If you're new here, this blog will give you the tools to become financially independent in 5 years on a median salary. The wiki page gives a good summary of the principles of the strategy. The key to success is to run your personal finances much like a business, thinking about assets and inventory and focusing on efficiency and value for money. Not just any business but a business that's flexible, agile, and adaptable. Conversely most consumers run their personal finances like an inflexible money-losing anti-business always in danger of losing their jobs.
Here's almost a thousand online journals from people, who are following the ERE strategy tailored to their particular situation (age, children, location, education, goals, ...). Increasing their savings from the usual 5-15% of their income to tens of thousands of dollars each year or typically 40-80% of their income, many accumulate six-figure net-worths within a few years.
Since everybody's situation is different (age, education, location, children, goals, ...) I suggest only spending a brief moment on this blog, which can be thought of as my personal journal, before looking for the crowd's wisdom for your particular situation in the forum journals.
If you enjoy the blog, also consider the book which is much better organized and more complete. You can read the first chapter for free, listen to the preamble, or see the reviews (1,2,3,4,5,6,7,8,9, A,B,C,D,E,F,G,H,I,J,K,L,M,N,O,P,Q,R,S,T,U,V,W,Z). Subscribe to the blog via email or RSS. Get updates on the facebook page, join the forums, and look for tactics on the ERE wiki. Here's a list of all the ERE blog posts.
I just wanted to share a great book on real estate evaluation which was shared in the ERE forums (I forget which thread). The principles transfer fairly well to stock analysis as well. This is perhaps one of the few books on investing which isn’t dumped down and thus doesn’t assume that addition and multiplication is now beyond the average person; this one won’t hide the underlying machinery by sending you to a website with some annoying javascript “calculators”.
I would say, if you don’t have an understanding of the math of the various ratios and percentages pertaining to basic financial statement analysis, you probably shouldn’t invest in individual stocks or real estate for that matter. Okay, let me rephrase that: Understanding the ratios and the thinking behind them will allow you to avoid a great many mistakes as an investor compared to the “I like their burgers”-school of investing.
A good proxy for the value of a book is the difference between the used price and the new price. The smaller the spread, the more sustainable value the book provides. A book with a large spread is not likely to have any enduring merit. This book has a small spread.
If you already know enough financial analysis to calculate internal rate of returns and you know the difference between return on equity and return on assets, this book will be a breeze to read though. It may serve as a fast refresher but you probably won’t learn anything significant. If not, this book is a great one to start with.
Originally posted 2011-03-21 19:03:11.
