The full title of this book by John Edwards is
“DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing“.
In my review posted on Amazon.co.uk, I rated it at the Four Stars level. This means I think it is Good.
Here is my book review.
A Very Nice Introduction To Investments For Beginners
This is a good UK based introduction to the world of investment for anyone who is thinking of taking control of their finances.
It starts by stressing the importance of getting out of debt and staying debt free since debt usually costs more per annum that your investments will earn. It also urges you to build a safety fund for just in case emergences and unexpected events.
Then it gently explains some of the most common words and phrases you’ll come across. Next it explains the importance of keeping fees and charges low since high costs will have a dramatic dampening effect on investments unless their return is exceptionally high. The basic message is to invest in low cost passive unit trusts and ETFs each month so that, when investments do the inevitable and go down in price, you can console yourself that you’re buying cheaply and will make a profit when prices bounce back upwards.
There’s too much pushing of Vanguard funds for my liking but I think it’s just because the author invests with them.
While the information in here will be very useful, I have some concerns about taking the advice in the book if you have a significant lump sum to invest. Central banks have done some extraordinary things since the 2008 crisis which have broken the contrary movements of bonds and shares. It used to be the case that when one went up, the other often went down so some percentage balance of each helped to reduce risks of a dramatic fall. In recent years both stocks and bonds have hit new heights at similar times and the diversification benefit has disappeared.
I’d have liked some graphs of the big stock market indices over their history plus similar for bonds and gold with some discussion of the movements, especially with allowance made for inflation. It’s important that new investors can see both the rises and falls and see how timing can matter at the stage of the initial investment of lump sums or the timing of big investment sales. Get both right and you can do very well, get both wrong and you can lose a lot of money.
The main index in Japan shows what can happen, because it peaked close to 39,000 in December 1989 and since then, it’s rarely recovered to half that level. I worry that with the UK’s over-indebtedness and bad demographics, we could be turning Japanese. This isn’t necessarily a problem if you are investing monthly for the next 25 years because you would do much of your buying at low prices but it does matter if you’re investing a lump sum or have built up considerable investments already.
It is available to buy from Amazon.co.uk and Amazon.com.
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