Rich Dad's Guide to Investing

The basics of a sound financial lifestyle are very important.

Therefore we need to educate ourselves on the topic. Education that we don’t get in schools and universities. If we don’t self educate, we stay financially illiterate.

This book is about the basic concepts which an investor needs to know before investing. Things like different financial products available (stocks, index and mutual funds, bonds…), the underlying ideas behind these products and services. More concepts like Diversification, Asset Allocation, Rebalancing, different investing strategies, behavioral finance ideas (like Recency Bias, Overconfidence, Loss-Aversion, Paralysis by Analysis, The Endowment Effect, Mental Accounting, Anchoring…).

Investing is about buying assets, holding them for long periods of time, and reaping the harvest years later. It requires taking risks, but only when the odds are in our favor.

Speculating is similar to gambling. Speculators buy an investment with the hope of selling it quickly and turning a fast profit. Like gamblers, some speculators do win, but the odds are stacked against them.

Index investing is an investment strategy that takes very little investment knowledge, no skill, practically no time or effort, and outperforms about 80% of all investors.

If you buy an S&P 500 index fund, your investment is highly diversified and its performance will match that of 500 leading US corporation stocks.

“Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals.” —WarrenBuffet

“If I have noticed anything over it is 60 years on Wall Street, it is that people do not succeed in forecasting what’s going to happen to the stock market.” –Benjamin Graham

Great starter for anyone who likes to learn about investing and financial markets.