Customer Reviews

Yes, You Can Become a Successful Income Investor! Reaching for Yield in Today's Market

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Ben Stein and Phil DeMuth are very dedicated to helping people get serious in preparing for retirement. They bring several strong virtues to this task. First, they not only reject investment fads, they believe in and focus on solid investment basics. Second, they believe that you have the final responsibility for your money, so if an investment or financial program is too complicated for you to understand in every detail, they advise you to stay away from it. Third, they understand and preach diversification. Simply, diversification aids the investor by removing the risk associated with investing in just one firm or one market sector and therefore stabilizes earnings.

The idea behind this book is quite good. For the past two or three decades, all the talk around investing has been about growth stocks where you make your money by realizing capital gains. Before the age of double dividend taxation, people invested for the income provided by dividends. The present market for stocks is priced high in historical terms (see Stein and DeMuth's excellent "Yes, You Can Time the Market" to understand why this is true) and it is all too likely that a correction could provide losses instead of gains. In this book, the authors provide an approach to investing that provides a return by gaining dividend income from stocks and interest income from bonds while avoiding the risk of capital losses as much as possible.

Stein and DeMuth begin by talking about bonds. They provide an excellent primer and then talk about the various types of bonds, their risks, and their returns. Their discussion will help the reader understand that a higher return comes with increased risks. In effect, the higher return is a compensation for taking on that higher risk. The authors help the reader understand that there are some bonds whose increased risk is worth taking and many whose higher return is not sufficient compensation for someone counting on the income for their daily bread.

The discussion then turns to developing a stock portfolio that is designed for income rather than capital gains. This is an excellent and important discussion because it runs counter to most of the stock talk of the past generation. Just as with bonds, they show the effects of various portfolio constructions. They are very good on what matters to the income investor and what is dangerous to your financial health. They have a short chapter on preferred stock that is interesting and gives adequate warning to stay away from complicated investments that you don't understand.

The section on REITs is terrific and will help the average investor understand them. They can be an excellent part of a portfolio and are an excellent way to participate in real estate without having to own and maintain your own properties. Remember, in retirement you want to be enjoying yourself, not going through the hassle of being a real estate manager.

They also talk about annuities in a sensible and helpful way. Stein recounts how annuities helped his parents have a terrific retirement. The authors also balance that with cautions about the balance between fixed and variable annuities and offer solid advice about their complications. They note that most of the people who sell annuities don't really understand what they are selling and to stay away from those you don't understand completely.

The heart of the book is the section on how to combine all of these investments into a portfolio that balances your ability to take risk versus return. They provide various example portfolios while always encouraging you to do your own research. They want you to use the examples as models of what to do rather than as investment recommendations.

Stein and DeMuth also provide a very good website that provides current information and links as well as errata for the book (you know the small typos that creep into any book).

This is an excellent handbook for anyone who wants to take responsibility for his or her retirement and is serious about understanding what is involved. There are too many sad stories of people who work their whole lives to save some cash and then have it evaporate in some inappropriate investment that promised them gold falling from the sky. Stein and DeMuth have provided an excellent guide to understanding what is real and what is fluff. You could not spend $23.95 better than to buy this book and then study it carefully. If you do, you will be a much better investor and steward of your financial future.

This was the best income investing book I have read. I loved this book, it was superbly well written with practical income investment advice in stocks, bonds (treasuries, corporate, municipal, junk etc) and real estate (REITs). This book would be very useful regardless of the amount of money you have to invest. The authors make specific recommendations without any vague statements. There is income portfolio advice. It is easy to read and I finished it in one sitting. The book had a lot of humor sprinkled throughout. I loved the two stories in one of the earlier chapters in which the authors said that if you understood these 2 stories you would understand the bond market and they were right on! There are plenty of numbers and figures but the authors have accomplished a remarkable feat in that they wrote the subject matter in such a way that any high schooler could understand. Yet the material is far from "dumbed down".

This is a very different investment book. While the books one typically sees suggest ways to get rich-- that is, to accumulate capital-- as quickly as possible, this short, readable book suggests that those near or in retirement should be thinking about how to deploy their resources in a way that maximizes their income. That is, staying comfortable is more important than getting rich.

Stein and DeMuth explain that most investment fads are not only unsuitable for older investors, but, worse, they just don't work. They make a point that many people who lost their money in the market meltdown a few years ago should have thought about: If an investment is too complicated to understand, then it should be avoided. In the end, there's no magic bullet; diversification and adherence to investment basics will pay off. The body of the book is devoted to explaining how to do that.

The book discusses various types of bonds, dividend-paying stocks, real estate investment trusts, and annuities. The one thing that is mentioned in every chapter is the basic principle that risk and reward are in balance; the only way to get a high reward is to take more risk. Striking the correct balance is, of course, an individual decision, and the most important part of the book is the discussion about how to combine various types of investments in in a way that balances risk and reward. There are numerous sample portfolios and many specific bond and stock funds suggested-- and also numerous cautions that investors need to do their own research before they buy anything. The authors provide a link to their website, which provides current information and links.

A bonus is that unlike many investment books, this one is very readable. The authors don't dumb anything down, but they take pains to explain things without using jargon. Readers familiar with Stein's TV and movie style of delivery will recognize it here, too.

This is a very valuable book that will provide the reader with a lot to think about-- and a good way to do that thinking.

Ben Stein is one of the very few authors whose work is an outcropping of his successes in life - not a reaction against his failures.

If you read this book, or any other work by him, you'll realize that this guy gets it. He understands how to live a successful life and gives advice that's derived from his own experiences - not what he wishes he had done. Savings, investment, love, happiness - he tackles these issues with the realism that is so often slighted by self-proclaimed gurus who haven't got a clue.

My litmus test for authors of books such as these: Would this guy go broke if I nobody bought his book?

Ben Stein is doing all of us a great favor by sharing his knowledge, which has allowed him to live such a well-rounded and successful life.

Excellent book ... short, easy to read with good illustrations. Would have liked an explanation as to how to select dividend stocks rather than using the recommended list since the recommended list will change over time.

...these guys gave some dreadful advice. They recommended the bonds of Bear Stearns, Lehman and ABN Amro. All are worthless now.

The authors do a great job breaking down an extremely sophisticated asset class so the everyman investor can optimize their returns while minimizing risk(Maximizing the Sharpe ratio).

Their focus on a real return is a smart one. The S&P 500 has underperformed the total return on lowly 3-month Treasury bills for what is now more than 8 years, earning average annual total returns of just 3.2% since early-1998. Over the past decade, the S&P 500 still sports an unimpressive annual total return of just 8.20%, despite containing the best 4-year market performance (1996-2000) since the rally from post-depression lows in the 1930's. YIKES!!!!!! This makes one take pause and consider adjusting the allocation.

Let's just say the "market portfolio" can no longer be considered the S&P 500- This is what Harvard and their endowment managers realized years ago.
A great book that provides a tremendous amount of information and that I will use again and again in the future. Take a look around at fixed income books out there. There aren't many of them, and this is by far the best one.

I read this book and fealt it was not only informative for us babyboomers but for my children, too.

The main part of the book is on how to combine all of the investments they write on into a portfolio that balances your ability to take risk versus return.

They are witty and they give you a website to use.

I am ready to buy there next book!

I am a very slow reader. Usually, it takes me about five minutes to read one page. However, since this book is so easy to read and one's attention is kept by the humor that Mr. Stein and Mr. Demuth use; I was able to finish it in my spare time in 10 days. I liked it so much that I bought a copy for my father. I would recommend this book to anyone who is interested in investing and is at any stage of the process (beginner or advanced).

Fine book on income investing. Good for all. Highly recommend this to all who are interested in increasing their income and preserving capital. Hats off to the authors.