Thread: Book to recommend to someone who doesn't know any investing stuff

Something about how Warren Buffett does it, and margin of safety. Robert P Miles?

And

Something that stresses safe position sizing, like Trade Your Way to Financial Freedom.

I have read "[ame="http://www.amazon.com/Rich-Dads-Guide-Investing-Invest/dp/0446677469/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1209359750&sr= 8-1"]Guide to investing[/ame]" by Kiyosaki and Lechter. I think it could be a good intro book for your friend.

Great question.

I had read all kinds of books, starting w/the Wall St Journal Guide to Investing when I first got started (it was worthless).

Pretty much everything I read made my eyes glaze over. I just couldn't understand what they were saying-- it was either so simple it wasn't helpful ("invest 10% of your paycheck each month and sign up for your company's 401K plan"), or it was too complicated ("experienced investors calculate the risk they are able to tolerate. New or young investors with lots of years in the workforce often do aggressive investing, while pensioners rely on more conservative investments.")

Blech.

First book I read that rocked my world (financially) was Your Money or Your Life by Joe Dominguez and Vicki Robin. Got across the concept that time was indeed money-- and that each second of my life equaled time I would never get back.

This book also gave me one of my biggest "AHA" moments-- the concept of living within your means, and putting extra money away. Using just the interest on the money sacked away, and tracking spending, there would be a day when the two lines crossed. This was HUGE for me-- really started me on my journey. I'm actually going to do a thread on this soon (I've been working on it to get my thoughts in order).

Next book I read that rocked my world was Suze Orman's Nine Steps to Financial Freedom. This was when it first came out-- when she was a total unknown, never been on TV, radio, etc. The book was a revelation to me, as it looked at money and how I related to it in an emotional way. No other book on finance had ever done this. It got me started on actually doing a plan-- Dominguez book showed me *how* to do it, but Orman's book actually gave me the courage and motivation to go out and *do* it.

And then I read Rich Dad, Poor Dad . . .

And any other subsequent book by Robert Kiyosaki (esp Cashflow Quadrant).

RDPD and Cashflow Quadrant basically turned my life upside down. Taught me the value of leverage, and got me to play a game called "Cashflow".

Cashflow was the thing that allowed me to "try out" different scenarios and investing strategies, to see what worked. Play a few games using one approach, and you could quickly see how effective it was (or wasn't).

My first cashflow games (w/my gf, soon to become wife) took us 3-5 hours to play. We did them the conventional way.

Then I drove to SF for an organized game. Wow, it blew my head off. I can still remember talking to my wife on the phone as I drove home.

I was floatin', man.

San Francisco Cashflow didn't rock my world-- it changed my whole universe.

You can literally track our financial success from the day I played that game of cashflow. My wife and I learned about leveraging, and (more important), learned how to do it so we never went bankrupt.

Started hanging out on RD.com and lurked for months. Read a LOT of incredible threads (what are now considered classics). Was fascinated by Diane Kennedy's participation, and bought her books, as well as Garrett Sutton's.

Went to one of Garrett's corporate structure seminars. Totally worth it.

Went to a Rich Dad event (wife got me tix in the purple zone or something as a Christmas present). Me, I would have tried to volunteer for the event (actually did try this, but after almost a dozen calls, got sick of never getting any call back).

Met Diane Kennedy after that Rich Dad event, and introduced myself as one of the posters to the richdad forums.

That RD event was in 2003 (I think). About 5 years ago.

When I went to that RD event, our net worth was around 700K. We both "owned" S jobs, which paid well ($100-250K/year). But we had no fastlane plan.

Started implementing our leveraged ("fastlane") plan in late 2003 (bought a run down B&B for $1.275M).

That B&B just appraised for $3.4M.

We also own another $4.5M in RE that we're developing. Our RE will generate over $850K this year in cash, before expenses.

**********

Why the long story?

To show that it took me a while-- and some very "slowlane" books and PLANs-- to finally make it into the fastlane.

Making that "lane change" was scary as hell.

Given that we've generated over $4M in net worth during just the past 4.5 years, it was worth the jump into the fastlane.

But don't discount the time it took us to learn how to drive-- and get moving in the slowlane.

That was time well spent, and helped build our momentum (and skill set) to make the transition to a more leveraged "fastlane" PLAN.

I guess that's my way of saying, if your friend is just getting started, sometimes those first "slowlane" books-- esp the ones that deal with your head and your heart (not your bank account or paycheck) can have the biggest long-term pay-off.

At least that's what they did for me.

-Russ H.