Introduction

The Investment Answer is a recommended book on a blog. It aims to educate the readers about personal investing so that we can protect ourselves and make smart financial decisions. I would like to know what the answer is.

Author

Daniel C. Goldie is the president of Dan Goldie Financial Services LLC. He is a member of CFA Institute and a Chartered Financial Analyst. He was a professional tennis player before dabbling in investment field.

Gordon S. Murray had worked in institutional trading and sales at Goldman Sachs, Credit Suisse First Boston and Lehman Brothers. He worked as a consultant with Dimensional Fund Advisors after retiring from Wall Street.

Contents

The Investment Answer has a prologue, an introduction, 8 chapters which are divided into 2 parts, and A Personal Note from the Authors.

Part 1 is The Decisions which contains 5 chapters. These chapters are The Do-It-Yourself Decision, The Asset Allocation Decision, The Diversification Decision, The Active versus Passive Decision, and The Rebalancing Decision.

Part 2 is Conclusions. The 3 chapters here are Compared to What?, What about Alternatives, and Everyone Can Succeed.

Review

The main premise of The Investment Answer is 5 informed decisions. These decisions are do-it-yourself, asset allocation, diversification, active versus passive, and rebalancing.

The authors advise the readers to enlist advisor (independent, fee-only), have an asset allocation plan, diversify, invest passively, and rebalance the portfolio periodically. They do not recommend investing in alternative investments such as hedge funds and commodities.

When is the right time to buy and sell? According to the authors, the right time to invest is when we have the money and the right time to sell is when we need the money.

The authors think that Wall Street and financial media often focus on the wrong thing (the potential return), instead of the risk taken to achieve that return. They also talk about using the correct benchmark for investment portfolio. For example, S&P 500 index is a good benchmark for a portfolio consisting of US large company stocks only , but not other portfolios.

In conclusion, The Investment Answer teaches us to control costs, diversify, establish right asset allocation, and maintain discipline to stay the course. It is not just one answer, but 5 answers. The authors reckon that by taking their recommended course of action, even though we might not get super rich, we would be able to accumulate a significant amount of wealth.

This book is easy to read and the concepts are simple. I think this book is very helpful for investors who just start their investing journey. By making informed decisions on the questions raised in the book, it would make the journey smoother and hopefully fruitful.

Quotes

1. The common denominator in all measures of risk is the uncertainty of future results.
2. You should know that whenever you buy or sell a security, you are making a bet.
3. Investing is not about winning and losing.

Rating

Interested in The Investment Answer?

You may get the book from through the links below*.

Print from Kinokuniya Malaysia

Ebook from Rakuten Kobo

*Disclosure: The above link are affiliate links. Thus, I may earn a small commission when you purchase the book through the links.

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