I just finished reading Investor's Manifesto by William Bernstein; this is an incredible guide to retirement and offers unique insights into how to easily plan for a decent retirement. The author has spent a ton of time writing financial books and collaborating with some of the best financial minds out there, and offers an amazingly simple and yet incredibly hard to beat approach to maximizing your stock returns.
A quick recap of the book roughly by chapter:
1) History shows us many financial bubbles. Countless have happened in the past, and undoubtedly more will happen again.
2) The stock market is unpredictable. It's folly to think anyone can consistently time the market or predict the future; chartists, advisors, professionals all cannot repeatedly do this. It's nonsense to think anyone can.
3) A realistic investment goal is simply to match market performance. Index funds are a very cheap and easy way to do this; Vanguard offers many very cheap index funds that very closely mirror various markets (eg. stock market, bonds, international companies, real estate, etc.)
4) The enemy is you. Most often the biggest cause of investment loses come strictly from the investor! People who too closely monitor their finances may commit to the worst financial move: selling low & buying high.
5) Financial companies make a lot of money by taking yours. In the long run, investors are better off avoiding investment professionals and instead simply trying to match market performance.
6) A great formula for investing is: take your age, and buy that % in bonds (eg. a 30 year old holds 30% bonds). Take 100 - your age and invest that % in stocks (eg. a 30 year old invests 70% in stocks) Rebalance this annually to adjust for your changing age and also to move money into the cheapest asset. You can adjust this formula for risk tolerance; if you're more conservative or more aggressive, adjust the percentages accordingly.
7) Keep your investment strategy very simple. You can outperform so many other professional investors this way. The index strategy is the safest/best long term strategy one can realistically count on.
