What is your risk tolerance? What to include and what not to include in a portfolio? Should you repay the mortgage or increase tax-advantage saving?
“The only guide you’ll ever need for the right financial plan” by Larry Swedroe, will help you answer these questions and many more. Although the book is intended for “average investors”, it has a conservative theme to it.
The author opens this book with a strong introduction on why it is important to understand the risk and uncertainty and proper asset allocation based on risk tolerance.
“During crisis, the perception about equity investing shifts from one of risk to one of uncertainty”. Author relates risks to measurable probabilities and uncertainty to indefinite or incalculable.
“Dramatic falls in prices lead to panicked selling … as investors tend to sell well after market declines and buy well after rallies have long began. The result is [investors] dramatically under-perform the very mutual funds in which they invest.”
Author goes on and covers some of the basic but important principles of creating a portfolio including asset allocation, recommendations on alternative investments, planning, and financial security.
The recommendations on alternative investments section could be the most interesting part of this book but the explanations are short and in some cases refer to further reading.
Should you include gold in your portfolio? No need for that in a well-balanced portfolio, argues the author very briefly.
Overall, this book is a useful brief guide that can be beneficial to new investors and to some extent to those who already have created one. Contrary to the title, it is not the only guide you will ever need.
Disclosure: No Positions