The problem with many investing books that are written is this: They are U.S. centric. And this is a problem when it comes to the practical application step as they will be confined to the U.S. examples. Good for those living in the U.S. but not so good basically for the rest of the world.
This is fortunately not the case with this book. The book gives examples of how you can apply the strategy, index investing, not only in Singapore but also in Canada and Australia. U.S. citizens should not feel excluded as you have a section in there as well.
What exactly is index investing?
Index investing is essentially investing in the basket of goods that makes up the index. For Singapore, the index we are talking about is the Straits Times Index (STI). This is where things start to go abit weird and suddenly Exchange Traded Funds (ETFs) come into the picture. Long story short, these ETFs track the STI.
The book does a better job of explaining it I’m afraid.
It also goes into why you should do index investing instead of the other kinds of investing out there, of which there are numerous. These reasons include lower costs, diversification and a better performance when compared with mutual funds over a (very) long term. Index investors usually have very long time horizons – think decades. But I digress.
The first rule (of nine)
Of the many things helpful in this book is the fact that Andrew speaks to an absolutely beginner in investing.
One of the most helpful chapters is the first one where he addresses the mindset of spending in Chapter 1: Spend like you want to grow rich. The story of the mom who looked rich, had a jaguar and took luxurious holidays but didn’t have enough to pay tuition for her son to me was eyeopening to read about.
What I did after
I wish I could say the book convinced me to do index investing and right after putting it down (actually, I closed the app since I read it as an eBook) , plonked down some cash and made some money. But I did no such thing. In fact, the book convinced me enough to go to Standard Chartered bank to open an investment account and there the account sat for a good few months or so.
In that few months, I read more books about index investing (The New Coffeehouse Investor etc.) which convinced me even more and eventually I took up a short online course and finally did my first investment.
The moral of the story is the seed was planted in my head by this book. In terms of content, the book is packed with gems but for the nitty gritty like how to place trades or how to select stocks, you’ll be better served reading Hardware Zone. However, it’s very difficult to find this in the National Library Board (NLB) as a physical book and I had to resort to borrowing the eBook from NLB and reading it from the OverDrive app.
I’ve made some money since my first trade a couple of months ago but we’ll see the final results in time- perhaps in 30- 35 years time.