
Ask HN: What are some good resources to learn how to invest and build wealth? - noratrace
I have recently purchased a home. I have my own business making great money. I have a great work from home engineering job.<p>Now I have all of this income flowing in and I&#x27;m not sure what to do with it. What are some good resources to learn how to best take advantage of this situation?
======
lacker
Bogleheads is a pretty good place to learn about conservative investment
strategies based on minimizing risk and taxes.

If you want to take a very brief look, start at:
[https://www.bogleheads.org/wiki/Lazy_portfolios](https://www.bogleheads.org/wiki/Lazy_portfolios)

~~~
pembrook
Bogleheads is the definitive resource for learning about investing on the
internet, period. Some of the leading academics and financial advisors are
active there and will actually respond to posts written about their research.

Also, I would recommend subscribing to this:
[http://www.capitalminded.com](http://www.capitalminded.com)

It's a weekly email newsletter that reminds me of Matt Levine's Money Stuff
but with more a Boglehead-type focus. Kind of like a weekly reminder to stay-
the-course backed up with some pretty interesting references from history and
academic papers.

Also, don't fall into the trap of checking CNBC, Yahoo Finance, etc. every
day. The reason most retail investors fail to match the performance of the
same funds they invest in is because of behavioral errors and getting drawn
into the emotional drama of markets.

------
jaysonelliot
My number one piece of advice: invest in the market, never invest in
individual stocks.

Find the best index fund you can, and let your money grow with the market.

If you want to get into things like individual stocks, or even angel
investing, do it for the fun and the experience, but don't do it for the
wealth. "Get rich slowly" is the best advice I've ever been given.

~~~
rubicon33
I'm curious, how many years did it take before you realized it was the best
advice you've ever been given?

I've been "getting rich slowly" for 8 years, and boy let me tell you, it sure
is slow. Definitely doesn't feel like my wealth is growing in index funds fast
enough to retire within this life time.

~~~
BraveNewCurency
> Definitely doesn't feel like my wealth is growing in index funds fast enough
> to retire within this life time.

Ha ha, I feel the same. But don't discount the fact that small percentage
returns are actually exponential growth. (For example, 2% returns actually
doubles your money every 10 years.) Just because it 'feels' like your
investments are stalled doesn't mean that they are.

~~~
jackcarter
> 2% returns actually doubles your money every 10 years

I wish! More like 35 years.

7% returns will double initial investment every 10 years.

~~~
dogma1138
That said tho if you invest even $200 a month from the age of 20 till
retirement you will have more than 1M by retirement with a decent index fund.

~~~
ryandvm
That said, one million dollars ain't what it used to be after 45 years...

~~~
dogma1138
Index funds tend to scale rather well with inflation tho.

------
vitaflo
As a business owner the single best benefit you have is contributing to a Solo
401k or SEP-IRA. You can contribute much more into these than an employee can
in a typical 401k. It will also help come tax time. I recommend setting one up
and maxing it out every year.

As for what to invest in, just go with boring index funds with the lowest
expense ratio possible. There is no reason to get cute with investments.
Upping your savings rate will do more to build wealth than anything. Let
compound interest do the rest.

Finance and wealth building is mostly psychological. Thinking you're smarter
than the market is a fools errand because you can't control it. Work on the
things you can control like your income and savings rate. Increasing your
sweat equity is something you have direct control over as well as how much you
spend. Optimizing those will have huge effects on your long term wealth path.

------
dclaysmith
[https://www.reddit.com/r/personalfinance/](https://www.reddit.com/r/personalfinance/)

~~~
davidhegarty
Going to echo this one. Plus the following two books: 1/ Richest man in
Babylon 2/ Rich Dad, Poor Dad.

Both written for the simplest of readers but great advice clearly told.

(Summaries are probably good enough)

~~~
EnFinlay
Summary of Rich Dad, Poor Dad:

Assets are things that give you money. Liabilities are things that cost you
money. Therefore your house is a liability until it is sold, at which point it
MIGHT be a net asset. Try to maximize your assets and minimize your
liabilities.

It sounds simple, and it is, but that's the primary lesson in the book IMO.
It's eye-opening the first time you see things that way.

~~~
0x4f3759df
The greater point is if you become a landlord, you get rich with the bank's
money.

------
jsshah
Rule of 12: Start with $12000 and invest in index fund (S&P500 SPY)

every month invest $1000 into that fund (you can always invest rest of the
savings in other investments)

S&P long term annual return is 12% (Assuming it remains that)

After 10 years: ~250K After 20 years: ~1M After 30 years: ~3.25M

So if you are in your 30s, when you retire you should have approx 3M from this
investment alone (other mutual funds, stocks, real estate, 401K aside)

Now each year you can withdraw 100K for next 30 years (65 - 95)

------
acconrad
It's known as "the index card"[1] and it's really the best advice for 99% of
people who just want to make the most of their money:

1\. max your 401k

2\. buy a low cost mutual/index fund (e.g. VFINX)

3\. never buy individual stocks/bonds

4\. save 20% of your money

5\. pay off your credit card balance in full every month

6\. maximize tax-advantaged savings accounts (e.g. SEP, IRA)

7\. pay attention to fees (i.e. avoid actively-managed mutual funds)

8\. only use financial advisors who adhere to a fiduciary standard

9\. promote social insurance programs to help people when things go wrong

[1]
[https://img.washingtonpost.com/blogs/wonkblog/files/2013/09/...](https://img.washingtonpost.com/blogs/wonkblog/files/2013/09/pollack-
card-800x600.jpg)

------
imgabe
Start with the stock series from jcollinsh (financial blogger)

[http://jlcollinsnh.com/stock-series/](http://jlcollinsnh.com/stock-series/)

This gives a good intro to why index funds are probably your best bet. If you
are willing to put in a lot of additional time and research, you _may_ be able
to do better picking individual stocks, but probably not.

~~~
woldemariam
His book is also great

[https://www.amazon.com/dp/B01H97OQY2/ref=dp-kindle-
redirect?...](https://www.amazon.com/dp/B01H97OQY2/ref=dp-kindle-
redirect?_encoding=UTF8&btkr=1)

The Simple Path to Wealth

------
arielweisberg
Four Pillars of Investing by William Bernstein [https://www.amazon.com/Four-
Pillars-Investing-Building-Portf...](https://www.amazon.com/Four-Pillars-
Investing-Building-
Portfolio/dp/B000OFHBQC/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=1529525699&sr=8-2)

------
dokein
Broadly, I've been doing a 5-fund portfolio with a mix of several index funds
in decreasing percentages (total US stock, total international, US bonds,
international bonds, REIT). If I had enough money for it to be meaningful, I'd
probably invest something on the order of 0.1% in cryptocurrency too.

The rationale is that uncorrelated assets result in average returns (across
the set of assets) but _decreased_ risk.

What's unclear to me is the performance of e.g. the S&P 500 once the
percentage of investments that are just index funds passes a certain
threshold. Presumably if all investors were index fund investors the market
would be super stupid, so is there a point before 100% where there will be
significantly aberrant behavior? If so, what is that percentage and what is
the behavior?

------
wtvanhest
Max out all tax advantaged accounts. Keep your investment costs low, i.e. no
mutual funds, or hedge funds, just invest in a diversified bucket of ETFs.*

If you seek financial advisory help, go with a "Fee Only" FA, and be ok
spending thousands of dollars for impartial advice. IMO, if you have over
about $500k saved, it is probably time to talk to someone.

Make sure you have the right insurance, disability, and life. Disability
should cover you in case you can no longer do YOUR job, not just any job. Life
should cover your dependents/wife etc.

Avoid timing the market. Evidence has shown that this doesn't work for anyone
but the extremely lucky.

*diversification gets hard, and you may need to pay for advice once you reach a certain level of assets (probably around $500k).

------
ElectricalPast
Read A Random Walk down Wall Street; Black Swan (by Nikolas Taleb); The
Intelligent Investor

These give a good intro on equities.

If you don't already, open an IRA (Roth or traditional). Also, consider
reaching out to a certified financial professional for guidance.

------
aantix
It's interesting: when questions like this are asked, you definitely hear the
sentiment echoed of "nobody beats the market consistently."

Which appears to be true, at least for the stats I've seen on money managers.

But for the smaller investor, where liquidity is less of an issue (we're not
dumping tens of millions at a time), could there be an advantage there?

Or someone privy to industry information - e.g. I knew that New Relic was
_really_ popular, because I consult with startups, long before they went
public. No surprise on their stock growth.

Just thinking out loud here... I'll probably just stick with our Vanguard
Target Date Fund. :)

------
whitepoplar
Read anything by William Bernstein or Jack Bogle.

You can start here with Bernstein: [https://www.amazon.com/Investors-
Manifesto-Prosperity-Armage...](https://www.amazon.com/Investors-Manifesto-
Prosperity-Armageddon-Everything/dp/0470505141/)

Or here with Bogle: [https://www.amazon.com/Little-Book-Common-Sense-
Investing/dp...](https://www.amazon.com/Little-Book-Common-Sense-
Investing/dp/1119404509)

~~~
hikarudo
This other book by Bernstein is also good: "The four pillars of investing"
[https://www.amazon.com/Four-Pillars-Investing-Building-
Portf...](https://www.amazon.com/Four-Pillars-Investing-Building-
Portfolio/dp/1932378014)

~~~
whitepoplar
Definitely. And for someone who is already familiar with the Bogleheads
philosophy, I think his "Investing for Adults" series is unmatched.

------
startupdiscuss
I will sum up what we know in general about investing: Keep fees low and
diversify.

That is the best you can do without specialized knowledge or effort (and,
depending on how strong a view you have of the efficient market hypothesis,
even then this might be the best you can do).

In this case you should put the bulk of your money in a robo-advisor like
wealthfront or betterment. (I am not related to them in any way).

If you do have insight into something -- maybe you are keyed into local real
estate development or you feel you know your industry -- you could get a
higher return. Take some small percent of your wealth (say 5%-20%) and put it
into this thing you may be good at.

This is my favorite overview:
[https://research.wealthfront.com/whitepapers/investment-
meth...](https://research.wealthfront.com/whitepapers/investment-methodology/)

~~~
pembrook
The problem with using is a robo-advisor is, if you earn even a moderately
good income you're basically going to giving them hundreds of thousands of
dollars in fees over your lifetime. Even though 0.25% seems small, I
calculated the fees would compound over the next 40 years to over $460,000.00
for my wife and I.

Thats an insane amount of money to pay someone just to put money into Vanguard
index funds. Also, being a DIY investor forces you to actually learn how these
things work, so you'll have a better chance of not making a stupid behavioral
mistake when the market drops next time.

By ignoring the whole "learning" portion of investing and just throwing your
money at Wealthfront you'll be liable to pull your money out or stop
contributing at exactly the worst time.

~~~
startupdiscuss
Those are two different issues though.

Firstly, if you believe that you should hold your money through a crash, then
you are free to do so whether or not you invest through Wealthfront.

Secondly, that is a huge amount of money. Congratulations on making so much.
Yes you can save that money by learning yourself but do value your time. If
you are going to rebalance, tax harvest etc it can add up time wise.

Thirdly, learning yourself may not be about saving in the areas that the robo-
advisor is good. You don't want to learn about tax harvesting because it is
better to leave that automated. You might want to learn about a particular
stock, but even that is better left to analysts and you can rent the research.
I had a friend who worked at Goldman. He analyzed three stocks total. He
worked 16 hour days. He knew more about any of those stocks than I ever could.

~~~
pembrook
For your average index fund portfolio, rebalancing has been statistically
proven to actually make investor returns lower. The value of rebalancing is in
keeping your risk profile constant, not increasing your returns. By selling
winners you lose exposure to one of the most persistent risk factors:
_momentum._

Also, the value of the TLH services provided by Roboadvisors have been grossly
over-stated and they have since backed off form their initial claims. Read
this for more info: [https://www.kitces.com/blog/evaluating-the-tax-deferral-
and-...](https://www.kitces.com/blog/evaluating-the-tax-deferral-and-tax-
bracket-arbitrage-benefits-of-tax-loss-harvesting/)

~~~
startupdiscuss
I am not defending the choices they make.

 _If_ you believe in rebalancing, let the robo-advisors do it.

(I don't rebalance personally).

------
Jemaclus
I highly recommend "I Will Teach You to be Rich" by Ramit Sethi, which I
thought was a great way to get the fundamentals in place. I've bought copies
for several of my friends who had no idea what to do with their money.

If you really have tons of money and don't know what to do with it and also
have your own business, I'd talk to a CPA about maximizing your tax benefits
(if you haven't already) and also to a financial advisor for the rest. CPAs
are one of those ROI multiplier type things, where you give them a little
money and they save you a whole lot, especially if your tax situation is
complicated.

------
lukethomas
If you're interested in investing in the stock market (specifically picking
individual stocks), I recommend the following books:

1\. [https://www.amazon.com/Little-Book-Still-Beats-
Market/dp/047...](https://www.amazon.com/Little-Book-Still-Beats-
Market/dp/0470624159)

2\. [https://www.amazon.com/Acquirers-Multiple-Billionaire-
Contra...](https://www.amazon.com/Acquirers-Multiple-Billionaire-Contrarians-
Market-ebook/dp/B076GS7WF9)

~~~
ydnaclementine
going to piggy back on this comment, if you're interested in technical
analysis of stocks/ETFs/futures/etc, I recommend A New Trading for a Living by
Alexander Elder. great book for basics and fundamentals of TA

------
diverted247
We recently published our 3 courses on Udemy covering this very topic. (
[https://www.udemy.com/courses/search/?q=vestu](https://www.udemy.com/courses/search/?q=vestu)
)

The courses walk you through investment principles, investment assets, and
portfolio implementation. Simple overview... Get the market return, get it for
lowest cost possible, enhance returns by investing where the market
historically outperforms, rebalance annually.

------
aarreedd
Investing in the market is good advice for most people. But many people are
not such a great financial position as you.

If you run a business the best investment you can make is in you own business.
By all means, max out your 401k contribution. But if there is money left over
to invest, conciser investing in your own business.

Here is a podcast I listened to just the other day about this:
[http://www.tropicalmba.com/monies/](http://www.tropicalmba.com/monies/)

------
thisisit
It really depends on how much effort and risk you want to take. Much of the
advice you will receive on HN comes from Bogle and his Vanguard index funds.
That is the lowest effort and risk you can take.

But, if you want to invest some more time and take additional risk (and maybe
better returns) try reading some books. Peter Lynch's - One Up on Wall Street
and Benjamin Graham's - The intelligent Investor are two good ones to start
with. These will give you a solid platform on stock selection.

------
anorborg
Shameless plug, but we have a podcast around commercial real estate investing,
a very popular investment type for passive income generation. We really have a
big education focus:

[https://www.realcrowd.com/blog/2018/01/podcast-best-of-
seaso...](https://www.realcrowd.com/blog/2018/01/podcast-best-of-season-one/)

------
gregorygoc
Is your business also your job? Then that’s sort of one source of income.
Depending on how much money you have you might want to diversify.

------
bigbang
I've liked bogleheads forum. The usual advice would be to maxmimize 401(k),
ROTH IRA and invest in index funds.

------
vxxzy
One resource, to get your feet wet, is to get a Paper Trade Account. Take a
look at interactive brokers. Read some books, get ideas, and test them out in
a Paper Trade Account. Then when you are ready, and comfortable, move into
"Real Life" trading.

~~~
456hdsaq234g
or Robinhood. Free trades! No monthly fees!

------
BadCookie
Depending on how much time you want to spend, I suggest a subscription to Real
Vision. If you just want to invest in an index fund, then it's probably
overkill, but they have high-quality, interesting content that is definitely
worth the $15/month.

------
jacquesm
Mr. Money Mustache. Ignore the cult bits, read it anyway.

The millionaire next door.

This question keeps coming up by the way.

~~~
jvreagan
+1 on the Millionaire Next Door. Read it in my mid-20s 25 years ago, glad I
did.

------
snikeris
[https://www.harrybrowne.org/articles/InvestmentRules.htm](https://www.harrybrowne.org/articles/InvestmentRules.htm)

------
ojbyrne
If you have a business, probably makes sense to hire an advisor, especially
with the latest tax changes, because the business is an important vehicle for
investment.

------
turc1656
As someone in the financial industry, I can throw out a few suggestions. These
vary substantially depending on your level of interest, time, and risk-
tolerance. I am not a financial advisor, nor should you consider any of this
professional investment advice. I know your question is geared toward resource
and learning. I will address that, but I'll also include the easier options if
you decide to just say screw it and go the simple route. That being said...

You could go the low risk, low-cost, near-zero time method of using index
funds. For full disclosure, this is the area of the industry I am involved
with. You can either choose the funds yourself or you can get someone to
provide you some suggestions. There are advisors out there who specialize in
tactical weighting of a defined set of index funds (i.e. the funds you have
available in your 401k for example). They vary the weights usually on a
quarterly basis on a set of criteria that is proprietary to them. This
tactical weighting can outperform the market if they know what they are doing.
They will, however, charge the standard advisory fee for this.

You could just hand over the reigns to an advisor after speaking to one your
are comfortable with. they'll charge their standard rate and if they are
halfway decent they will match your investments to your risk
profile/tolerance. Be wary, though, as many may just shovel you into a default
set of index funds. If you pay an advisor you need to be sure they actually
add some sort of value and that they adhere to fiduciary standards (not
"suitability" standards)

if you actually want to focus on individual stocks, please please please at
least learn the absolute basics about fundamental ratios and how to look at a
balance sheet or cash flow statement. Or actually know the company you are
investing in. There are many books out there. The gold standard about value
investing is Ben Graham's famous Intelligent Investor.

real estate is a fairly tried and true method. investment properties produce
reliable cash flow. there are property management companies out there that
will charge usually around 10% of the rent to keep your place rented and
handle the landlord duties.

you could also focus on a stock market strategy geared toward passive income.
something like a covered call strategy. that is a strategy commonly used in a
sideways market or a market not strongly trending in either direction to
produce cash flow by owning the stock and issuing/writing a call against it
where you collect the premium. A few books I have read that offer some good
intro to the basics of options strategies (and a few slightly more advanced
methods) are the followings ASINs on Amazon - B014C59R9S, B01EPJC2T8,
B0165YDUSS, and B00YBIK9P8. They're short and very straightforward to help
understand the basics and also generate some ideas for yourself. They're only
like $3 a piece, too.

moving up the ladder of education and effort - you could pay for training
courses for a site like WallStreet Mojo. I happen to have purchased all their
stuff in a recent sale they had (like 85%+ off), which they have from time to
time. They also have some free stuff for you to check out. It looks like they
are running a special right now on the premium courses. Not sure how long that
is in force.
[https://www.wallstreetmojo.com/courses/](https://www.wallstreetmojo.com/courses/)
They have courses targeted for investment banking, CFA, financial modeling,
etc. Their courses include videos and downloadable Excel templates/examples to
learn with. It's time consuming, but if you are actually interested in how the
financial analysts and investment bankers perform valuations then it's a
pretty solid tool/resource. Their CFA courses are obviously geared toward the
CFA exam, but the knowledge is the same and can be applied in any way you
choose. You would be able to skip the compliance and ethics portions and just
focus on the rest. this information combines to form a much more in depth
valuation toolbox and you could theoretically choose stocks with success using
careful analysis, or perhaps create fund-style strategy to spread out the risk
of your personal portfolio.

you could also purchase an existing business that is for sale. they are plenty
of sites dedicated to these sales. if you find something you like, get an
attorney who knows about these transactions. this basically is a sort of turn-
key solution that provides relatively predictable cash flow. but it's not
quite turn-key as businesses require work and you already own/run one. if you
decide to go this route, i would suggest making sure the cash flow has enough
wiggle room to hire someone to replace your own involvement, as you likely
won't have the time to run it yourself.

------
JUDAS
Invest in start-ups? [https://angel.co/](https://angel.co/)

------
madeuptempacct
"Rich Dad, Poor Dad" is pretty much the only "finance" book that's useful to
the common person that I know of. Explains the basics.

"The Intelligent Investor" wasn't helpful to me at all, and I could actually
understand what he is talking about, having a heavy background in finance.

P.S. a college degree or being a CFA won't help, from personal experience,
though every other finance grad claims it will. The moment I started doing
fundamental analysis is the moment my portfolio went to shit.

Helpful tl;dr: "index funds".

------
dominotw
Always disappointed to see " index funds " repeated ad nauseum in these
threads.

I assuming op wants something creative and new advice. Not index fund advice.

~~~
CompelTechnic
If you want to have a little bit more fun, buy normal total-market funds with
the majority of your portfolio, but put a little bit of money in specific
areas- small cap value tilt, IT industry fund, etc.

~~~
dominotw
so every one these threads should have just one comment with 'index fund' in
it?

------
CEO_Fart420
You’re gonna want to follow plane-Jane bog-standard investment advice.
Remember, youre not a full-time Wall Street central banker and can’t devote
all your time to due diligence. Go the buffet route and create a long-term,
diversified portfolio of cheap low-fee crypto currencies and don’t touch it
until retirement.

~~~
lacker
Come on, don't pretend that cryptocurrency is standard investment advice. If
you meant to say "index funds" your advice becomes standard.

~~~
CEO_Fart420
When’s the last time you saw anything about “index funds” on the front page of
HN or LinkedIn? How many YC startups are built around them? I’m assuming he
wants to follow strategies that are appropriate for the _future_ , not the
past.

~~~
CompelTechnic
Running your personal finances like a YC startup means you will go bankrupt
90% of the time. Different goals for different situations.

I admit to feeding the troll here.

