One financial adviser’s version of the ABCs of money management.
As debut author Newtz explains in his introduction, the purpose of his book is to present guidelines for basic money market strategies and good financial decision-making. The first chapter explains why financial institutions are focused on making money for themselves, not their customers. Next, the author discusses some basic money management details, such as setting goals and preventing identity theft. He looks at the necessity of building good investments, which he calls a “castle and moat” to protect wealth from the forces of “erosion”—inflation, taxes, interest rate declines, and other factors. He then goes over some of the cardinal rules of investing (such as “Carry a considerable dividend and cash position—you want to have money available when investment opportunities arise”) and lists the types of financial vehicles that make up a full money management plan. Newtz goes on to what to look for in a financial adviser, takes a brief look at tax avoidance strategies, reviews some of the most common mistakes investors make, and covers common retirement-related issues. Finally, he lays out the importance of enjoying money rather than just hoarding it. Although Newtz provides some useful information, he tends to skimp on the important details. For example, he lists several viable asset-allocation strategies, but fails to explain how to decide which one is the best option for a given situation. He also neglects to mention whether his own strategies have proven lucrative for himself and his clients. On the other hand, the details he does include may be quite useful to beginning investors, such as his advice about diversifying across asset classes instead of buying a lot of mutual funds that may hold the exact same stocks. His argument for using life insurance as a money management tool is also both plausible and intriguing.
Just enough information to confuse inexperienced investors, although they will likely find a few useful tidbits within.