"The Only Investment Guide You’ll Ever Need" by Andrew Tobias

• You are in a higher tax bracket than you think. And this number -- your tax bracket -- is critical to understanding your finances.
• So if you want to pile up a little nest egg, or a big one, the first thing you might consider -- even though you’ve doubtless considered it before -- is spending less rather than earning more.
• You can make money buying things in two ways: the discount you get for buying the super-economy size, in bulk; and the discount you get, in effect, by beating inflation. You get a year's worth, or two, at last year’s price.
• Between beating inflation by buying now and buying in bulk when items are on sale (or buy getting a by-the-case discount), you could easily stretch $1,000 to buy $1,400 of the very same stuff you’d have bought in the course of the year anyway. And that’s a 40% tax-free return on your money -- $400 you’ve managed to save in the course of the year -- with no sacrifice whatever.
• The simplest, safest, most sensible way to earn 18% or 20% on your money is to pay off your credit cards. Not having to pay 18% or 20% is as good as warning 18% or 20%. Tax-free! Risk-free!
• You can save a fortune booking your hotel through priceline.com.
• To decide how much to bid, I first go to expedia.com, orbitz.com, or hotels.com, to see what kind of deals they’re offering. Then I bid at least 30% less at Priceline, and almost invariably get my room.
• For the more adventuresome, there are hostels (visit hostelz.com) and friends’ couches.
• Avoid the mini-bar, room service, or even the hallway Coke machine.
• Don’t finance your car. As with credit cards, not paying 11% on a car loan is as good as earning 11%.
• The difference between a house and a car is that a car depreciates, while a house, over time, may appreciate. Plus, the interest on a mortgage is tax deductible, while the interest on a car loan is not.
• Buy a used car.
• Buy an economical car.
• You want to borrow as little as possible, as cheaply as possible, for as short a time as possible.
• When buying auto or homeowner's insurance, shop around.
• Self-insure by choosing the highest “deductible” you can comfortably afford.
• Term insurance rates start very low but go up every year. Whole-life rates start high but remain constant.
• You would be wise to buy renewable term insurance and do your saving separately.
• Buy term life insurance and invest the difference.
• If you have student loans, you may be able to save money and/or make your life easier by consolidating them: loanconsolidation.ed.gov.
• The two biggest obstacles to exercise are laziness and boredom.
• Use the library. Even cheaper than audible.com or amazon.com are the books and audio books you can borrow from the local library.
• Add up everything you own, subtract everything you owe, and that’s your net worth.
• Spend less than you earn. Live a little beneath your means.
• Trust no one. You’ve got to take responsibility for your own affairs.
• You have to take responsibility for your own money because no one cares about it as much as you.
• The simple investments are very often the best. And that goes, too, for the simple loans, the simple insurance, and the simple financial plans.
• There are two kinds of money in the world, debt and equity.
• Debt is an IOU; equity is a piece of the action. Debt is bonds or bills or CDs -- anything where you lend your money.
• Equity is where you invest your money, with no promise that your investment will be recouped.
• A very basic thing to know about money is that, over the really long run, people who buy equities -- stocks -- will almost surely make a lot more money than people who make “safer” investments.
• The first several thousand dollars of any body's money should be in a checking or savings account.
• The key to everything financial, and to nearly everything economic, is interest rates. When the going rate for money rises, bond prices automatically fall. When the going rate for money falls, bonds rise.
• Series I Savings Bonds: They guarantee a small fixed return on top of the inflation rate for up to 30 years.
• All Treasury Bills, Notes, and Bonds can be bought through treasurydirect.gov.
• The best retirement plans are the 401(k) and 403(b) “salary reduction plans” that tens of millions of employees contribute to. What makes them so good is that many employers add 25 cents or 50 cents or even more to each dollar you choose to save this way. This is free money. If your employer offers a deal like this and you’re not taking full advantage of it, you’re an idiot.
• The most common mistake 401(K) participants make is to deploy their 401(k) assets too conservatively -- although this certainly will not seem like a mistake in years when the stock market plunges.
• Save yourself the trouble of agonizing over the choice and go with the Roth IRA.
• Over the long run -- and it may be a very long run -- stocks will outperform “safer” investments.
• Most people should do their stock-market investing through no-load index funds.
• The higher the prevailing long-term interest rate, the less you should be willing to pay for stocks. And vice versa.
• Whether concerning an individual stock, or the market as a whole, always ask yourself which would be more of a surprise: good news or bad news.
• Diversify over time by not investing all at once.
• A lifetime of periodic investments -- adding to your investment fund $100 a month or $750 a month or whatever you can comfortably afford -- is the ticket to financial security.
• Steady periodic investing also gives you the benefits of dollar-cost averaging.
• If you are a systematic investor, you should welcome declines with open arms and a checkbook.
• And then -- for the most part -- just stick with it.
• By and large, for your money, “buy and hold” is the way to go.
• Diversify over several stocks in different industries.
• Be wary of high-fliers and stocks that “everyone” likes.
• Beware the deceptive p/e. The price/earnings ratio is the guide most investors use to get a quick fix on a stock. The p/e tells you how much ‘p’ (price) you have to pay for $1 of this stock’s ‘e’ (earnings).
• Don’t waste money subscribing to investment letters or expensive services.
• Buy value and hold it. Don’t switch in and out. Don’t try to outsmart the market.
• Sell only when a stock has gone up so much that you feel it no longer represents a good value.
• Invest -- don’t speculate.
• If you have both taxable and tax-sheltered portfolios, keep your riskiest holdings outside your tax-sheltered accounts.
• There are no brokers who can beat the market consistently and by enough of a margin to more than make up for their brokerage fees.
• By and large you should manage your own money (via no-load mutual funds). No one is going to care about it as much as you. And no one but you is going to manage it for free.
• Never buy anything from a broker who calls you up cold.
• Minimize your transaction costs.
• So when it comes to funds, you know my advice is to stick to index funds because they charge no sales fees and their annual expenses are typically very low.
• In the investment race the horse with the lightest jockey -- fund with the lowest expense ratio -- wins.
• Charts look like they should work, but don’t.
• Although splits can affect a stock’s price temporarily, they in no way change its underlying value (or lack thereof).
• When you sell a stock you don’t own, you are “selling short.” You do this if you think a stock is likely to go down and you wish to profit from its misfortune.
• Never use margin to buy stocks.
• It is common advice that you not let tax considerations interfere with investment decisions.
• Spend less than you have. Save the difference. Watch it grow.
• What to do, then, should you have the ill fortune to inherit a million dollars? Or, worse still, two?
• Go out for a very nice dinner.
• Put about one year of normal living expenses someplace liquid, like a bank or money-market fund.
• Put roughly equal sums into U.S. Treasury securities maturing in one, two, three, and four years.
• Put the bulk of the remaining money into stock-index funds, split between domestic and foreign investments.
• Buy a vacation home or a bigger house, if you want one -- but not so big that the cost of carrying it will in any way strain you.
• Do not buy a boat.
• Be sure your will is in order.
• Now, relax and forget the whole thing. Review it once a year, mainly to roll over your Treasury securities as they come due. Don’t spend any of the investment principle, but enjoy the extra income it throws off.
• There are funds that charge initial sales fees of 3% or more, known as the “load”; and there are others that charge no load. Choose a no-load fund. To do otherwise is to throw money out the window.
• You have to have a very good reason to go with a fund that charges more than 1% a year for its management and administration.
• If you have mutual fund paralysis, just buy shares in one of Vanguard’s index funds.
• This is a very simple concept but profound: just by investing all the money you have earmarked for the stock market in the Vanguard Index Trust, you will generally do better than most bank trust departments, mutual fund manager, and private investors -- with far less effort!
• If the stock market collapses, look at it as a great opportunity to make subsequent purchases at bargain prices.