Book Review: The Only Investment Guide You’ll Ever Need

If you open The Only Investment Guide You’ll Ever Need, by Andrew Tobias, you will see a quote from the Washington Star that reads: “A good primer for …

If you open The Only Investment Guide You’ll Ever Need, by Andrew Tobias, you will see a quote from the Washington Star that reads:

“A good primer for anyone who doesn’t want to die poor.”

If any succinct sentence clearly expresses my thoughts about The Only Investment Guide You’ll Ever Need (TOIGYEN), it is that one. Tobias offers a prudent plan: be frugal, save and invest conservatively. This plan will undoubtedly protect the majority of people from losing their hard earned savings, thus the reference to prudence. Unfortunately I don’t think most of us have prudent dreams, and that probably includes Tobias, based on some of his examples of less conservative investments in which he has partcipated. We, like Tobias, sometimes find ourselves drawn to investments that, with some of our own brainpower and personal time, offer the opportunity to squeeze a little more blood out of the financial turnip.

TOIGYEN is focused on how to save money and hold onto it. His advice with regard to how to make money is simply to let the market do the work for you. If you are patient enough and your dreams are reasonable, this just might be a good strategy for you. In other words, if you clip coupons, this is the investment book for you. Tobias shows how you can actually make a 50 percent return just by buying a particular item in bulk (in his example, a case of wine). This example shows an intriguing and creative way to look at some of your everyday purchases and the time value of money. However, when I read it, I couldn’t help feeling the same as when my wife comes home with shopping bags and announces, “Honey, come see how much money I saved us.” The question in the back of my mind is always: are you buying it because you really need it (and will use it) or because it’s on sale (or offered with a bulk discount).

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In case you couldn’t tell, I’m not a coupon clipper. I chuckle when the grocery store clerk tells me that with my receipt I can save $.10/gallon and wonder how many people actually go out of their way to save that $1.50 to $2.00 on a tank of gas (provided they were lucky enough to be at the grocery store on the day their tank was completely empty). All that is to say that my goals are not achieved if I spend 30 years conservatively (and detachedly) investing and saving. Perhaps that explains my passion for investments in tangible assets such as real estate and businesses, things that offer a certain level of control and flexibility (activity) as opposed to passivity. (If you are looking for information on those kinds of investments, you won’t find them in this book)

Regardless of your coupon-clipping proclivity, this book has something to offer a multitude of investors. For new investors, and those with a small amount of money, Tobias offers a simple plan that, if followed, can provide an easy-to-manage path to more long term financial security. For active investors in a market full of speculative fever, TOIGYEN is an aspirin and a damp cloth.

What this book does:

• Give a brief overview of most stock and financial derivative investment options
• Warn against taking your financial advice from those who stand to benefit from your decision
• Lay a foundation for long term investing: in the short term, the only guy who makes money is the broker (that goes for stocks or real estate)
• Offer some examples about how to teach your kids the value of money and investing
• Debunk some of the marketing gimmicks of financial services products (i.e. life insurance and annuities)

What this book doesn’t do:

• Give instruction on how to trade some of your time for better returns (in fact Tobias’ belief is that no one can consistently beat the market)
• Cover a range of alternative, non-stock investments (other than basic rental real estate, timber and oil & gas)
 

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