Here’s a free (and simple) guide to investing from Dr. William Bernstein that brings some clarity to investing. The title tells it all, If You Can – How Millenials Can Get Rich Slowly (it’s really only 14 pages of text and well worth the 15 minutes). Will be a great extension activity and/or long-form reading assignment at the end of your investing unit. Here’s the tantalizing question that the booklet opens with:

Would you believe me if I told you there is an investment strategy that a seven-year old could understand, will take you fifteen minutes per year, outperform 90% of finance professionals in the long run and make you a millionaire over time?

Yes, you read this right, this strategy can 1) be understood by 7 year olds; 2) take 15 minutes per year to implement and 3) outperform 90% of financial professionals. Hopefully, that teaser alone will get you to read this short booklet.

Hurdles: I won’t give you the strategy here (can’t give away the punch line)…but I will tell you the hurdles that Dr. Bernstein identifies that prevent people from following this very simple strategy:

• Hurdle #1: People spend too much money.
• Hurdle #2: You will need a basic understanding of what finance is all about.
• Hurdle #3: Learning the basics of financial and market history
• Hurdle #4: Overcoming your biggest enemy, yourself, is a daunting task
• Hurdle #5: As an investor, you must recognize the monsters that populate the financial industry

Reading List: Bernstein also provides a good reading list for folks who want to further their knowledge:

• Stanley and Danko’s Millionaire Next Door
  • Description: Inverse correlation between spending and saving
• Bogle’s Common Sense on Mutual Funds
  • Description: Best introduction to basic finance
• Chancellor’s Devil Take the Hindmost
  • Description: Examples of stock market manias
• Roth’s The Great Depression: A Diary
  • Description: How it feels at the bottom of the market)
• Zweig’s Your Money and Your Brain
  • Description: How to overcome investing’s worst enemy, you!
• Roth’s How A Second Grader Beats Wall Street
• Ferri’s All About Asset Allocation

Questions for your students:

• How would you describe the strategy that Bernstein is recommending (in your own words)?
• What percentage of your salary is he recommending that you should save for retirement?
• Which of the five hurdles to implementing this strategy do you think applies most to you? Why? Ideas on how you can overcome this  hurdle?
• Why is it important to understand market history?
• What about the human condition (human nature) make us bad investors?
• What are the “monsters” he describes in hurdle #5? Do you think this is a fair term?
• How would you implement his ideas (the “nuts and bolts”)?

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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