ITA Wealth Management

  • Home
  • Blog
  • Lifetime Membership
  • Portfolios
    • Bethe Portfolio
    • Bohr Portfolio
    • Carson Portfolios
    • Dirac Portfolio
    • Einstein Portfolio
    • Franklin Portfolio
    • Galileo Portfolio
    • Gauss Portfolio
    • Huygens Portfolio
    • Kahneman-Tversky Portfolio
    • Kepler Portfolio
    • McClintock Portfolio
    • Millikan Portfolio
    • Pauling Portfolio
    • Rutherford Portfolio
    • Schrodinger Portfolio
  • Forum
  • Reset Password
  • Contact Me
  • ITA Feedback
  • About Me
You are here: Home / Beginning Investors / The Elements of Investing: Burton G. Malkiel and Charles D. Ellis

The Elements of Investing: Burton G. Malkiel and Charles D. Ellis

September 3, 2015 By Lowell Herr

Alaska RR -circ 1950

Alaska RR – circa 1950

The Elements of Investing is a small investment book patterned after the very popular book on writing, The Elements of Style.  There are five primary sections to this book and they are as follows.

  1. It All Starts With Saving
  2. Index
  3. Diversify
  4. Avoid Blunders
  5. Keep It Simple

There are many blog posts that focus on numbers 1, 2, 3, and 5 here at ITA.  Search The Golden Rule of Investing and you will find material critical to point number 1.  Malkiel and Ellis add a number of ways one can save.  Some that quickly come to my mind are:  Buy term life insurance (or avoid completely), increase deductible insurance on automobile, don’t smoke, drink tap, not bottled water, carry your lunch, don’t own a pet, and pay off the credit card every month.  There are many more and I’m sure ITA readers will add their own ideas.  We all have areas were we can reduce expenses and save the difference.

Point number two is to always use index mutual funds or non-managed Exchanged Traded Funds (ETFs) instead of trying to analyze companies and select individual stocks.  If you work for a company where they provide stock options, do not place all your savings in the company you work for.  This leads right into point number three (3) – diversify.

Point number three is to diversify and I recommend global diversification.  Actually, this can be accomplished by investing in one single ETF, VT.  My preference is to use more than one and if you follow the Galileo, Rutherford, and other portfolios on this blog, you will find all are diversified all over the planet.  This is accomplished using very few ETFs.

I’ll not focus on the Avoid Blunders section, but move on to point number five which is to Keep It Simple.  In many ways, point number 5 is a repeat of points 1 through 3.  There is more emphasis on asset allocation, but this can actually be covered in point 2.

The Elements of Investing is best modeled by the Schrodinger Portfolio as it is a global portfolio with broad diversification using non-managed ETFs.  In addition, all ETFs are commission free.  I highly recommend The Elements of Investing as it is on my Top Ten Investment Books.

Share this:

  • Twitter
  • Facebook
  • LinkedIn

Filed Under: Beginning Investors, Books Tagged With: Beginning Investors, Books

Comments

  1. TrickPony says

    September 3, 2015 at 1:16 PM

    Lowell,
    Beautiful picture. I just set it for my desktop background.
    Kurt

    • Lowell Herr says

      September 3, 2015 at 2:20 PM

      Kurt,

      I am scanning some old slides so the quality is not all that great. The color has held up quite well as the slide is 60 years old. Also, to move the scanned slides over to the blog I need to reduce the size of the file so both resolution and color are compromised. Pleased you like it.

      Lowell

Popular Posts

  • Over-Valued Market Update: Four Critical Indicators – April 2021 53 views | 2 comments
  • Relative Portfolio Performance: 8 April 2021 50 views | 2 comments
  • Modified Kipling Workbook with Risk Ratios 46 views | 0 comments
  • Rutherford Portfolio Review (Tranche 3) – 1 April 2021 40 views | 2 comments
  • Rutherford Portfolio Review (Tranche 4) – 9 April 2021 34 views | 1 comment
  • Gauss Portfolio Review: 13 April 2021 33 views | 6 comments
  • Quick Look At Kepler: 3 April 2021 32 views | 2 comments

General Investment News

Portfolios coming up for review are:  Franklin, Huygens and Schrodinger.  Non-scheduled portfolios may be reviewed.  If you are a new user, check the posts you missed. Links to Random Posts are found in the lower right-hand footer or just to the right of what you are now reading.  Most popular posts are found in the lower left-hand footer.

Contact me at itawealth@comcast.net if interested in a Lifetime Membership.  Current Platinum members will be grandfathered into a Lifetime Membership before the end of 2021.

Random Posts

  • Reworking The Investment Quiver
  • Schrodinger Portfolio Review: 28 May 2015
  • Tuesday’s Uptick Changed Little
  • Huygens Portfolio Review: 19 March 2021
  • GLD Inflation Play with Options
  • Memorial Day Review: Getting Back to Investing Basics
  • Tree of Life Music
  • Gauss Portfolio Review: 10 March 2021
  • Which ETFs To Use When Constructing A New Portfolio
  • Bach’s St. John Passion

Log in | Website Design by BOING