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

It is not enough in modern society to be a useful resource in figuring out one of the major issues in human life; no, increasingly, you have to be THE one and only definitive manual, or people say that you’re no good. As a result, you see more and more books claiming to be the one, the only, the single source you need to be a success in a particular field.

The Only Investment Guide You’ll Ever Need is one such book (although the author Andrew Tobias claims the title was all his publisher’s idea). Having been first published back in 1978 and revised regularly since (the edition I read was from 1998), does it get anywhere close to the title’s lofty claim, or simply fail to meet its goals? Let’s read on and find out!

Summary

The Only Investment Guide You’ll Ever Need (1998 edition) opens with a brief preface covering what has changed in the world of finance since the first edition of the book was published, but stressing that the overall principles of finance remain the same. The first part of the book focuses on getting your finances in order before really investing, and chapter one stresses the importance of not worrying about becoming highly educated in investing in order to be a success, while sharing several stories in which more knowledge actually could work against you.

Chapter two, entitled ‘A Penny Saved is Two Pennies Earned’, covers many ways to cut down on your expenses in life. (A complete listing here would fill the entire review, but some of the highlights include buying a used car, buying generic products, and haggling, when possible). The third chapter covers how to make a basic budget, and also provides some help on how to stick with it throughout the coming years. Chapter four is called ‘Trust No One’. As you might guess, it’s a warning about the many less than wise investments and insurance offers that are present out there, and a reminder that the only person you can truly rely on in life is yourself.

The fifth chapter is the ‘Case for Cowardice’, and covers some of the safe things you can do with your money (money market funds, Treasuries, and corporate bonds, for example). It recommends (U.S. Government) Treasuries, at least short and intermediate term Treasuries, as your primary option for ‘safe’, short-term investments. The sixth chapter finishes out the first portion of the book, covering some of the tax issues involved with saving for your kids’ education, saving for your retirement, giving to charity, and owning real estate.

The second part of the book stresses the importance of investing in stocks to grow your money over time. Chapter seven covers some of the advantages of stock investing, as well as some advice to investing wisely (invest money you won’t need for years, diversify, and ignore the noise of the media, among others). Chapter eight provides further advice on how to do well, by ignoring brokers and relying on deep discount brokerages and no load index funds.

Chapter nine covers a wealth of ‘hot tips’ and areas where you might be tempted to invest, but Tobias recommends you don’t. Some are pretty common sights in such warnings (penny stocks, for example), while a few I hadn’t heard much about before (like ‘spot secondary’). There are also some pieces of advice on timing your stock sales to minimize tax costs and investing via the internet. Chapter ten finishes off the main portion of the book, telling you what you should do if you inherit a million dollars (or, given the level of inflation that has occurred since the book was first written, two point five million dollars). For those of us who aren’t that lucky, there’s advice on how to build up our net worth slowly and reliably, so we don’t find ourselves aching for money in the future.

There are a number of appendices at the end of the book, elaborating on points covered earlier. There is a discussion of how buying things on sale and in bulk (wine is the example used) can save you much, much more than simply the sale price. There is some help calculating how much life insurance you should have, a discussion of the Social Security system, and further discussion of the national debt (and how, given the way the government accounts for Social Security and handles government expenses, it’s harder to get a real handle on how much is actually owed). There are some cocktail party quips to help make you feel smart, some selected mutual funds and brokerages to consider, and a chart showing the growth of a dollar over various periods of time at assorted interest rates. (Want to be a quadrillionaire? All you need is a dollar to invest, an investment that consistently returns 20%, and 200 years to wait.) The book ends with a short, hypothetical Q&A to help get you off your feet and investing.

Pros

The Only Investment Guide You’ll Ever Need is easy to follow and has plenty of good advice. The humorous tone and simple instructions help to make it a quick and entertaining read. Although titled as an investment guide, it’s also pretty good for money management in general.

Cons

Some of the humor in the book might prove offensive for low-earners (the chapter on budgeting, for instance, is called ‘You CAN Get By on $165,000 a Year’). There’s also some investment advice you might question, from avoiding corporate bonds (and bond funds) to spending up to 7% of your portfolio each year (when 4% tends to be limit most commonly cited, and even that is sometimes considered too high).

Overall

The Only Investment Guide You’ll Ever Need is a pretty solid introduction, not only to investing, but to personal finance in general. As with almost any personal finance book, there will be at least a few points where you don’t quite agree with what the author says (see my Cons above). But it does come pretty close to being exactly what the title claims, the sole guide you would need to the investing world.

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

  1. I have seen this book many times at B&N and wondered if it was worth the read. Although you did a great wrap up, I’m not totally sure if I agree with Tobias’s advice. For example, in Chapter 1 he tells you not to worry about becoming highly educated in finances. But in Chapter 4, he tells you to Trust No One. Is this not a contradiction? I’m a firm believer that financial education is the foundation for all your financial education in life. The more you know, the better your expertise is at making good decisions.
    MyMoneyDesign´s last blog post ..Weekend Wind Down

  2. @MyMoneyDesign: It is a pretty good read. The contradiction doesn’t really exist. Chapter four is more about the typical warning not to rely too much on financial media for your investment decisions, while chapter one simply points out that you don’t need to know much to invest well. Financial education, at least getting the basics down, is the basis of making good monetary decisions.

  3. @ Roger: I see! When you put it like that, I can agree with those points. At any rate, I know Tobias’s books are far more popular than I’ll ever be, so more power to him! Have you read “Aftershock” yet? That was a recent read I really enjoyed.

  4. @MyMoneyDesign: Glad I could clarify matters; I know it’s sometimes tough to convey all the important information about a book in a one thousand word (or so) review, so I’m more than happy to go more in depth on any particular issues that may arise.

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