The Financial Times Guide to Investing: The Definitive Companion to Investment and the Financial Markets (The FT Guides)
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Excellent foundation for investment,
I’ve long suspected that a bit of effort and intelligence are enough for understanding the main areas of finance and investment. One doesn’t actually need to pay “experts” to make your investment decisions for you. The jargon is only something you need to learn, it does not have to present an insurmountable barrier. Before attempting to understand the financial pages or specialist books on trading, I bought this and was not disappointed. Working through it slowly and methodically and then returning to the more complex areas and following up the handy links and references provided, I feel much more confident about this whole area.
This is in no way a “get rich quick” book and actually helps to guide one away from such risky attitudes. Nor does it provide advice on savings accounts or the specific market or company that is best for you. It is an education on the world of finance: the markets, players, companies and instruments involved in the flows of capital which maintain the business world, and much of the economy, around us. It shows how most people (you don’t have to be at all wealthy or super-brainy) can get involved in this system and, with a bit of patience and common sense, can significantly benefit from it. Armed with the basics and knowing who to deal with and, equally important, who to ignore, anyone should be able to improve their investment returns having read this.
The different kinds of investment are concisely explained and the limitations of some of the more hyped areas become obvious. Some of the mystery of futures trading is resolved, and one can follow-up pointers if interested in any particular area. The terminology used by companies in their financial reports and by the professionals who analyse them starts to become clear and all this jargon is explained again in the invaluable glossary at the back of the book, a place I kept referring to.
What emerges is the way money from savers and investors is used by Banks, Insurance companies and Pension funds to provide funds for new companies, established companies and companies wanting to expand and, as the author points out, how this wealth-creation is not just a good thing for individuals, but for society as a whole. I’ve already started to notice mistakes in the media, for example a recent TV drama’s misunderstanding of the way hedge funds work and one sometimes gets the impression that there is only a dog-eat-dog mentality and little control over what happens in the markets. Undoubtedly there are problems and excesses but, getting closer to the subject and learning how it actually operates, can help to remove the prejudices and misunderstandings some people have about finance and about capitalism.
One fact alone has made this purchase a good one. I realised, when reading the section on pooled investments, that I had lost money on “With-profits policies” thanks to persuasive financial advisers and their commissions from insurance companies. That little piece of education has saved me hundreds of pounds in the future and makes this book a high-return investment in itself.
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|Brilliant for the Beginner,
Before reading this book I knew nothing about the stock market and the different types of securities, etc. Since reading it working life has become much easier, since I have but had to deal with texts on them in my line of work. Various aspects of the investment world (insurance, pensions, different types of securities, the workings of the stock market and more) are explained in clear and concise language -with the exception of the pooled funds chapter which becomes slightly bewildering, although that’s more down to all the varieties there are- and sound advice offered plus guidance on how to read the financial pages. If finance is a new subject for you then it’s brilliant and if you’re an old hand in the financial world it will still serve as useful reference nevertheless.
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|Better than the Motley Fool,
As a new investor, I purchased this and the Motley Fool UK Investment Guide.
Both recommend a Warren Buffett-esque long term investment strategy, but the FT book is clearer and more succinct.
The information in the FT book is focused around the common sense idea that informed investment decisions can only be made through an understanding of business, economic and accounting principles. It also explains some of the technical processes behind different investment vehicles. In a nutshell it attempts to answer three questions:
1) What should I know before making an investment decision?
2) How do I execute an investment decision?
3) How can I make better decisions in the future?
Further reading is suggested at the end of every chapter/topic.
This FT book is merely an introduction to the world of investing, but it will get you started in the right direction.
You may prefer the Motley Fool book if you want a more “mind off” approach to investing. There is much less background information and the book will often tell you what to do. Avenues for further investigation are directed at its website where they will sell you a variety of articles and publications that also tell you what to do (and promise higher returns).
Over time, I have found myself returning to the FT book again and again, whilst the Motley Fool has sat gathering dust on my bookshelf.
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