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Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On With Your Life Paperback – May 1, 2005
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This little how-to-invest book, which elegantly summarizes our common worries about how to build wealth, was initially published 11 years ago. This updated, revised, and revamped edition stands the test of time—and of updating. Seattle-based Schultheis states his three principles of investing—allocate assets, approximate stock-market average, and save—then proceeds to expand and expound with personal stories and provocative questions. When is enough enough? What’s behind this Wall Street obsession to beat the market? Why do we need to lead a penny-pinching life today for a high retirement style tomorrow? Forget the complicated formulas, the diversity of spreadsheets. Concentrate instead, he advises, on understanding your burn rate, the meaning of diversification, and the value of being on financial autopilot. Like his peers (Suze Orman et al.), the author exposes two myths: “no load” mutual funds and “great companies make great investments.” All in all, solid and comfortable investment counsel that will help balance (and, eventually, grow) your balance sheet. Appended: partial list of index funds; notes; additional reading. --Barbara Jacobs --This text refers to an out of print or unavailable edition of this title.
“It is a wonderful book. Indeed, I’m tempted to say, ‘It looks like I wrote it myself.’ Now, if people will not only read Coffeehouse but act on its message.”
—JOHN C. BOGLE, founder of The Vanguard Group
“The best investment book you’ve never read.”
—THE SEATTLE TIMES --This text refers to an alternate Paperback edition.
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Top customer reviews
If you are already investing and or are confounded by how immensely complicated investing seems to be. If you are looking to begin investing and suffering from the paralysis of analysis. Then you are in a similar place that I have been for years. Most of us come to count on "financial advisers" to direct our investments, because it does seem overwhelming and we're pretty busy raising children, working, etc. Investing in the stock market seems to involve a knowledge and mystical quality far beyond our grasp.
The "NEW" Coffeehouse Investor, blows that smoke screen apart and shows you what commonsense investing (not gambling) looks like. In his simple to understand, not boring, book the author effectively illustrates how and why we should all do this and in a most cost effective and safe way. Finally the clouds are parting and I feel empowered to move out on my own.
As hard and complicated as Wall Street tries to make investing..... to make you think you need a broker or active mutual fund manager, the steps for successful investing are very basic. This book does hit most of the basic steps correctly.
#1 is to live below your means so you can save at least 10% of your gross each year and invest it. This sounds easy, but it apparently is not since the average U.S. household credit card debt is now around $8,000 saving rates are below 1%, and average household net worth is below $100K. The book should have mentioned the classic book The Richest Man in Babylon with regards to the merits of living below your means so you have money to invest.
#2 is to use automatic investment so you pay yourself first. If you set up an automatic way of investing, then you can't spend money you don't see. After all, the U.S. government adopted automatic payroll deduction to pay income taxes right after WWII because it was concerned people would not save to pay their tax bill. The government using automatic payroll deduction to assure they always get their share of your money, so why not use this method to keep some of your money for yourself? If you use automatic investment, you get the advantages of dollar cost averaging as well. Automatic savings would have been a good addition to this book.
#3 is to invest your savings in stocks and use low cost index funds for your investments. The book got it right in saying that stock brokers are not your friends. Often their objective is to move your money into their hands per the classic book Where are the Customer's Yachts?
#4 is to focus on asset allocation, not which stocks or mutual funds to pick. This book does an excellent job of explaining asset allocation.
As a yardstick measurement of how well one saves and invests, the book should have referenced The Millionaire Next Door's expected net worth formula of 1/10 of your age times your income. This gives you a frame of reference to how well you have saved and invested.
A visit to this book's web site reveals how successful a good asset allocation has been the last 5 years. A good asset allocation helps weather the storms we occasionally see in the U.S. stock market......like 3 down years in a row in 2000-2002. The example portfolio in this web site includes a 10% allocation to the real estate area using a
All-in-all, a great primer on successful investing strategies. I would suggest companion books to supplement this book including The Richest Man in Babylon, Bogle on Mutual Funds, The Millionaire Next Door, The 4 Pillars of Investing, A Random Walk Down Wall Street, Wealth of Experience: Real Investors on what Works and What Doesn't.
Again, I think Bill Schultheis has the right basic idea, but although a journey of a thousand miles starts with the first step, neither does it end there. The "portfolio" in this book is way oversimplified.