Customer Reviews

25 Myths You've Got to Avoid If You Want to Manage Your Money Right : The New Rules for Financial Success

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The best book I have read on financial planning strategies and tactics. If I had my own financial planning business, 25 Myths is the one book I would give to to clients to explain the basic rules to follow in implementing a successful financial plan. I enjoy reading Jonathan Clements's Getting Going columns in the Wall Street Journal. Don't worry his book is not a rehash of his articles, although many of his ideas and recommendations are familiar from reading his column. He takes 25 familar financial myths and explains how each myth arose, where we go wrong in following those myths and what the new rules are. Myth: Stocks are risky. Reality: Stocks are not risky compared to the risk you suffer from inflation if you concentrate your money in safe investments like bonds. Myth: You can beat the market. Reality: You can't beat the market but you can cut the costs by using discount brokers, no load mutual funds, low cost funds, and income tax efficient funds. Clements recommends keeping 80% of a person's investments in stocks (which shifts to 60% as you approach retirement). To ensure that upon retirement a person has a cash balance Clements offered the tactic of using zero coupon bonds to fund the cash balance for retirement. So long as one focuses on the maturity value in retirement, the possible fluctuations in value of zeros doesn't matter. I also liked his analysis of inflation indexed bonds as way to hedge against inflation and interest rate fluctuations. I will list the myths here because the book review does not list the table of contents: 1. You can have it all. 2. Get a good job and you'll be set for life. 3. Stocks are risky. 4. You can't go wrong with IBM. 5. You can beat the market. 6. Your investments will make 10 percent a year. 7. You can't go wrong with mutual funds. 8. You can find the next Magellan. 9. Index funds are guaranteed mediocrity. 10. Nothing's safer than money in the bank. 11. If you need income, buy bonds. 12. Hedge your bets with hard assets. 13. You should own a balanced portfolio. 14. You need a broker. 15. Keep six months of emergency money. 16. Debt is dangerous. 17. Buy the biggest house possible. 18. You can't beat the mortgage tax deduction. 19. Invest in your house. 20. Trade up as soon as you can. 21. Protect against every disaster. 22. Life insurance is a good investment. 23. Invest in your kid's name. 24. Max out your IRA every year. 25. One day, kids, all of this will be yours.

This book covers the 25 myths about managing money. What makes this book better than others is that it gives you the background logic behind the decisions. For example, the author discusses the myth of buying the biggest house possible and why this mindset was successful in the 70s & 80s (and could be again) but isn't a good idea in today's economy. The author further shares the "forumula" behind the logic -- inflation rates, present/future value of money, and lost opportunity.

The 25 Myths are nothing surprising, but you will find that the logic is refreshingly simple and easy to apply to your financial situation.

Just read it today. Then I read a couple of other personal finance books. What a difference! Clements's book debunks some of the most commonly assumed beliefs. For example: owning a house is a must, or, home-improving by installing a new kitchen is a godd investment. Well, not really, and all the math shows it.

The author definitely beats home some basic messages about inflation, tax implications and trading costs that might be old news to some seasoned investors. He loves stocks and hates bonds. The most important thing I took away from this book was that even if you manage to pick a mutual fund that beats the S&P over a 30 year period, the costs incorporated into even no-load mutual funds can eat away at what little gains you might make over indexes. His remedy: Invest in stocks for the long term (nothing new here) and diversify your portfolio with the cheapest domestic and international index funds you can find. He recommends Vanguard's Total Stock Index Fund and Vanguard Total International fund.

I read the book in the spring of 2002, which makes some of the information in the 1997 printing I had a bit dated (e.g. no 529 tax deferred education savings plans). If you're looking for a more updated version with a lot of the same ideas, try Glassman's Secret Code of the Superior Investor.

This is the single best book on personal finance that I've ever read. It debunks some of the most common truisms of financial management, and it does so by providing very good explanations that really teach you the concepts, and by teaching you what to do instead. The writing is non-technical but very, very intelligent and enjoyable to read. I first got this book from the library, and I found its wisdom so valuable and so original that I then BOUGHT a copy--something I have NEVER done with other investment/ financial planning books. Get this book and it will change the way you think about protecting your money!

I'm a freelance writer and jazz musician. Nothing makes my skin crawl like a typical discourse on "wise" investing. Like dental work, investment education frequently centers around the idea of pain and shame as inevitable consequences of despicable indulgence. "It's all so simple and self explanatory if you would just buckle down and do it. And remember - if you don't, you'll be sorry," intones the Victorian voice.

"25 Myths" is different. Its beauty is two-fold. First, it exposes the flaws in traditional investment strategies, thus validating my misgivings. Second, it provides an easy-to-latch-onto structure that the reluctant beginner can use to get started.

Perhaps Clements' most important precept is that we should ignore short term market fluctuations focusing instead on the real enemies - taxes and inflation. From there, he goes on to outline several beginners' axioms from which one's first investment strategy may be painstakingly! formulated.

Has he uncovered the holy grail? Probably not, and he's the first to admit it. Remember the old saying, "you have to know the rules in order to break them?" Clements has set down a list of rules - not familiar chestnut adages but pragmatic responses to the investment climate as it exists today.

In a field overrun with "paralysis by analysis," Clements forgoes the role of beacon in the darkness, and instead simply shines a flashlight in a darkened garage to guide us to safety.

Probably the best book I have read - fiction or nonfiction. I have read many books dealing with personal finance and nothing comes close. It is clearly and concisely written and easy and enjoyable to read. It gives practical advice and clears up misconceptions that many people have about money management. I am reading it for the 2nd time.

I religiously read Jonathan Clements' weekly column in the WSJ. I find his advice spot on for the individual investor. This book is a pragmatic discussion of several basic investment topics and has provided invaluable information for non-finance types such as myself (I'm a CIO). I recommend it!

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The rules HAVE changed. What worked in the 70s, 80s, 90s - and those rules were all different - won't work now. Get rid of your financial anxiety - Jonathan tells you how to buy a house that you can pay off, buy index funds, be 100% invested in stock index funds, be smart about insurance and sleep like a baby at night. None of this is new stuff. What is new is the clear, concise writing and the insight that what we do next is based on today's and tomorrow's rules.