Monday, April 16, 2007

One DIY Book

I feel good about the work Lori and I have done on the house, as well as the work we've contracted out. I also feel that doing the work ourselves is in some cases a better value proposition than buying an end-product by paying more for a house. I would never extend this logic to infrastructure problems - only interior.

When does it pay to hire experts? When is DIY the right approach? When it comes to retirement and financial planning, I am way in the DIY camp. So I thoroughly enjoyed canceling my Bank of America "Premier" status today.

Premier status? Well, it turns out that somehow through a series of mergers and acquisitions, I got lumped in with Bank of America's rich clients. It turns out I had a "relationship manager" (whom I have never spoken with until today to cancel the whole thing). Since I don't have gobs of money and don't need gobs of advice, I don't think I need my relationship to the bank to be managed. Every time I have compared BoA to other institutions, they've proven uncompetitive. A professional that can "advise" me to buy these products simply illustrates the enormous conflict of interest present in financial services: it's a zero sum game between you and your banker/broker/retirement planner/financial services company. They make all their money by taking some of your money.

Can you do better on your own? I think so. There is an enormous amount written about investing and retirement planning. If you only read one book on the subject (perhaps to see if you can stand it) I suggest "A Random Walk Down Wallstreet" by Burton G. Malkiel. Four things going for it:
  • It contains real investment information that you can use to set up your own portfolio and take action.
  • It covers the academic topics behind investing, with clear explanations. This gives you the background to refute the next salesman who says "ah, but you can beat the market with our new XYZ mutual fund."
  • The book has been updated recently, important both for market perspective and for covering new investment vehicles.
  • Most importantly, it's a good read and goes quickly. I think the biggest barrier of entry to DIY finance can be the subject matter.
(John Bogle has probably done more for individual investors than anyone else I can think of, and he's very smart...I have the utmost respect for him. But his books can be dry...if you were to pick up Common Sense on Mutual Funds as a first book on the subject, it could also be your last.)

The original purpose of this blog (now it serves as a photo album) was to document my DIY mistakes on the house. But I figure financial DIY mistakes should be fair game too!

No comments: