Every year around this time, a flood of new personal-finance books is released, and every year I complain that so many tout terrible advice.
Not this year. Sure, there is the usual truckload of bad new books out there, offering doomsday philosophies, conspiracy theories and get-rich-quick schemes in place of solid financial advice.
But this year's crop of money titles includes some real standouts -- books that offer new ideas, fresh approaches and sage advice about how to handle your money.
If you want books that will help you grow your money and your understanding, here are five I believe are worth reading:
- "Stop Getting Ripped Off: Why Consumers Get Screwed, and How You Can Always Get a Fair Deal" by Bob Sullivan.
"Stop Getting Ripped Off" is a worthy successor to MSNBC columnist Sullivan's earlier best-seller, "Gotcha Capitalism," which explored how our free-market economy has been replaced by a bait-and-switch system of low advertised prices that hide myriad "gotcha" fees. In "Stop Getting Ripped Off," Sullivan first explores why we're so vulnerable (rotten math skills and the disappearance of effective consumer protection are among the reasons), then offers concrete ways to fight back.
But Sullivan's most compelling argument is his initial one: that even the savviest consumers are vulnerable when the laws against unfair business practices aren't enforced.
- "Your Money Milestones: A Guide to Making the 9 Most Important Financial Decisions of Your Life" by Moshe A. Milevsky.
You've probably never read a personal-finance book like this one, unless it was Milevsky's earlier book, "Are You a Stock or a Bond?" Milevsky challenges a lot of conventional wisdom about money, and even when he concurs with mainstream advice, he tends to do so for reasons that are different than you might expect.
Some background: Milevsky is a finance professor at Toronto's York University and a bit of a rock star in financial-planning circles for his work on annuities, risk management and retirement planning.
"Are You a Stock or a Bond?" rejected the idea that you should use your age or risk tolerance to determine how much of your retirement portfolio to invest in stocks. Instead, Milevsky suggested assessing whether your most important asset -- your ability to earn money, also known as your human capital -- was more bondlike or more stocklike.
If you could easily earn more money by working more hours, and your job wasn't tied strongly to the economy (like, say, a barber who owns his own business), Milevsky decreed your human capital was more like a bond and thus you could afford to take more risk in the stock market. If your job had set hours and was closely tied to the economy (maybe you work as support staffer for a financial institution), your human capital was more stocklike, and you should take less risk in the markets.
Milevsky uses a similar approach in "Your Money Milestones" to advise against buying a home before you're 50, noting that you shouldn't tie yourself down to a big, undiversified investment when most of your human capital is also undiversified --locked inside you, rather than already turned into financial capital that can be diversified across asset classes and regions of the world.
He also dismisses the distinction between good debt and bad debt, and even suggests it's OK to live beyond your means during some points in your life. (You'll understand that little bit of heresy better once Milevsky has walked you through the concept of lifetime consumption smoothing.)
This book is like a brisk walk for your brain. You may not agree with all of his conclusions, but you'll consider some new concepts, and you certainly won't be bored by yet another rehash of the same old advice.
Continued: Have a not-so-regular job? Read on