The Elements of Investing »

Burton G. Malkiel is the Chemical Bank Chairman's Professor of Economics at Princeton University and the author of the bestselling A Random Walk Down Wall Street. Malkiel has served on the President's Council of Economic Advisers, as Dean of the Yale School of Management, as Chair of Princeton's Economics Department, and as a director of major corporations.

Charles D. Ellis is a consultant to large public and private institutional investors. He was for three decades managing partner of Greenwich Associates, the international business strategy consulting firm. He serves as Chair of Whitehead Institute and as a director of Vanguard and the Robert Wood Johnson Foundation. He has taught investing at both Harvard and Yale and is the author of 15 books, including the bestselling Winning the Loser's Game.

In his classic book The Elements of Style, Professor William Strunk Jr. whittled down the art of powerful writing to a few basic rules. Forty years later, E.B. White initiated a revision, and thus The Elements of Style became known as Strunk & White. Following this same format, authors Charles Ellis and Burton Malkiel, two of the investment world's greatest thinkers, have combined their talents to produce The Elements of Investing—a short, straight-talking book about investing and saving that will put you on a path towards a lifetime of financial success.

The Elements of Investing lays to rest the popular shibboleths that undergird the hyperactive trading of the average investor. In it, Malkiel and Ellis skillfully focus their message to address the essentials and offer a set of simple, but powerful thoughts on how to avoid Mr. Market and his "loser's game," and instead enjoy the "winner's game" approach to investing.

All the investment rules and principles you need to know are here—with clear advice on how to follow them. In just two hours of reading time, you will learn all you need to know to be truly successful in investing. Divided into five essential elements of investing, this little book packs a big message that can help secure your financial future all the way through retirement. Topics touched upon include:

• Diversifying broadly over different types of securities with low-cost "total market" index funds and different asset types—and why this is important
• Focusing on the long term instead of following market fluctuations that are likely to lead to costly investing mistakes
• Using employer-sponsored plans to supercharge your savings and minimize your taxes
• And much, much more

A disciplined approach to investing, complemented by understanding, is all you need to enjoy success. This practical guide explains what you really need to know and puts you on the right course for long-term success through all kinds of markets.

Foreword.

Introduction.

It All Starts with Saving.

I. Save.

First Do No Harm.

Start Saving Early: Time Is Money.

The Amazing Rule of 72.

Savvy Savings.

Small Savings Tips.

Big Ways to Save.

Let the Government Help You Save.

Own Your Home.

How Do I Catch Up?

II. Index.

Nobody Knows More Than the Market.

The Index Fund Solution.

Don't Some Beat the Market?

Index Bonds.

Index Internationally.

Index Funds Have Big Advantages.

One Warning.

Confession.

III. Diversify.

Diversify Across Asset Classes.

Diversify Across Markets.

Diversify Over Time.

Rebalance.

IV. Avoid Blunders.

Overconfidence.

Beware of Mr. Market.

The Penalty of Timing.

More Mistakes.

Minimize Costs.

V. Keep It Simple.

Review of Basic Rules.

Asset Allocation.

Asset Allocation Ranges.

Investing in Retirement.

KISS Investing

A Super Simple Summary.

Appendix: Save on Taxes Legally.

Individual Retirement Accounts (IRAs).

Roth IRAs.

Pension Plans.

Tax-Advantaged Saving for Education.

Recommended Reading.

Acknowledgments.

About the Authors.

Index.