TITLE: The Value of Simple
AUTHOR NAME: John Robetson, PhD
AUTHOR CREDENTIALS: Financial Blogger PhD
NUMBER OF PAGES: 204
PUBLICATION DATE: December 2014
SYNOPSIS/SUMMARY: From Amazon
“A Practical Guide that takes the Complexity Out of Investing. This is a plain-language guide to investing for Canadians. Canada has the highest investment fees in the world, as well as a confusing tax system that features four-letter words like RRSP and TFSA. Fortunately there are low-cost index funds that make it easy and rewarding for you to become a do-it-yourself “couch potato” investor. With a focus on developing good processes to minimize the room for human error and step-by-step instructions, the book will walk you through the elements of managing your finances for the long term: how to devise a savings plan, stick to it through automation, determine how to allocate funds balancing risk and reward, invest using low-cost index funds, track your investments, and deal with the inevitable issue of taxation. Putting your money to work can look suspiciously like math at times, but this book lays out a simple approach that anyone can follow. Inside you will find tools and templates, along with easy suggestions and rules-of-thumb to help prevent analysis paralysis and get you started fast. Control what can be controlled; minimize fees and effort. Investing doesn’t have to be complex to be successful. Keep it simple and you will succeed.”
John has written one of the best starter kits for anyone out there contemplating a do it yourself passive investing journey.
You see I also abhor anything too complex out in the personal finance world. Complex strategies and financial products turn me off and I always choose simple easy to understand solutions to my saving and investment decisions. The Value of Simple addresses all these needs. The book is rated as a Practical Guide to Taking the Complexity out of Investing. It does exactly that.
Who is this book for?
It is aimed at those Canadians looking for basic advice on how to become a do it yourself investor. I wish this kind of information was available when I started my journey back in the early 80’s instead of the flood of advice on mutual funds and how to choose them. Anytime you are presented with complex options like in life itself, John presents simple answers to them. If you enjoy simple math and keeping investing drilled down to it’s most basic level then you are really going to enjoy this book. You also won’t be confronted with a lot of hard to understand financial jargon.
Read what others have said about the book here.
The book is divided into three parts:
- On Exponential Growth, Bunnies and the Future
- Putting it Into Practice
- Burrowing Deep
Contains 20 chapters and covers the basics of investing, the stock market, different types of fund and investment accounts, inflation, planning, asset allocation and rebalancing. All the terms and explanations that a beginner investor should understand. As John explains, it took him years to write this book. Give yourself some time to learn all of the different processes and you too will gain more confidence as you go through your investing journey.
Here are a couple of my favourite passages in Part One :
From page #28
“With passive investing one simply accepts that trying to do better than the index doesn’t usually work and that the average return is good enough. Instead of trying to buy the best stocks, which is difficult (perhaps impossible) to control,you just invest in the index itself.
From page #53
” Just try to save as much as you can get away with early on, invest it wisely, and you’ll set yourself up to be in fine shape by the time you’re at the point where the details will matter enough to make it worth paying to have a professional look at your situation”.
In this part John takes you on a step-by-step journey to get you started with investing passively on your own. Over the course of 7 basic steps he shows you how to set up your account and how to purchase different investments and implement your very own plan. He includes three options that you can choose and finishes with a handy reference guide to help you stay on track.
From page# 73
” Do not underestimate the importance of behavioural factors in planning and investing – they are easily the major divisions between success and failure. Part of setting up an easy to follow plan is to make your own life easy and stress free, but equally important is that the easier a plan is to follow, the more likely it is that you will will actually follow it.”
” Set up a plan, put it into practice, and stick to it! Keep it simple yet effective; an emergency fund for the short term and just 4 funds will cover your bases for the long term. Keep your costs reasonably low. Re-balance when necessary, but not constantly. Automation can help you stick to your plan.”
In this part John goes through some of the more special situations you may come across. Should you pay down your mortgage or invest? Tax discussions, joint accounts, reading monthly statements and final words on processes and expected value.
From page# 129
“Behavioural factors can be the most important determinants of long term success. Every move way from a simple, effective plan risks costly errors, but sticking to a plan can be hardest when it’s most important. Consider implementing methods to tame the need to tinker.”
From page # 168
“For most people, the ultimate goal of all this planning and investing activity is to set themselves up for a future where they are not working. At some point, the task will be turning investments into retirement income.”
My Final Take
I have to admit I use passive investing in my wife’s retirement account. I use just 4 funds as John suggests and I try to keep costs low by using ETFs and only rebalancing once a year at the beginning of the year. I find this Couch Potato approach to investing helps me sleep at night and also allows me to block out all the negative world news that may affect my investments. Keep it simple and stick to your passive investment plan. There is real value in Simple!
Please visit John’s website at www.holypotato.net and also he provides financial services on an hourly fee-for-service basis focused on supporting and educating do-it-yourself investors. You can read more about his service at www.therobertsons.net/invest/
I would like to thank John for providing me this copy for review on my site. Now I want you to have it!
Free Book Giveaway!
If you would like a copy of John’s book The Value of Simple you just need to do two things: Subscribe to the email list to your right of the blog in the sidebar, also leave a comment at the bottom of this page as to why you want this book. That’s it. I will then draw one name at random from the list of subscribers and declare a winner on 20 January 2016. Good Luck!