment. One should understand the risk clearly. Again there is a subtle difference between long-term investments in stocks vs day trading. Day trading requires more financial investment tools and quick access to a trading desk to make quick decisions. Day trading is purely a study of demand and supply of specific stocks based on the official news cycle and many other factors other than the fundamental financial results of the companies.

    Some savvy investors who trained themselves well also invest in Forex, commodities, etc. and these markets are open 24/7.
     
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  4. nuss

    nuss Finest Post Winner

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    Thank you! I have done okay so far with discipline but never hurts to learn new things!
     
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  5. nuss

    nuss Finest Post Winner

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    Wow! You have summarized the whole book in one post!

    I totally agree that budget is important but to me it is about discipline. Instead of assigning dollar amounts to different areas, I assign total dollar amount to our household expenses (a rough budget). After years of tracking, I now know that this % of our income is needed every month). I transfer money to saving first, then know how much will be mortgage, 529, IRA, and daycare. So, it’s easy to know how much to set aside for groceries, gas, miscellaneous, eating out, travel etc. Once that amount is low, even if I am tempted I don’t steal from the savings.

    Please keep posting. I would love to learn more!
     
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