The winner of last week’s book “Birth of Plenty” is Bruce.  Please contact me at livingalmost at gmail dot com.

This week I’m reviewing the book “Investing for Dummies” by Eric Tyson.  Again please leave a comment for a chance to win. I will draw the winner next 11/19/08 @ 10 pm and announce it 11/20/08. I hope you enjoy this review and participate for a chance to win.  This book is divided into 6 parts.

Part I: Investing Fundamentals.

This part talks about investment choices in the first chapter.  In the second chapter the book looks at risk and return and the relationship.  Finally the third chapter discussing maximizing retirement accounts before starting to invest in taxable accounts.

Part II: Stocks, Bonds, and Wall Street

This is part talks about stocks, bonds, and wall street.  The first chapter focuses on how stocks and bonds worked.  It explains that bonds or stocks are used to generate income for companies starting out, or intial public offerings.  This allows companies to generate enough money to develop their product.

The second chapter looks at building wealth using stocks.  It suggests using index funds over normal mutual funds.  Also it further explains in the next chapter how to buy individual stocks.  But it also discusses why it be risky and harmful financially to buy single stocks.  I think the biggest problem is people panic, even with mutual funds; leaping in and out of funds based on performance. Instead of sticking with a long or even short term strategy, they emotionally invest rather than mathematically.

The next chapter talks about bonds.  It really explains what a bond is, how it can and should be used. It also explains the different bonds like treasury, minucipal, corporate, mortgage, and convertible bonds. The chapter also explains the likelihood of default.  The chapter also talks whether you should invest in individual bonds or bond mutual funds.

The next chapter talks about mutual funds and building a portfolio.  The biggest factor in making money from mutual funds is minimizing the costs associated with investing in mutual funds.  Finally this part of the book wraps up by explaining how to choose a brokerage firm.  It explains what you are paying for with a full versus discount brokerage.  Mostly in the cost of fees associated with mutual funds sold by the brokerage firm.

Part III: Real Estate

This part focuses on real estate both as a primary residence and as an investment.  The first part is perfect of novice homeowners. It talks about the fees and costs associated getting a mortgage, how to determine if you qualify for the mortgage, and how to find a property.  The chapter focusing on real estate investment gives goods tips.  But I think it glosses over the problems with being a landlord like renters not paying rent, or things breaking, etc.  I think real estate is one of the hardest investments to read about, and a person is better of talking with a long time landlord about the pros and cons.

Part IV: There no Business like Small Business

This part talks about being your own boss.  There are 3 different topics touched, starting, running, and buying a small business.  In starting your own business the chapter gives a list of 10 questions to ask yourself before striking out on your own.  I think they are great questions.  In discussing running a business the chapter focuses on leaving your job, financing the business, and surviving without a paycheck or benefits.  It also talks about getting customers, setting up a shop, and gives tips on accurate accounting.  Finally the last chapter wraps up what to look for when buying a business.  I think that valuation of any business is subjective, but less so with a franchise, so when buying a business I might stick to a franchise.

Part V: Investing Resources

This part looks at where to get financial advice.  Obviously if you are reading this review, you’ve found probably the newest, hottest place: personal finance blogs!  It also talks about whether you should trust personal finance “gurus”.  I think that you should read and listen to whatever you can. It will broaden your mind and horizons.  Everything has benefits, I may not agree with Dave Ramsey 100%, but he’s got a message that resonates with many people.  So take everything with a grain of salt.

Part VI: Parts of Ten

This talks about 10 psychological investing obstacles, 10 things to consider when selling an investment, and 10 tips of investing in a down market.

Hope you enjoyed this brief review.  Please leave a comment for a chance to win.  I’ll draw the winner 11/19/08 @ 10 pm.  Next week I’m reviewing Killing Sacred Cows.