Investing 101: A Crash Course in Building Personal Wealth

Investing 101: A Crash Course in Building Personal Wealth by Michele Cagan, CPA was originally reviewed on YouTube on May 10, 2021, but you can watch the review on Rumble or listen to it on PodBean.

This is one of those books that landed in my hand during a random browse through Barnes and Noble. And since I would eventually, someday, like to both pay off my student loans AND retire not a penniless sad person, I bought it.  Only, to pay off my student loans and not retire a penniless sad person, I need 1. Read the book and 2. Implement what I learn.

So, step 1: read Investing 101. And just like the title says, it is a crash course in all things investing. It starts with some basic economics, moves in to describing what exactly a stock is, describes bonds, mutual funds and exchange traded funds (ETF’s). Cagan describes the different styles of investing and the key differences between them.

For whatever type of investment you choose to make, Cagan repeatedly underscores the importance of researching the company, bond, or fund BEFORE you invest. Also underscored throughout the book is that investing is risky.  There is always the chance that what you invest you will lose.  Which is why research is so important.  Research is how you mitigate risk. And if you don’t have time to research your investments, you probably shouldn’t be investing.

But, if you can tolerate even a little risk, investing is how you make your money work for you…remember that lesson from last month, Richest Man in Babylon? One of the steps to financial independence was to make your money work for you.

Now, the stock market and all the different ways to invest in the stock market is one way to invest.  Another way is real estate, which carries its own risks, but at least the risk is grounded in tangible assets.  Just beware of government intervention…remember when the government put the kibosh on collecting rent and wouldn’t let landlords evict tenants due to covid-19? May have been overturned by the courts, but the government still felt the need to interfere. While the landlords could not evict tenants for not paying rent, those mortgage payments were still due to the banks. So, there is risk with property management too, even if it’s not as seemingly risky as the stock market.

Another method of trading is currency and commodity trading. Currency, as it sounds, is trading in the world’s monies. Commodity trading is trading in those things’ life needs…food, oil, precious metals. Cagan also touches on socially responsible investments, which is going green, if that is important to you.  And it may not be.  But that goes back to investigating your investments.

Cagan spends a chapter hitting on two of the main reasons people get in to investing, Education and Retirement. While wanting to pay off my education is not the goal of this chapter, it does offer valuable advice for setting up accounts to pay for your kids’ education, so that your kids don’t have to take out massive student loans to pay for a degree they may or may not ever use. Retirement, though, is the other reason I read this book. And I’m already off to a good start there, since my day job has a 401K I contribute too.  Which leads me back to learning to invest on my own, so I can retire with more money.  Just like Spaceballs.

So, this isn’t a long book, and it is chock full of quick bits of advice.  It was written in 2016, so I’m not sure if that pre-dates investing apps like Stash and Robinhood.  Cagan does mention online trading as a growing method of the small investor and TD Ameritrade as an online broker. I think this is a good basic book to get one familiar with investing terminology and addresses some basic concerns most first time investors have, as well as offering a quick quiz to help one identify one’s risk tolerance. It’s the sort of quiz you should be as honest as possible when you take, so you don’t overestimate your ability to handle market downturns.

The final chapter addresses some of the greats in the investing world, including Warren Buffett, who is practically a household name, and Benjamin Graham, who was Buffett’s mentor and author of The Intelligent Investor, which is also in my library.  But I have not yet read that one. But I want to…just have to find the time.