Recently I started going to the National Library biweekly, since I started going there I was think maybe i could pick some books of my interest and start some book reviews on my blog. A good thing about book review is that it helps the writer itself to remember to content and to share the goodness or bad about the book with the public.
In fact, How a Second Grader beats Wall Street is my second book, my first book that I borrow from the library was “Come in to my trading room” by Alexander Elder. It was a very interesting read too but I have yet to write a book review on it.
Basically, this book talks about how the writer teaches his son, a Second Grader about investing and through simple analogy it also highlight the golden rules of investing. I like the part that the book is simple to read and understand it helps me to understand what are some of the investing mistake that I have taken without realizing it. For example, Commission and Taxes on investing – In Singapore, we are not taxed on our capital gain (I think) because I have yet to filed income tax because I have just graduated last December. But when it comes to commission it surely takes a large portion in my investing. Begin a small retail investor, I learn that it is not worth trading in short term than to long term because the commission would take up a big chuck even if you profit and if you don’t you will end up not just with bigger loss and also giving more $$ to your broker. In the Book, the Second Grader portfolio consist of ONLY Three different funds from Vanguard.
- Vanguard Total Stock Market Index Fund
- Vanguard Total International Stock Index Fund
- Vanguard total Bond Market Index Fund
Then the book will give you the reasons why the above funds were chosen, afer reading the book, I also started to look out for more info on CPF investment and the different interest rates available in Singapore banks that would help me in making my investing expenses lower. Because in the book, the most and the first golden rule that was highlighted was investing expenses ie. Sales Charges. For example is the sales charges for a index fund is 2% given a annual return of 10% you will be left only 8%. And assuming compounded a $1000 investment compounded 8% for 10 years vs $1000 investment compounded 10% for 10 years makes a big difference.
The Golden rules were also put into layman terms which I find it easy to understand and remember. Overall, I say this good is very interesting, easy to understand, good for those starting out in investing and long term investors.