Random Walk Gde to Investing PA

by Malkiel,Burton G.

• ISBN13: 9780393326390
• ISBN10: 039332639X
• Edition: 00
• Format: Paperback
• Copyright: 2005-01-17
• Publisher: W. W. Norton & Company

Summary

Based on the million-copy seller A Random Walk Down Wall Street, this concise new guide by influential and irreverent author Burton G. Malkiel takes the mystery out of personal finance by outlining Malkiel's own ten-point plan for success. Easy to read and easy to follow, this practical book aimed at the investment novice cuts through the jargon to give readers the confidence and knowledge to make wise investment decisions that will provide consistent returns.

Author Biography

Burton G. Malkiel is the Chemical Bank Chairman's Professor of Economics at Princeton University and the author of A Random Walk Down Wall Street.

Table of Contents

Preface and Acknowledgments	xvii
PART ONE: THE BASICS	1	(32)
Fire Your Investment Adviser	5	(6)
Focus on Four Investment Categories	11	(16)
Cash	12	(1)
Bonds	13	(2)
Common Stocks	15	(9)
Bubbles in Stock Prices
The Tulip-Bulb Craze
The South Sea Bubble
The Internet Craze
What Lessons Should We Learn?
Real Estate	24	(3)
Understand the Risk/Return Relationship	27	(6)
PART TWO: THE RULES	33	(136)
Start Saving Now, Not Later: Time is Money	37	(5)
Returns Throughout U.S. History	38	(1)
The Miracle of Compound Interest	38	(2)
The Million-Dollar Difference	40	(2)
Keep a Steady Course: The Only Sure Road to Wealth Is Regular Savings	42	(15)
Savvy Savings Tips	43	(7)
Pay Yourself First
Find a Save More Tomorrow Plan
Make Out a Budget
Change a Spending Habit or Two
Think in Terms of Opportunity Costs
Be Saving in Your Spending
Pay Off Your Credit Card Balance
Strategies for Catching Up	50	(2)
Downsize Your Lifestyle and Start Saving Now
Consider Pushing Retirement Back a Few Years
Make the Most of Your Home Equity
Retirement Planning	52	(2)
The Millionaire Next Door	54	(3)
Don't Be Caught Empty-Handed: Insurance and Cash Reserves	57	(11)
Establishing a Cash Reserve	57	(1)
Money-Market Mutual Funds	58	(2)
Bank Certificates of Deposit (CDs)	60	(1)
Internet Banks	61	(1)
Treasury Bills	61	(1)
Tax-Exempt Money-Market Funds	62	(1)
Buying Insurance	63	(4)
Variable Annuities	67	(1)
Stiff the Tax Collector	68	(15)
Individual Retirement Accounts	69	(2)
Roth IRAs	71	(2)
Pension Plans	73	(2)
401(k) and 403(b) Pension Plans
Self-Employed Plans What Can You Invest In?
Priorities in Saving for Retirement	75	(2)
A Caveat	77	(1)
Possible New Tax-Favored Vehicles	77	(1)
Tax-Free Savings Strategies for Education	78	(3)
Saving for College: As Easy as 529 Education Savings Accounts
Education Savings Bonds
The Best Tax Strategy of All	81	(2)
Match Your Asset Mix to Your Investment Personality: How to Allocate Your Assets	83	(13)
A Reminder: Risk and Return Again	84	(3)
Your Time Horizon	87	(3)
Your Capacity for Risk	90	(2)
Your Temperament	92	(2)
Rebalancing, or Keeping an Even Temperament	94	(2)
Never Forget That Diversity Reduces Adversity	96	(15)
The Benefits of Diversification	96	(2)
An Investment Horror Story	98	(1)
The Potential Crises in Some 401 (k) Plans	99	(1)
How Much Diversification Is Enough?	100	(3)
Do You Need to Diversify Internationally?	103	(1)
Diversification Also Means Buying Other Asset Classes	104	(2)
Diversification Over Time	106	(5)
Pay Yourself, Not the Piper	111	(7)
Pay Off All Credit Card Bills	112	(1)
Look Out for Mutual Fund Expenses	113	(2)
Costs Matter for All Financial Products	115	(2)
Don't Get Wrapped Up	117	(1)
Bow to the Wisdom of the Market	118	(17)
Why the Market Is Smarter Than You Are	119	(3)
Being Smarter Doesn't Always Mean Being Smart	122	(1)
Timing Isn't Everything	122	(2)
Why Do Most Professionals Get C's?	124	(3)
But Don't Some Active Managers Beat the Market Every Year?	127	(4)
Managers Who Deserve an A	131	(4)
The Role of Chance
They Did It Their Way
You Never Know in Advance Who the Winners Will Be
Back Proven Winners: Model Portfolios of Index Funds	135	(18)
The Index Advantage	136	(2)
But Not All Index Funds Are Alike	138	(1)
Exchange Traded Funds	139	(2)
Indexing Works for Bonds, Real Estate, and Other Asset Classes	141	(1)
What Index and What Funds Should Be Chosen?	142	(4)
A Life-Cycle Guide to Asset Allocation	146	(7)
Don't Be Your Own Worst Enemy: Avoid Stupid Investor Tricks	153	(16)
Overconfidence	154	(2)
Herding	156	(4)
Illusion of Control	160	(2)
Loss Aversion	162	(1)
Other Psychological Pitfalls	163	(2)
Susceptibility to Hot Tip Investing Gin Rummy Behavior
Believing in Foolproof Schemes
Ignoring Costs	165	(1)
Getting Entranced by New Issues	166	(3)
PART THREE: TAKING STOCK AN INVESTMENT SCORECARD	169	(16)
Questions Frequently Asked About Indexing	176	(5)
A Summing Up	181	(4)
References	185	(4)
Index	189