Becoming An Investor [Paperback]

... a straightforward primer to the basics of conservative financial investment ....

"Becoming An Investor: Building Wealth By Investing In Stocks, Bonds, And Mutual Funds" gives you practical knowledge and insight that will help you protect and grow your investment portfolio. By reading Becoming An Investor you will learn: * The Difference Between Active and Passive Portfolio Management * The Power of Compounding and How It Applies To Building Wealth * The Concept of Margin of Safety * The Importance of Diversification * Ratio Analysis * Professional Company Valuation Using Dividend Discount Calculations * How To Measure Rates of Return And Know How Your Investments Are Really Doing * How To Preserve Principal * How To Avoid Making Bad Investment Decisions That Lose Money * How To Select Mutual Funds * How To Select And Invest In Turnaround Companies * How To Select And Invest In Growth Companies * How To Evaluate Company Risk * How To Invest For Income * How To Know If You're Saving Enough For Your Retirement

I'm the author of "Becoming An Investor." This book is for conservative stock market investors, growth investors, and value investors. It's not for market timers, day traders, or options investors. But, if you're a long-term, buy-and-hold investor, you'll probably enjoy "Becoming An Investor." This book is aimed at intermediate-level investors.

Here's what's in the book: After a brief introduction to personal finance, I discuss asset allocation, and I address the question "What's a reasonable return?" I believe many people new to investing are unaware of what returns are consistently achievable and the risk levels involved. This makes them easy pray for gurus offering dubious advice and claiming huge returns are easily achievable.

I discuss the concept of a "loser's game" and how trying to do more can actually hurt your investment performance. You can read an excerpt of that chapter on amazon. Chapter 3 is a detailed discussion about compounding and how compounding affects wealth. I discuss the value of holding quality stocks a long time and benefiting from low capital gains tax rates. Also, it will be helpful to investors asking this question: "If I invest $Y each year, and I achieve a return of Z%, how much will I have in X years?"

Chapter 4 discusses measuring rates of return and how achieved return rates relate to investment manager performance. For example, many mutual funds boast excellent three year returns. What can really be inferred from such information? An appendix discusses how to use a spread sheet to calculate rates of return under realistic assumptions. For example, irregular contributions to a portfolio at various intervals, while sometimes money is also withdrawn from the portfolio.

Most investors don't know how to measure rates of return. Knowing this allows you to compare your actual performance to market averages. It also allows you to see how your portfolio is doing relative to assumptions. For example, suppose you hope to retire in fifteen years. Based upon how much money you feel you need and what return you think you can achieve, you can calculate how much you must invest every year. Suppose, however, that after five years, you find that your actual rate of return is 9% rather than an estimated 11%. That information tells you that you'll need to contribute more money to your investments to achieve your goal. I have another chapter devoted to retirement planning which covers estimating your retirement income gap and estimating the effects of inflation upon your wealth.

Other topics include diversification, risk, margin of safety, ratio analysis, stock market manias and the Internet bubble, investing in turnaround companies, and investing in growth companies. I also briefly discuss bonds and mutual funds. Investing for income is a major focus of my book. More advanced investors will probably enjoy my discussion of price-to-sales ratios and dividend discount calculations. Peter