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Your guide to smarter holiday reading

Given all of the talk about many Australians being apathetic about their superannuation, it seems counter-initiative that one of the fastest-selling books ever in Australia is about how to improve your personal finances.

     

 

Nielsen BookScan names The Barefoot Investor by Scott Pape as a top three contender to become the overall best-selling book (fiction and non-fiction) in Australia for 2018.

The Barefoot Investor was the overall best-selling book in Australia in 2017 and is the best-selling non-fiction book in Australia since Nielsen began surveying our market.

The fact that an Australian personal finance book can beat the big-name international thrillers from the likes of John Grisham and Tom Clancy suggests that many of us really care about our personal finances.

Twice this year, The New York Times has published feature stories about the phenomenon of The Barefoot Investor.

In June, the paper published an article, Australians can’t get enough of the Barefoot Investor, by Australian journalist Amelia Lester. As Lester writes, Pape’s “folksy manner delivers down-home truths”. These include avoid trendy investments, reduce your debts and don’t become overexposed to overvalued property.

And in September, The New York Times published the second piece, I highly recommend joining this cult, by another Australian journalist Lisa Pryor.

Pryor, as does Lester, emphasises the sheer popularity of The Barefoot Investor – selling well over a million copies (and fast climbing) in a country the size of Australia. (The first edition was published two years ago.) No wonder she calls it a “cult”.

In her opening paragraph, Pryor neatly summarises what the book’s about: “It’s called common sense. Don’t live beyond your means. Don’t borrow what you can’t repay. Don’t charge what you can’t pay off when the bill comes due. It’s how our parents lived. Don’t try to keep up with the Jones. I guarantee the Jones are likely in hock.”

Most titles on Smart Investing’s annual holiday reading list appear year after year with good reason. These are the personal investment classics. If you read some of the suggested books last year, why not reread your favourites?

The best investment/personal finance titles tend to give pointers about how to accumulate wealth slowly and progressively through an understanding of sound saving and investment practices.

Here are eight to consider adding to your reading list for summer 2018:

  • Thinking, fast and slow by Daniel Kahneman: A winner of the Nobel Prize for economics, Kahneman points to the many flaws in financial decision-making – including overconfidence and excessive loss aversion (inhibiting appropriate risk-taking and encouraging a short-term focus). His views underline the benefits of having an appropriately-diversified portfolio while avoiding the traps of market-timing, trying to pick future winners on the share market and making emotionally-charged investment decisions. He strongly warns about the “biases of intuition”.
     
  • The only investment guide you’ll ever need by Andrew Tobias: His overall message is to take a common-sense approach to looking after your investments and other personal finances. For instance, only buy investments you can understand, avoid inestments that seem too good to be true, and don’t have credit card debt.
     
  • The behaviour gap – Simple ways to stop doing dumb things with money by Carl Richards: The central message of this entertaining, easy-to-read guide by a financial planner turned personal finance columnist is to keep our negative behavioural traits under control when saving, investing and spending. His tips include: adopt strategies to avoid buying shares at high prices and selling low, don’t spend money on things that don’t really matter, identify your real financial goals and simplify your financial life.
     
  • The millionaire next door by Thomas Stanley and William Danko: Long-term research by late academics Stanley and Danko suggests that “prodigious accumulators of wealth” are typically content to progressively build their wealth while being inconspicuous in their spending. In other words, these wealth accumulators are not in a hurry to make their money by taking excessive risks or in a hurry to spend their money. Conspicuous consumption should not be taken as a sign of wealth – it often means the opposite.
     
  • A random walk down Wall Street by Burton Malkiel: The basic theme of this classic is that investors – individuals and professionals – cannot expect to consistently outperform the market. Malkiel, a Princeton University economics professor, favours investing in market-tracking index funds (including ETFs), dollar-cost averaging (regularly investing set amounts), appropriate portfolio diversification, periodic portfolio rebalancing and low-cost investing. And he too emphasises the need for investors to understand the risks of irrational behaviour.
     
  • The little book of common sense investing by Jack Bogle: As Bogle writes, “successful investing is all about common sense”.  Don’t try to pick the best time to buy and sell stocks – consistent success with market-timing is rarely achieved; diversify to minimise risks and spread opportunities; recognise the rewards of compounding returns; focus on long-term returns; and keep investment costs low.
     
  • The Intelligent Investor by Benjamin Graham: Warren Buffett has long named this as “by far the best book about investing ever written”. Graham believed that an intelligent investor was patient, disciplined, a keen learner and determined to keep emotions under control. Buffett writes in the preface to the current edition: “What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.” That’s what Graham is all about. Graham famously introduced the fictional character “Mr Market”. In short, Mr Market – that is the share market” – is an emotional, often irrational character with plenty of highs and lows.
     
  • The Barefoot Investor by Scott Pape: This serves as both a valuable starter guide to personal finance and investment, yet its common-sense principles also apply to experienced investors.

 

Supplied by Robin Bowerman
Head of Corporate Affairs at Vanguard.
18 December 2018
vanguardinvestments.com.au

 


Sam El Shammaa

Sam El Shammaa

Director/Financial Planner

For more than 20 years, Sam has been a financial planner helping individuals and families achieve their financial planning goals, by providing advice on Investment Planning; Insurance Planning; Tax Planning; Retirement Planning; and Estate Planning. Working with a network of highly skilled professionals in Sydney he is dedicated to providing high-quality advice and integrated wealth management solutions that simplify and enhance the quality of his clients' lives.

Sam established his own firm in 1997 and has overseen its steady development and growth. Attention to detail, good listening skills and great empathy are symbols of his appreciation by his clients. He has built long-term relationships with his growing client base and aims to provide excellent customer service.

Sam began his financial planning career in 1993 after completing a Bachelor of Science degree in 1991. Since this time he has accumulated many professional qualifications such as:

Sam has volunteered with the Cancer Council of NSW and can be seen almost every year volunteering or participating in the 7 bridges walk.

Away from the business, he enjoys spending weekends with his son. He is also a football (soccer) tragic and is a massive Chelsea FC fan.


George Pereira

George Pereira

Financial Planner

Having worked for national financial planning companies in the past, George has extensive experience in the provision of advice in risk insurance, investments and retirement planning and is focused on forming long-term relationships with his clients.

George has been awarded a Masters of Commerce (Financial Planning) and a Bachelor of Commerce through University of Western Sydney as well as having the Diploma of Financial Services (Financial Planning).


Jane Lim

Jane Lim

Financial Planner

Jane Lim is a friendly character with a bubbly personality. She has the unique ability of making complex information sound simple and easy to digest.

Jane entered the financial services industry in 2006, and worked with big blue-chip financial companies such as Count Financial Limited and AMP Financial Planning Pty Ltd.

She holds a Master's degree in Applied Finance through Macquarie University, and she is a member of the Million Dollar Round Table.

Being a self-confessed "tennis nut", Jane spends many weeknights in the tennis court, and is a frequent member of Sydney's Eastern Suburbs Tennis Competition.

Being a highly motivated professional, Jane is always eager to help her clients on a wide range of financial planning needs.

Paul Jayashekar

Paul Jayashekar

Financial Planner

Paul has been a financial planner for over 15 years helping individuals and families successfully achieve their financial planning goals. He is very focused on building successful long-term harmonious relationships with his clients.

He provides a holistic approach on various aspects of financial advice encompassing areas such as Investment Planning; Insurance Planning; Tax Planning; Retirement Planning and has extensive experience and knowledge in these fields.

Paul's professional qualifications are:

Away from his professional life, he enjoys spending his time with his family doing various activities such as coaching his son and taking him to games. He is a very avid sports fan and a cricket enthusiast.

Christian Tanadinata

Christian Tanadinata

Client Services Manager

Christian joined Capitalwise as Client Services Manager, with backgrounds in both customer service and administration.

Christian is passionate in providing excellent customer service by being attentive to client’s need as well as being able to circumnavigate challenges.

He holds a Master's degree in Commerce specialising in Marketing through the University of New South Wales.

Volunteering is one of his delights in life, where he had spent time being involved with the Centre for Volunteering, St Vincent de Paul's Society, and Sculpture by the Sea in a variety of positions.

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