The Elements of Investing Book Review

In the 2013 edition of The Elements of Investing: Easy Lessons for Every Investor, authors Charles Ellis and Burton Malkiel—two of the world’s greatest financial minds—have again combined their talents to produce a candid book about investing and saving. Written with every investor in mind, this reliable resource will put you on a path towards a lifetime of financial success.

This terrific entry-level book on investing comes in at only 203 pages, making it a very quick read. It really lays out the basics of saving and investing for your retirement and your future. It’s short and to the point, because really investing isn’t as difficult as most make it out to be. In fact, I believe investing is as difficult, or easy, as you want it to be. If you invest via passive index funds, it’s very simple. Target date funds are even easier yet.

Divided into six essential elements of investing, this little book packs a big message that can help secure your financial future all the way through retirement. Malkiel and Ellis touch on a variety of topics, from focusing on the long term instead of following market fluctuations to using employer-sponsored plans to supercharge your savings and minimize taxes. Along the way, they also address the best friends of any investor: diversification, rebalancing, dollar-cost averaging, and indexing.

One of my favorite excerpts from the book is the ‘Rule of 72’, which demonstrates how long it takes before an investment beings to double, e.g. the power of compound interest. If you 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to double. For example, the rule of 72 states that $1,000 invested at 10% would take 7.2 years ((72/10) = 7.2) to turn into $2,000.

Written with every investor in mind, this short, plain-spoken “investment” book proficiently offers a set of simple, yet powerful thoughts on how enjoy the “winner’s game” approach to investing. All the investment rules and principles you need to know are here—with clear advice on how to follow them.


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