Investments 101 - how do I learn how to understand these?

[Anonymous]

We have some investments and I would like to be more knowledgable about them. No intention of getting involved with actively *managing* them at this (or potentially any) point, but would like to better understand what we have, monthly statements, etc.

Basically I would like to go beyond just looking at the overall total to actually understanding our portfolio.

Any recommendations on how to start?

[Anonymous]

bogleheads.com is probably a good resource (bogle is the founder of vanguard and advocates a passive index strategy, and this appears to be up your alley).

[Anonymous]

Anonymous wrote:bogleheads.com is probably a good resource (bogle is the founder of vanguard and advocates a passive index strategy, and this appears to be up your alley).

OP here. Thank you - will look here. To be clear though the money is currently under active management, just not by me. My goal is to better understand where our money is, how to interpret statements, etc. basically how to better understand the world of investing in general and our specific investments in particular.

I suppose what I'm looking for is (step 1) investing and the financial marketplace for beginners - not related to my particular investments, and (step 2) how to analyze / assess our particular portfolio. I think I need step 1 in order to put step 2 in perspective.

I took intro macro and micro economics in college, but that's where my financial education ends.

[Anonymous]

What does active management mean exactly and how much are you being charged for it?

There are a number of studies that show that active management is bad or not as cost effective as buy and hold.

Biggest thing to know is, what fees are you being charged? If it's any more than half a percent, you are probably being robbed.

I agree, bogelheads or reading pf books from the library, or taking an investing class from a community college is a good way to go.

[Anonymous]

Whoever is doing the active management ought to be meeting with you at least quarterly to go through the portfolio and provide benchmarks as compared to the leading averages (DJIA/Russell etc). If they aren't doing this much, then you really need to roll up your sleeves and get to work.

First, do you have a list of assets? Is it all publicly traded stocks and bonds, or are there funds involved? Either way, you should be checking via some business website, could even be yahoo finance, to track news, dividends etc.

You should learn to read the balance sheets, listen to the quarterly reports etc as well.

Finally, you should understand each of the different sectors and how your holding compare and be particularly interested in the portfolio diversification.

[Anonymous]

Anonymous wrote:Whoever is doing the active management ought to be meeting with you at least quarterly to go through the portfolio and provide benchmarks as compared to the leading averages (DJIA/Russell etc). If they aren't doing this much, then you really need to roll up your sleeves and get to work.

First, do you have a list of assets? Is it all publicly traded stocks and bonds, or are there funds involved? Either way, you should be checking via some business website, could even be yahoo finance, to track news, dividends etc.

You should learn to read the balance sheets, listen to the quarterly reports etc as well.

Finally, you should understand each of the different sectors and how your holding compare and be particularly interested in the portfolio diversification.

OP here. We do get reports and analysis. What I want is to be better able to actually understand them. And I agree with your advice, my question is how (specifically) to do that. If I am looking at the list of assets, what should I be checking these business websites for? What am I looking to know / learn?

Balance sheets and quarterly reports - are you referring to the companies balance sheets and quarterly reports? If I look at these, what am I looking for? And should I just take the 2-3 biggest companies (or 2 from each sector?) as a starting point to look at how to read / interpret these?

And what exactly do you mean by understanding the different sectors? I have a broad idea of the difference between large vs mid vs small cap, emerging markets, etc. But it's more at a level of familiarity with the terms vs. real understanding.

[Anonymous]

As much as I hate to do this, read Jim Cramer's books. They will give a primer. Just don't take Cramer's advice.

[Anonymous]

Anonymous wrote:As much as I hate to do this, read Jim Cramer's books. They will give a primer. Just don't take Cramer's advice.

Thanks. Just googled and he seems to have a lot of them - any book in particular you would recommend as having a good primer?

[Anonymous]

Anonymous wrote:What does active management mean exactly and how much are you being charged for it?

There are a number of studies that show that active management is bad or not as cost effective as buy and hold.

Biggest thing to know is, what fees are you being charged? If it's any more than half a percent, you are probably being robbed.

I agree, bogelheads or reading pf books from the library, or taking an investing class from a community college is a good way to go.

Maybe I don't mean active management (see - I don't even understand the terms! That's why I need the basics!) More that we have a number of actual specific company stocks vs. something like a vanguard fund, though to be honest I don't really know what a Vanguard fund is, I just see it mentioned here frequently. I believe it is mostly a buy and hold strategy, but there are legacy stock positions so someone does manage the portfolio in terms of looking at diversification / sector weighting, managing capital gains and losses, etc.

I believe fees are around 0.3%

Do you have any particular personal finance (I assume that's what pf stands for?) books or authors to recommend? If I go to the library and just pick one at random is that likely to be good for what I need?

[Anonymous]

Please take a class. I got most of my knowledge from an mba. Or yes, read on your own.

[Anonymous]

Anonymous wrote:Please take a class. I got most of my knowledge from an mba. Or yes, read on your own.

An in-perdón class really isn't an option at this point. It would be hard to fit in schedule wise and to be honest it's not my first choice as I'm not a great auditory learner - lectures have never been the best learning method for me.

Any recommendations on particular reading materials or online course resources? I am familiar with (and like) online learning, but the resources I'm familiar with are tech rather than finance focused.

[Anonymous]

here are some suggestions:

Take an investing or personal finance class at your local community center or college.

Read well known personal finance blogs: wise bread, get rich slowly, etc. mister money mustache is a little extreme.

Read ARandom Walk Down Wall Street, and check out anything in that Dewey decimal section. Other common authors there: Suze Orman, Dave Ramsey, etc.

Don't invest in anything you don't understand, especially if you don't understand how much the fees are. Beware if someone who can't easily explain how they are paid or if they say they can regularly outperform the market.

Past performance is no guarantee of future return.

Investopedia is a helpful site to look up financial terms you don't know.

Ask questions, if it's unclear to you than its probably unclear to others.

Napfa.org to find a fee-only financial planner.

If you are married, have regular conversations about money, and don't let one person do any one money job exclusively.

There are podcasts about this too I'm sure.

Subscribe to Money Magazine for a year.

Thank an intro class in accounting or finance if an investing class per se is not available.

[Anonymous]

I suggest you read "Buffet, The Making of an American Capitalist."

Then read the latest edition of "A Random Walk Down Wall Street."

Don't skim.

[Anonymous]

Thank you PPs. Enough folks recommended classes that I went hunting. Found what appears to be a good free & online option from UC Irvine ("Fundamentals of Personal Financial Planning") so will start there.
http://cat.ocw.uci.edu/oo/getPage.php?course=AR0102092&lesson=1

[Anonymous]

18:17 again. The Buffet book is a very interesting story, some of it about his early years in DC. He is Warren Buffet, widely regarded as the best investor.

Consider it, and Random Walk, intoductory background for a lifetime of learning about investing.