Comment by jon_dahl | Hacker News Reader

Comment by jon_dahl | Hacker News Reader

The first and best book on investing that you should read: A Random Walk Down Wall Street (http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/039306...). This book has great investing advice; is funny, interesting, and well-written; and clearly explains what's going on behind different investment approaches. In other words, it doesn't just answer the "what" question, it answers "why" and "how".

As for specific advice, investing isn't that difficult. The best approach is to be lazy: decide on an asset allocation (e.g. 50% US stocks, 30% international stocks, 20% bonds), buy index funds, and rebalance to these percentages every now and then. Vanguard (https://personal.vanguard.com/us/home) is probably the most respected provider of index funds; give them a shot.

Check out David Swensen's lazy portfolio if you want something more advanced: http://www.npr.org/templates/story/story.php?storyId=6203264.

For investing discussion, try http://www.bogleheads.org/.

Index fund is the way to go for many people. In fact, it is the suggestion William Sharpe gave to (pre-IPO) Google employees.

http://www.sanfranmag.com/print/node/3368

Yeah, but be careful, most index funds have gone down recently, suffering equity losses in the 10-15% range for the last year, before inflation. Just take a look at the Vanguard funds [1], which have one of the best reputations though. Of course, index funds simply followed the market downwards. Long term, they're still a great, trouble-free investment.

I would also consider buying Berkshire Hathaway stock. Expensive, B-series at about 4K, but worth it, again, long term. Slightly better returns too.

Even better, do not listen to me (IANA financier), but read Phill Greenspan's excellent investing advice [2].

[1] https://personal.vanguard.com/us/FundsIndexOnly [2] http://philip.greenspun.com/materialism/money

The fact that index funds have gone down recently should not cause you to be careful. If you believe the long term value is still there, the best time to buy is in fact after they've suffered losses.

jon_dahl is dead on. Understand Malkiel's Random Walk and the rest is details.

But for a really thorough discussion of those details check Investments by Bodie, Kane and Marcus (http://www.amazon.com/Investments-Zvi-Bodie/dp/007293414X/re...). My corporate finance prof encouraged me to look into it, then it was required reading for an economics course I took later. I understand it's the standard-bearer in most finance departments, so there's no going wrong if you're willing to work through the technical parts.

What do you think of ETF's as opposed to regular old index mutual funds?

ETFs are just fine. There are pros and cons to each, but they are minor. Generally, ETFs have lower expense ratios, but you have to pay a commission to buy them (maybe $10 per purchase at a discount broker). Mutual funds are usually free to buy. So if you're going to invest $100/month, go with a mutual fund. If you're buying $5K at a time, an ETF is fine. Never pay more than 2% of your purchase price on a commission, and <1% is better. There's a little more to it than that (the purchase price of an ETF may stray a bit from net asset value, up or down), but that doesn't usually make a difference.

ETFs sometimes get a bad rap because there are so many slice-and-dice funds - gold mining ETFs, Alabama mid-size business ETFs, etc. Stick with the basics (stocks and bonds, US and international, developed and emerging, large cap and small cap).

Looks like a great book, and generally good advice. Thanks!

you must read "The Dollar Crisis" before you invest in anything - trust me this will help for the rest of your life !!!

Thanks for the suggestion. Could you be more specific as to why this book is so great?

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