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Book Review: Portfolio Investing Is Not Rocket Science

Friday 6th May 2005

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Risk, Return & Reality
By Cameron Watson

Reviewed by Vicky Powell, Good Returns

 

To help those with little or no investing experience, Watson who is Head of Research at ABN AMRO Craig, has produced a book - Risk, Return and Reality - outlining the basic principles.

Risk, Return and Reality is less of a 'read' but more of a collection of Watson's ABN AMRO Craig's writings from the past five years.

"Investing is not rocket science," Watson says, "but we don't learn about it at school or tend to chat about it too much. There are some basic investing principles anyone can master."

Watson explains that there is nothing magic about the term "portfolio investing", at its most basic it describes bringing together a collection of investments and looking after them as one group. Taking this very simple step makes it much easier to manage risk and maximise returns, and can make all the difference to your investing outcomes.

"The book is not a get-rich-quick guide," says Watson. "It's for people who are serious about investing and consider protecting their money to be as important as making money."

The book begins by covering 'investing from the ground up' and talks about the different types of investment vehicles available As explained by Watson, there are really only three investments (four at a stretch) and every fund or whiz-bang product is just a fancy way of investing in either shares, property or fixed income.

The articles Watson has included are all extremely informative, and range from what to do with your lotto earnings to investing overseas. The book includes a section on 'Building a Great Portfolio' and includes some useful tips on getting the most from your adviser and why it is worth minimising their fees.

The last section of the book concentrates on strategies for keeping ahead of the sharemarket. 'Respect the market", Watson warns, "because the moment you think you have the market figured out, it will clobber you."

The conclusion lists what NOT to do, and includes 10 of the most common hazards that fell unsuspecting investors.

Risk, Return and Reality is written in an easy-to-read style and the articles are separated into focused stand-alone sections, allowing readers to easily go to the topic relevant to them. Throughout the book there are handy graphs, charts and examples to complement Watson's articles.

This book would assist new investors to learn about investing from the ground up, but seasoned investors may also gleam a tip or two from these pages.

Risk, Return and Reality, $24.95, is available online through Good Returns Bookstore

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


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