If you’re like me, you like to learn from the experience and wisdom of others. It’s much cheaper that way! When it comes to being an investor, few things can beat the knowledge you and I can absorb by reading books. Plus I just like to read.

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Five Books For Active Investors

The Intelligent Investor by Benjamin Graham. Graham was Warren Buffet’s professor and Buffet has declared that this book is “the best book on investing ever written.” Strong words from someone who’s used those investing strategies to make billions.

Payback Time or Rule #1 both by Phil Town. Town’s investment philosophy mirrors those of Warren Buffet and Ben Graham, that price and value are two different things. He shows you how to intensely scrutinize any business you invest in and how to make an educated guess about it’s value based on its past, present, and predicted future.

The Little Book That Beats the Market by Joel Greenblatt. The author’s private investment partnership, Gotham Capital, has produced 40 per cent a year returns over the past 20 years. The last time I checked, he was invested in only two stocks. 40 percent. Wow.

Irrational Exuberance by Robert J. Shiller. This Yale economist contends that emotion often determines prices in the stock market, resulting in prices that are often far higher or lower than values. Does anyone really believe that Yahoo was truly worth $500 billion in 1999?

One Up On Wall Street by Peter Lynch. This former manager of Fidelity Magellan Fund, the largest mutual fund in the world at one time, thinks you should be managing your own money. He wrote “The amateur investor has numerous built-in advantages that should result in outperforming the experts and the markets.”

Five Books For Passive Investors

How A Second Grader Beats Wall Street by Allan Roth. He believes you’re paying too much in fees, too much in taxes, and that the financial advisors you’re been using don’t have any idea where the market is headed. Our biases (and our financial planner’s biases) can cause us to lose big money over the long run. Invest in broad based ETFs or Vanguard funds and rebalance each year.

The Little Book Of Common Sense Investing by John Bogle. As the founder of the Vanguard Group, Inc., Boggle is THE guru of index investing, providing guidance to small investors in smaller and more direct terms than some of his other writings.

The Only Guide You’ll Ever Need for the Right Financial Plan by Larry Swedroe. In a easy-to-understand prose, Mr. Swedroe provides excellent information on the various types of equities, bonds, alternative investments, a valuable discussion on how to increase your tax-advantaged savings and important tips on asset location for maximum tax-efficiency.

Searching For Alpha by Ben Warwick. This is a great discussion of market efficiency versus stock picking from an active manager. This is a light-hearted book on a heavy subject that addresses such things as “the commonalities between catching monkeys in India and avoiding taxes on investments in the United States.” You want to read it now, don’t you?

The Wall Street Self Defense Manual by Henry Blodget. Though many people believe the author should be in jail because he was an insider and eventually was barred from the financial markets, no one knows more about how to spot a Wall Street scam than a former crook. His recommendation? “Diversify your assets, reduce your costs, and get out of the way.”

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If you’re like most people, including me, money can be an intimidating multi-armed animal. There’s so many working parts: savings, retirement, investing, credit, insurance. Seriously, there are a lot of different functions to making money and understanding it.

Even though money is complicated on many fronts, on a personal level, Charles Farrell has made personal finance much more understandable with his book, Your Money Ratios: 8 Simple Tools for Financial Security. This book is, in a word, awesome.

I’ve read hundreds of financial books over the past few decades, but this book is perhaps one of the very best at simplifying personal finance. Farrell’s writing is clear and direct as he explains even the most complicated financial situations in terms than anyone can understand. This book is full of sheer common sense and is exceptionally well written, even enjoyable to read. Few financial tomes can reach that level!

Let’s take a look at the individual chapters.

Chapter One: The Capital to Income Ratio

Farrell starts the book by arguing that we need to save at least 12 times our annual salary so we can live in retirement on 80 percent of our annual income. He assumes an annual return of 8 percent so if you think that’s a little generous, you should increase that number to perhaps 15 times or more.

If you make $75,000 per year before taxes, you would save $900,000 and after retiring, withdraw $60,000 each year in retirement. In order to maintain your retirement nest egg at $900,000, you’d have to have returns at 7.15 percent – assuming no inflation. In reality you’d need to average quite a bit more than that to accommodate taxes and inflation.

Chapter Two: The Savings Ratio

In order to hit that proper capital to income ratio, you’ll have to save 12 percent of your annual income if you’re under 45 years of age, and 15 percent if your over 45 like me. This money cannot be touched!

Chapter Three: Social Security

The author is pretty adamant about the long term viability of Social Security (personally, I’m not convinced), and he believes that it will make up about 20 percent of the average retiree’s income.

Chapter Four: Where to Save Your Money

All your retirement money shouldn’t go into a savings account, some of it should be in a 401(k) or a Roth IRA (mostly for the tax advantages). You should also consider a brokerage account. The main thing is to make any savings as automatic as possible.

Chapter Five: The Debt Ratios

Can debt be something that elevates you from laborer to capitalist? Perhaps, but debt can be a two edged sword and high interest debt should always be avoided. He argues that a mortgage should be the only debt anyone incurs and even then it should only be two times your annual income

Chapter Six: The Investment Ratio

If you’re under 60, Farrell recommends 50 percent of your investment in stocks and the other 50 percent in bonds. If you’re over sixty, invest more heavily in bonds. Too much in bonds and hitting that 7% plus return that Farrell claims you’ll need in the first chapter might be out of reach. One alternative is to invest your retirement money in a targeted fund that is aggressive while you’re young and slowly becomes more conservative as you get older.I

Chapter Seven: Stocks and Bonds

Rebalancing and diversification are the two keys to investing properly. Just like Alan Roth explained in How a Second Grader Beats Wall Street, your stock investments should be spread across lots of different companies, preferably using index funds. Your bond investments should largely be in government bonds, but you should be diversified there as well. Annually you should rebalance your portfolio, moving money into your asset classes according to your personal risk tolerance.

Chapter Eight: Ignoring Wall Street

Forget Wall Street, CNBC, and the financial media. They’re in it for the short term but we’re in this for the long haul. Don’t let little blips in the Dow Jones frighten you, it’s temporary and you’re not a temporary investor.

Chapter Nine: The Disability Insurance Ratio

You’ll need to insure your income through disability insurance to the tune of 60 percent of your pre-tax income. That’s about what you bring home anyway.

Chapter Ten: The Life Insurance Ratio

Your life insurance should be a term policy with a benefit equal to 12 times your salary minus your capital to income ratio (from chapter one). So, for example, if you make $75,000 a year, your total of your capital and your life insurance benefit should be $900,000 per year. This, of course, means that as you save more, you’ll need less life insurance. As a result, your twenty or thirty year term policy might not have to be renewed at all once the term ends.

Personally, I think 12 times isn’t nearly enough and since life insurance rates are so low, I carry 20 times my salary.

Chapter Eleven: The Long-Term Care Insurance Ratio

Wait until you’re in your mid 50’s before looking into long-term care insurance. Prior to that, the cost isn’t worth the benefit but wait too long and the cost will be prohibitive. This is the most complicated chapter in the entire book, but Farrell does a good job of explaining this type of insurance.

Chapter Twelve: Health Insurance

With so much up in the air, it would be best to find the lowest cost health insurance that meets your needs and stick with it until things settle down. Keep yourself fit, eat well, and keep your health insurance rates low as a result.

Chapter Thirteen: Getting Professional Help

If all of this is too complicated, Farrell advises readers to find a professional financial advisor, one that’s competent, ethical, independent, and highly trained. Farrell points out a few warning signs of a bad financial advisor, particularly one who promises unbelievable returns, never asks you about your goals, or constantly only recommends one company’s products.

To buy or not to buy?

Your Money Ratios: 8 Simple Tools for Financial Security is an unqualified BUY from my perspective. This book is so clearly written, so … common sense, that it’s not only a buy but a MUST BUY. This is a book that everyone needs to read and put into practice. Had we followed the advice Farrell gives in Your Money Ratios over the past few decades, this past financial crisis would have been just a minor blip on the radar. Let’s put these principles to work NOW so we can avoid the next crisis.

Links to products or services may be affiliate links. See my disclosure policy on the site or on my About page.

After working on The Inner View of Your Interview for almost a year now, I’m proud to say that this 102 page, 40,000 word book is now available! Taking a look at interviewing from an interviewer’s perspective, this book reveals not only WHAT you’re likely to be asked, but WHY. It then delves into HOW you should answer those questions and WHERE you should guide your interviewer (hint: to your own strengths as they relate to the open position).

I’ve been interviewing other people for job openings for several decades and I’m always amazed at the lack of preparation far too many people bring to their interview. On the other side of the coin, I’m also amazed that other job candidates think they can spend 5 minutes rehearsing a few answers they found on the Internet and snow me or any other interviewer. An interviewer can always tell when a job candidate has marginally prepared or has been coached. And although that only works slightly better than a completely unprepared candidate, a seasoned interviewer will see right through the rehearsed replies and send you packing. The Inner View of Your Interview doesn’t recommend you come off sounding like an interviewing robot, repeating the tired old phrases and slogans espoused in books from the career section of Barnes and Noble. The Inner View of Your Interview teaches you step by step how to prepare for your job interview using bonus worksheets and dozens of examples.

The best prepared candidate for a job interview is the one who sounds completely natural, who doesn’t sound coached, and who has more knowledge about the interviewing process and the company’s needs than first appears. THAT is the candidate most likely to receive a job offer; and if a job seeker puts into practice the tips and techniques found in The Inner View of Your Interview, everything else being equal, he or she will be that candidate.

Writing a book isn’t easy. Far too often ideas come in flurries faster than fingers can type. Other times there is nothing there and nothing flows together, but after sticking with it, I’m proud of what was produced.

If you’re looking for a gift this Holiday season, or if you know someone who has recently graduated or is looking for work, The Inner View of Your Interview makes a great gift.

You can purchase it right here on the sidebar on the right side of this page or go to the book’s main page here. Use coupon code “save10” to get $10 off your purchase now through December 31, 2010. Simply enter the coupon code and click APPLY, wait for the cart to reset and you’re good to go.

Other eBook projects I’m working on:

• An eBook on Moving. Having moved 28 times over 44 years, I’ve definitely got the experience … and the sore back. This book will help you avoid my mistakes.
• An eBook on Dachshunds. We loved our little Dachshund, Copper, and he’s been a joy to our family. Maybe you’d like one too?
• An eBook on writing a grant proposal. There are literally billions of dollars set aside by the federal government, state agencies, corporations, and foundations for education, research, community initiatives, and much more. If you have a way with words, it could pay!
• An eBook on Retirement: Beyond Finances. There’s more than just money to worry about.
• An eBook on camping. Yes, you need to get out more often, but maybe not the “out” you’re thinking of.
• An eBook on the Fundamentals of Saving for College. It will be here before you know it. It’s coming up on me FAST.
• An eBook on Household Organization. Declutter your home and free your mind! Organization will set you free. Bold statement? Sure, but true nonetheless.
• An eBook on How to Build a Deck. See my backyard in pictures this Spring!
• An eBook on How to Read a Financial Report. Knowing how to read those reports can help you make a better educated guess for your investments.

I’ve already gotten the framework written on most of these and they will become available over the next few months so keep tuned!

Links to products or services may be affiliate links. See my disclosure policy on the site or on my About page.

UPDATE: The Inner View of Your Interview is now ready for purchase!

Click HERE to purchase your copy and use coupon code “save10″ to save $10 immediately! Be sure to APPLY the coupon before you checkout!

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Within the next few weeks (maybe even days?) my eBook on job interviewing will be finished and available for purchase here on The Wisdom Journal. I’ve been working on this project for almost a year now and I believe I’m finally ready to stop editing! Now if I could just get my editor to give her final stamp of approval! Hint-hint.

The Inner View of Your Interview is written for job seekers from the perspective of a Human Resources professional. It examines the top 100 questions asked by interviewers but applies a unique twist – not only does it give you a framework for crafting the best answer, it also warns you of the worst answers and the traps that interviewers set for job candidates. But it goes much deeper than even the best and worst answers – The Inner View of Your Interview clues you in on why the question was asked in the first place.

One of the keys to understanding human nature is knowing why people think a certain way and The Inner View of Your Interview uncovers the motivations behind the top interview questions asked by interviewers. It’s like seeing your interview from inside the mind of the person asking the questions.

I’ve written quite a lot on job interviewing, mostly because I majored in Human Resources Management before getting my MBA. Knowing some of the ins and outs of HRM as well as the business principles I learned in graduate school helped me write this book.

Here are a few of the stats:

• 80+ pages of actual content (that’s huge for an eBook)
• 35,000+ words
• 100 actual interview questions dissected and examined
• Dozens of examples on what to say and how to say it
• FREE bonus chapters on handling illegal questions
• FREE bonus chapter on the new rage: behavioral interviewing
• Worksheet to help you uncover your motivational Success Factors
• Worksheet to help you find open positions through networking
• Yet another FREE bonus chapter on background checks

Yes, I wrote this book for the job seeker, but interviewers can also benefit. If you interview people for almost any type of position, you can use these questions as a template to help you better prepare to be on the question side of the desk. And yes, all of the questions are legal – except the ones listed in the “illegal question” section!

If you know anyone who is:

• Unemployed
• Laid off
• Recently graduated
• Searching for a job
• Wanting to make a job change but fearful of interviewing
• Confused with how to “prepare” for an interview
• Searching for qualified help to fill a position

This is the perfect gift for them.

I’ve used a career and interviewing coach before.

I paid over $7,000 for less than half the information you’ll discover in The Inner View of Your Interview. Not only that, but the information is presented in an easy to read format and in language anyone can understand.

The Inner View of Your Interview will retail for $29.99 but I’m offering an instant $10 off during the launch phase to those who are interested. If that describes YOU, just drop me a line on my contact form and I’ll send you the coupon code when The Inner View of Your Interview is released.

Many more eBooks to come. Future books will include:

• Home Organization
• Building a deck (a Spring 2011 project)
• Saving for college
• Retirement planning beyond the finances
• Grant writing for fun and profit

The eBook cover design was by the master – Peter Anderson from Logos for Websites. He is awesome!

Links to products or services may be affiliate links. See my disclosure policy on the site or on my About page.

When I was contacted to review Phil Town’s latest book, Payback Time, I was thrilled. I read his first book,Rule #1, and when I used the principles he outlined, I actually made quite a lot of money investing in individual stocks.

In the past year, I’ve done more investing along the lines of How A Second Grader Beats Wall Street and have made a lot of money there as well. But I’m currently in the process of selecting some businesses to investigate.

The book’s major premises:

• Price and value are not always in sync. Having worked as a commodities buyer for several years, I can readily testify to this.
• Mutual fund managers aren’t all they’re cracked up to be.
• Once you determine a business’ value, if its stock goes on sale, buy more. Town calls this “stockpiling” (essentially, it is a buy low and sell high strategy which so many people know, but fail to do).
• Invest only in businesses you actually understand. Really. If you don’t have a genuine understanding of the business, or at least a deep interest, don’t invest.
• Make sure that business has a strong competitive advantage.
• Investigate the management like you own the company … as a stockholder, you do.

So what is “payback time”?” It is the price of the business that will be repaid in X number of years out of earnings the business generates. If you spend $27 per share on a stock and it earns $3 per share, it should have a 9 year “payback.” Town recommends only buying stocks with a payback of 10 years or less. The lower the better.

Concentrate your energies, your thoughts and your capital. The wise man puts all his eggs in one basket and watches the basket. –Andrew Carnegie (worth an estimated $250 billion in 2009 dollars)

This isn’t active trading. Town recommends sitting on the sidelines and keeping your money in a savings account when the business you’re interested in is not on sale. It is a conservative, “watch that basket” type of investing.

Should you buy Payback Time? If you’re interested in value investing and have the time, resources, motivation, and inclination to research different businesses, you would probably benefit from this very interesting, very well written book.

Links to products or services may be affiliate links. See my disclosure policy on the site or on my About page.