randomwalkinvestingThis is an offshoot of Burton Malkiel‘s A Random Walk Down Wallstreet, where he conclusively provides proof that money managers are largely not worth their collective breath.  That book (reviewed here) was very powerful in that it teaches that there are no secrets to investing, just hard work.  And by hard work, I mean staying the course despite your wits telling you otherwise.

The Random Walk Guide to Investing is a watered down version of the previous offering, consolidating it into ten rules.  This is a good thing because the previous book is very long and, though virtuous, a difficult read.

Here are the ten rules:

1.  Start Saving Now, Not Later

2. Keep a Steady Course:  The Only Sure Road To Wealth Is Regular Savings

3.  Don’t Be Caught Empty Handed:  Insurance and Cash Reserves

4.  Stiff The Tax Collector (I’m reading another book specifically on avoiding taxes to the full extent of the law very soon)

5.  Match Your Asset Mix to Your Investment Personality

6.  Never Forget That Diversity Reduces Adversity

7.  Pay Yourself, Not The Piper

8.  Bow To The Wisdom Of The Market

9.  Back Proven Winners:  Model Portfolios of Index Funds

10.  Don’t Be Your Own Worst Enemy:  Avoid Stupid Investor Tricks

I write these because just reading the list isn’t enough to not buy the book (in fact, they are listed on the back cover.)  Reading the book is a very quick and effective way to understand very complex financial market information.   If you want a more in depth, proven discourse on the same subject, read the larger offering.   Malkiel gives easy to follow guides for 4 different age groups and how to diversify correctly in proportion with the time you have to save, income and risk aversion characteristics.  Whether or not you choose to follow these investment ideas, your call.  There are also informative listings of low transactional cost firms to purchase stocks, bonds and real estate interest trusts through.  Recommended.