Taylor Larimore

This book offers a mix of financial planning advice and investment advice. The financial planning advice is of the Captain Obvious variety - "pay off credit card and high-interest debts", "establish an emergency fund", etc. Not super useful, but not harmful either. The investment advice, in turn, is all over the place. "Buy index funds because passive beats active" - fair enough, lots of research corroborate that. But then you can add "a value and/or a small-cap fund", and Real Estate Investment Trusts can be "a worthwhile addition to larger portfolios". What gives? Either passive beats active, in which case you shouldn't tilt your portfolio towards any specific factors or industries, or it doesn't, in which case you should do stock picking.

Not to mention the magical numbers. "We suggest that REIT funds not exceed 10 percent of your equity allocation." Based on... what? Did the authors use efficient frontier to get to that number? If so, what were the other assets in the portfolio? Where is the data coming from? How long is their time series? "We believe that investors will benefit from an international stock allocation os 20 percent to 40 percent of their equity allocation." Why? The US is 56% of the world's stock market. Why put more than 56% of your equity allocation in US stocks? No explanation is given.

(A minor point, but: if you're presenting the results of some paper then just cite the damn thing. "One of [Financial Research Corporation's] most important studies was..." isn't helpful, it makes us waste time googling around, sometimes to no avail.)

(An even smaller point: "Despite the statistical impossibility, at least 70 percent of Americans believe they are above average." That's not a statistical impossibility if your average is the mean and not the median. Not important in itself, but I don't want to take investment advice from people who don't understand how averages work.)

I did learn new things. I had never thought about how rebalancing forces you to sell high and buy low. This was the first time I saw hard data comparing the returns to different rebalancing strategies. This was also the first time I saw hard data on loss harvesting (and learned that it does work, at least in the US). But that's maybe 5-10 paragraphs out of a 311-page book. (I also learned a lot about how the US government taxes equity and bonds, but most of that is irrelevant to us foreigners.)

Overall you're much better off by reading Burton Malkiel's "A Random Walk Down Wall Street". Same general point - passive beats active - but a lot more evidence-based and internally consistent.… (more)

Buena guía de iniciación al ahorro y la inversión "segura". Tiene el problema de que hay varios capítulos que se centran en pormenores de las leyes e impuestos norteamericanos, pero más de dos terceras partes son aplicables a cualquier país.
El libro propugna el sentido común a la hora de invertir, y da muchos consejos muy interesantes:
- Cuanto antes empieces a ahorrar, mejor.
- Elige fondos indexados. Ganan al 90% de los gestores profesionales de fondos a largo plazo y son mucho más baratos que un fondo de gestión activa. Un fondo indexado te puede costar un 0.2% al año, y uno de gestión activa un 1%-2% al año.
- Elige una combinación de instrumentos (bonos, acciones...) adecuada a tu edad y tus metas y atente a ella.
- Muchas veces cuando el mercado cae es momento de comprar, no de asustarse.
- Reequilibra (rebalance) tu cartera cada trimestre o cada año. Si has ganado mucho en bonos pasa parte del dinero a acciones porque suele suceder que tras un año buenos de los bonos es más probable que venga un año bueno de las acciones. Mantén tu porcentaje en cada producto constante.
- Evita el "investment porn", programas o cursos que te animan a invertir con ellos a cambio de la riqueza y la felicidad. Aunque ganen dinero son mucho más caros que los fondos indexados.
- Si quieres emociones fuertes vete al parque de atracciones. Invertir no es ir al casino. Es desarrollar un plan y seguirlo.

Y así páginas y páginas de detalles, siempre en un estilo comedido (¿aburrido?) y con mucho sentido común. El objetivo final es llegar a la jubilación con un capital suficiente para no tener que preocuparnos nunca más. (Hay un capítulo dedicado a esto: ¿qué porcentaje de mi dinero de jubilación me gasto cada año si me da miedo que se me acabe?)

En general, un buen libro. Recomendable para centrar a inversores/ahorradores nuevos en el mundo de la independencia financiera.… (more)

This book is a decent introduction to the financial aspects of retirement planning. Of course, it comes with the expected Boglehead philosophy of index fund investing, but it also has information on non-investment topics related to retirement (e.g., taxes, wills, etc). In some respects, the most important parts of this book contain lessons that would be most useful to young professionals early in their career (concerning the importance of starting retirement savings early, how to invest for the long haul, etc). The topics range from the simple (their investment advice) to the complex and outdated (tax rules of course change, and so specifics on that topic are likely to be outdated quickly, and that is the case with that portion of this book). Overall, not a bad overview for those thinking about how to approach retirement planning, but not an especially intriguing read.… (more)