How a Second Grader Beats Wall Street: Golden Rules Any Investor Can Learn
In How a Second Grader Beats Wall Street, you'll follow the story of Kevin Roth, an eight-year-old who was schooled in simple approaches to sound investing by his father, seasoned financial planner Allan Roth, and discover exactly how simple it can be to become a successful investor. Page by page, you'll learn how to create a portfolio with the widest diversification and lowest costs; one that can move up your financial freedom by a decade and dramatically increase your spending rate during retirement. And all this can be accomplished by using some common sense techniques.
Along the way, Kevin and his dad discuss fresh, new approaches to investing, and detail some tried-and-true, but lesser known approaches. They also take the time to debunk the financial myths and legends that many of us accept as true, and show you what it really takes to build long-term wealth with less risk.
- Discusses how to design a portfolio composed of a few basic building blocks that can be "tweaked" to fit your personal needs
- Addresses how you can reengineer your portfolio in order to stop needlessly paying taxes
- Reveals how you can increase returns, regardless of which direction the market goes, by picking the "low-hanging fruit" we all have in our portfolios
With just a little time and a little work, you can become a better investor. With this book as your guide, you'll discover how a simpler approach to today's markets can put you on the path to financial independence.
Introduction. The Seeds of Financial Success.
Chapter 1: The Claw Will Take Your Money: "10 – 2 =
Chapter 2: Own the World: “Don't Put All of Your Eggs in
Chapter 3: The Advantage of Having Wall Street Marketing
Blinders (and Where Can I Get Some?): “I Don't Watch Cramer,
I Like Sponge Bob.”
Chapter 4: Adults Behaving Badly: “Don't Act Silly When
Something Is Important.”
Chapter 5: Can You Beat a Second Grader’s Portfolio?:
“I’m Not Going to Win All Three Spins.”
Chapter 6: Beyond the Second-Grader's Portfolio: “If Dad
Says There's a Better Way I Might Try It, but I'm Not So
Chapter 7: Bonds—Your Portfolio's Shock Absorber:
“Don't Lend Money To Someone Who Won't Pay You
Chapter 8: Better Than Bonds: “If the Teacher Promises
You’ll Be Paid Back, Then It's Okay to Lend Randy
Chapter 9: Simply Brilliant or Brilliantly Simple—Building Your Portfolio: Don't Bet Your Lunch Money.”
Chapter 10: Investors Who Love To Pay Taxes, and the IRS Who Loves Them: “Don't Pay the Tax Man If You Don't Have To.”
Chapter 11: Nightmare on Wall Street—The Scary Tale of
Trick-or-Treat Investing: “If the Game Is Too Hard to
Understand, I'm Not Playing.”
Chapter 12: Increase Your Return No Matter What the Market Does:
“If You Pick the Low-Hanging Fruit, You Don't Have to Climb
Chapter 13: Keep It Simple Stupid (KISS): “Why Do Grownups
Have to Make Things So Complicated?”
About the Author.
"Kevin Roth, the author’s son, is eight years old.
He’s probably got a better investment portfolio than you do.
This book reveals his secrets. Our take: Explaining how a second
grader can whip most adult investors is a fun way to demonstrate
the benefits of a simple indexed portfolio."
–Don Phillips, Managing Director, Morningstar, Inc.
"There has been no time in our financial history when
implementing the simple investment plan in this book has been more
–Dan Solin, author of The Smartest Investment Book You'll Ever Read and The Smartest 401(k) Book You'll Ever Read
"Allan Roth shatters the Wall Street myth that investing is too
complicated for ordinary investors. Using his son, Kevin, as an
example, Allan shows us, in his easy-to-read writing style, how we
can construct a simple personal portfolio that is almost certain to
outperform the vast majority of investors. If you have been looking
for an easy-to-understand book about how to invest
successfully—this is it."
–Taylor Larimore, co-author of The Bogleheads' Guide to Investing
"Allan presents in a very clever way why a second grader can
outperform most investors, professional and individual. He
demonstrates both why smart investing is both simple and also why
it is not easy for adults to execute because of behavioral mistakes
to which they are prone."
–Larry Swedroe, author of Wise Investing Made Simple
"I have a very strong feeling that sometime in the
not-too-distant future I will happily be working for Allan Roth's
son! If you buy only one how-to book this year, this is the one!
Allan Roth is a National Treasure."
–Mike Causey, senior correspondent, FederalNewsRadio.com
"Successful investing should be a matter of choice, not chance.
Follow this book’s advice and your probabilities of success
are 100% in your favor."
–Paul Merriman, author of Live It Up Without Outliving Your Money!, and publisher of FundAdvice.com
"Allan Roth gets an A+. It is no surprise that a second grader
beats Wall Street, because everything we need to know about beating
the pros is taught in the first grade. That is when we learn to add
and subtract. And after subtracting the high fees and commissions
that the pros charge, their results fall far short of a simple
–Richard Ferri, CFA, investment advisor and author of The ETF Book
"Using just a bit of logic and a dash of arithmetic, Allan Roth
lucidly explains why low-cost index funds should be the investment
of choice for 2nd graders as well as their parents and
–John Allen Paulos, mathematics professor at Temple University and author of Innumeracy and A Mathematician Plays the Stock Market
"Kevin, the second grader, is really smart and cool! He knows
what it took me decades to learn. A smart strategy is to diversify
broadly across US stocks, international stocks and high-grade US
bonds using low-cost, tax-efficient index funds. He even taught me
how individuals can increase their fixed-income returns without
incurring higher risks. He will also teach you about asset location
and the importance of saving in the most tax-advantaged savings
vehicles, like a 401(k) and Roth IRA. By following Kevin's advice,
we, too, can be smart investors. But we may never be as cool as
–William Reichenstein, Powers Chair in Investment Management at Baylor University
“If you’d like to learn more about what makes good (and simple) investing, Roth’s 2009 book, How a Second-Grader Beats Wall Street, is a good start and a must for any index investor’s library.”
—Scott Burns, AssetBuilder
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