Books in Brief: Speed-read Your Way to Financial Wisdom

Your financial fitness starts here.

May 1, 1999

Bookstore shelves strain with tomes on stock picking, get-rich-quick plans, and financial planning made simple. What titles are worth your time can be a mystery. We've picked out three books to help you find the information you need to make wise financial decisions.

1. Getting Rich in America--8 Simple Rules for Building a Fortune and a Satisfying Life by Dwight R. Lee and Richard B. McKenzie (New York: HarperBusiness, 1999; $25)

You don't need to be born to wealth, win the lottery, become a corporate CEO, or exist on tuna fish to get rich.

According to the authors of Getting Rich in America, virtually anyone can amass wealth by following eight simple rules. Among their rules: Take the power of compound interest seriously, resist temptation, and take prudent risks.

Although much of the advice is extremely practical and probably familiar to you, it bears repeating. To create substantial wealth, you need to have discipline and create a long-term vision of where you want to be financially.

In the book, you'll find exercises and methods of number crunching that aren't mind numbing or inaccessible to a beginner.

Whereas other books use a chart to explain how your money grows, Lee and McKenzie offer real-life examples of average Americans who've amassed big nest eggs by living a frugal--and happy--life.

Also, if you're really wondering whether that splurge purchase will really make a difference in the long run, the authors illustrate the long-term cost one of our most treasured status symbols--a Rolex watch. If the $4,000 you spend on the watch is instead stashed away and left to earn 8 percent a year, the authors say, in 30 years that one-time investment will be worth $68,983.

2. Mutual Funds for Dummiesby Eric Tyson (Foster City, Calif.: IDG Books Worldwide Inc., 1998; $19.99)

Everyone tells you to invest in mutual funds, but what funds to pick and how to allocate investments within a fund family can send the most money-savvy person running for the hills.

Tyson demystifies the mutual fund game, telling you in straightforward, digestible bits what mutual funds are, why they're a smart investment, how to choose the right fund, and how to read those dense prospectuses (he even provides pictures).

If you're beyond the basics, you can cruise by the easy stuff and get into the nitty-gritty of creating a portfolio that meets your personal needs.

Speed your read even further by looking for icons throughout the book that give you down and dirty information on the chapters' topic. Little shark tails, for instance, denote deadly mistakes. Bull's-eyes denote tips.

One of Tyson's tips: "The most valuable information--the fund's investment objectives, costs, and performance history--is summarized in the first few pages of the prospectus. Read these. Skip most of the rest."

One of his shark tails: "Context matters. In their marketing literature, fund companies usually compare their funds' returns with selected benchmarks. Keep a wary eye on these comparisons. In the great American advertising tradition, fund companies often pick benchmarks that make it easy for their funds to look good."

3. The Motley Fool’s Rule Breakers, Rule Makersby David and Tom Gardner (New York: Simon & Schuster, 1999; $25)

If you're ready to brave the chilly waters of Wall Street and pick your own stocks, the Motley Fools, founders of the Web site by the same name, let you in on some of their secrets for making smart choices. They give you some insight into looking behind the hype about a company and evaluating whether it has staying power.

The authors talk about the rule makers (stocks--such as Coca-Cola and General Electric--that will give you good returns over the long haul) and the rule breakers (upstart businesses--such as Amazon.com--that, as the book's dust jacket says, “take their industries by storm").

You'll learn techniques for evaluating a company and how to identify the rule breakers that, if you're lucky, will lead you to a bright financial future.

Elyse Umlauf-Garneau is a Chicago-based freelance writer and former senior editor with REALTOR® Magazine.

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