The Elements of Investing: Easy Lessons for Every Investor

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Overview

Since the original edition of The Elements of Investingwas published over three years ago, investors have faced difficulteconomic times along with unprecedented market volatility. It's notsurprising that many investors simply abandoned the stock market.It seemed to be too risky a place for retirement savings, and thesituation was too unnerving for most to handle. Moreover, someprofessionals started to announce the death of "buy and hold" and"diversification" strategies.

Burton ...

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Overview

Since the original edition of The Elements of Investingwas published over three years ago, investors have faced difficulteconomic times along with unprecedented market volatility. It's notsurprising that many investors simply abandoned the stock market.It seemed to be too risky a place for retirement savings, and thesituation was too unnerving for most to handle. Moreover, someprofessionals started to announce the death of "buy and hold" and"diversification" strategies.

Burton Malkiel and Charles Ellis, two of the investment world'sgreatest thinkers, understand how you could get thoroughly confusedby today's markets and the often-conflicting advice that comes withit. That's why they've returned with an Updated Edition ofThe Elements of Investing. While staying true to theoriginal edition—and discussing the timeless investing andsaving lessons that will put you on a path towards a lifetime offinancial success—this book also contains fresh insights foundin an additional chapter on rebalancing, which focuses on importantissues such as fine-tuning your bond diversification strategy toreflect the realities of today's markets.

Written with every investor in mind, this short,straight-talking book skillfully offers a set of simple, yetpowerful thoughts on how to avoid Mr. Market and his "loser'sgame," and instead enjoy the "winner's game" approach to investing.All the investment rules and principles you need to know arehere—with clear advice on how to follow them.

Divided into six essential elements of investing, this littlebook packs a big message that can help secure your financial futureall the way through retirement. Malkiel and Ellis touch on avariety of topics, from focusing on the long term instead offollowing market fluctuations to using employer-sponsored plans tosupercharge your savings and minimize taxes. Along the way, theyalso address the best friends of any investor: diversification,rebalancing, dollar-cost averaging, and indexing.

The timeless lessons presented in this book are even morerelevant in today's volatile markets. If you take the time to learnthem, you will be able to take control of your financialfuture.

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Product Details

  • ISBN-13: 9781118484876
  • Publisher: Wiley
  • Publication date: 1/29/2013
  • Edition description: Updated Edition
  • Edition number: 2
  • Pages: 208
  • Sales rank: 68,297
  • Product dimensions: 5.30 (w) x 7.10 (h) x 0.70 (d)

Meet the Author

Burton G. Malkiel is the Chemical Bank Chairman'sEmeritus Professor of Economics at Princeton University and theauthor of the bestselling A Random Walk Down Wall Street.Malkiel has served on the President's Council of Economic Advisers,as dean of the Yale School of Management, as chair of Princeton'sEconomics Department, and as a director of major corporations.

Charles D. Ellis is a consultant to large public andprivate institutional investors. For three decades, he was managingpartner of Greenwich Associates, the international businessstrategy consulting firm. He has taught investing at both Harvardand Yale and is the author of fifteen books, including thebestselling Winning the Loser's Game.

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Table of Contents

Preface to Updated Edition xi

Foreword xvii

Introduction xxiii

It All Starts with Saving 1

I. Save 3

First Do No Harm 6

Start Saving Early: Time Is Money 7

The Amazing Rule of 72 9

Savvy Savings 14

Small Savings Tips 18

Big Ways to Save 20

Let the Government Help You Save 22

Own Your Home 24

How Do I Catch Up? 25

II. Index 29

Nobody Knows More Than the Market 31

The Index Fund Solution 34

Don’t Some Beat the Market? 38

Index Bonds 43

Index Internationally 44

Index Funds Have Big Advantages 44

One Warning 46

Confession 49

III. Diversify 51

Diversify Across Asset Classes 54

Diversify Across Markets 58

Diversify Over Time 60

Rebalance 65

IV. Avoid Blunders 73

Overconfidence 76

Beware of Mr. Market 79

The Penalty of Timing 84

More Mistakes 85

Minimize Costs 87

V. Keep It Simple 93

Review of Basic Rules 95

Asset Allocation 105

Asset Allocation Ranges 107

Investing in Retirement 112

Getting Specific 114

VI. Timeless Lessons for Troubled Times 125

Volatility and Dollar-Cost Averaging 128

Diversification Is Still a Time-Honored

Strategy to Reduce Risk 131

Rebalancing 133

Diversification and Rebalancing Together 136

Index at Least the Core of Your Portfolio 137

Fine-Tuning a Bond Diversification Strategy 142

A Final Thought 148

A Super Simple Summary: KISS

Investing 151

Appendix: Save on Taxes Legally 153

Individual Retirement Accounts (IRAs) 154

Roth IRAs 156

Pension Plans 158

Tax-Advantaged Saving for Education 161

Recommended Reading 165

Acknowledgments 167

About the Authors 169

Index 171

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