Essays

The Only Investment Guide You’ll Ever Need: Family Planning and the Rest

I first picked up a ragged old copy of this book at a used book sale, but since then it keeps popping up over and over again. This week, I’ll review chapter by chapter the latest revision of this personal finance classic (it was first printed in 1978, which means it’s had a much longer lifespan than many personal finance and investment books) and find out whether it’s worth picking up or not.

Chapter 10: All in the Family
This chapter, section by section, focuses on handling money issues with the other members of your family, starting with the children and working up in age to your parents.

Most of the advice for dealing with your spouse and your parents is pretty common, but I particularly enjoyed the advice on how to teach children about how money really works. Here’s the best one, and one that I think I’ll use on my child when he’s old enough:

Give them a dollar to start with and put it in a jar. Tell them that each day they’ll earn 10% interest on whatever is in the jar for the next 40 days. Do this in cash at the kitchen table each night so that they can see what happens over time (I visualize doing this with change). At the end of the forty days, the cup will have $45.25 (or so) in it and the kids will be going berserk over the growth. Thus, they’ve learned about compound interest.

Now, do the same thing except offer them one piece of candy in exchange for starting just three days later. If you do that, after the 40 days, there’s just $34.00 in the jar. That one piece of candy cost them $11.25. Thus, they’ve learned the power of starting early and the real cost of buying stupid stuff.

Chapter 11: What to Do If You Inherit a Million Dollars; What to Do Otherwise
After all of this advice, the book closes with one key message: if you don’t know what you’re doing with your money, take it and invest it in multiple low-cost mutual funds in a diversity of areas and just let it sit. Tobias recommends doing this, or perhaps using what basically amounts to my treasury note retirement plan.

Appendices
The book doesn’t really finish there; it continues on with several short pieces that seem to be reprints of articles from various places mostly written for the entertainment factor, as well as a few bits of miscellany.

Tomorrow, I’ll give a “buy or don’t buy” recommendation on this tome.

The Only Investment Guide You’ll Ever Need is the twentieth of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.