By Daniel Wilcock
A lot of financial media aimed at the general public are little better than carnival barking. Now that the Dow and S&P are back at pre-recession levels, the carnival has returned to town.
Like many wiser than myself, I think it’s best to ignore the noise and stick to a fundamental strategy: living below one’s means, acquiring a balanced portfolio of appreciating assets, minimizing fees.
Short of hiring an enlightened advisor (on a flat fee rather than commission basis), which is probably the preserve of more affluent individuals, I think most people are best off schooling themselves with some basic books that inspire wisdom and good choices.
I’d love to hear your suggestions for this list. Here are my five favorites, with a few words about each:
The Millionaire Next Door by Thomas J. Stanley and William D. Danko
At the top for the laser-like precision with which it cuts through illusions about wealth. In a few words: persons whose net worth rises above $1 million in a single generation are usually frugal and self-sufficient. The authors back this up with a lot of data. This runs counter to what marketers, particularly those who sell luxury, would have us believe.
Your Money or Your Life by Vicki Robin, Joe Dominguez and Monique Tilford
This is unashamedly a self-help book, and a very good one at that. The authors observations about how our money decisions have lifelong impacts on our well-being (at each level from individual to global environment) are compelling and, for most people, life changing.
Inf
luence: The Psychology of Persuasion by Robert Cialdini
This book is a skeptic’s delight. Not a book about money per se, but nonetheless an indispensable guide to the mental minefield in which we live. Were you ever curious why surveys are so often deployed by people who want our money or our votes? Ever feel the need to reciprocate a token gift? Ever wondered why the higher-priced item is more alluring? Cialdini’s book exposes the mechanics or persuasion and helps us step back from money traps.
A Random Walk Down Wall Street by Burton G. Malkiel
A manifesto aimed squarely at investors who might otherwise be ripped off by Wall Street profiteers. Malkiel claims that a monkey throwing darts at the markets page could make the same quality picks as most fund managers, and backs the assertion up nicely. His book made me a proponent of low-fee “no-load” index investing. Like John Bogle, the founder of Vanguard who helped invent index investing, Malkiel’s the little guy’s friend.
The Richest Man in Babylon by George Clason
Humans love stories. As Joseph Campbell taught us, our culture is infused with parables. These are parables that feature characters in ancient Babylon and teach timeless wisdom. Admittedly, some of the language, such as “Start thy purse to fattening,” is kind of corny. Yet simple stories stay with us, and this is about as simple as it gets.
P.S. To get a head start on actualizing the lessons in these books, check them out from the library!
Trails and Talismans 