Author Topic: how to learn finance (Read 17418 times)

kalos · « **on:** January 07, 2017, 05:23 PM »

Hello!

Can you tell me please an introductory book that will cover things like:

debt and equity markets
fixed income
securities
derivatives
etc?

I have no idea what these terms mean and I don't want to just google them, because I want to have a complete introduction, instead of sporadic dictionary searches

thanks!

rgdot · « **Reply #1 on:** January 07, 2017, 05:32 PM »

As close as completeness you can come if online by yourself ...your best bet would be MIT

https://ocw.mit.edu/...s&subcat=finance

kalos · « **Reply #2 on:** January 08, 2017, 07:41 AM »

very interesting, I will certainly do them, but any book(s) to carry with me?
not irrelevant finance, I want to learn about securities, derivatives, private equities, etc, not sure which branch is that

rgdot · « **Reply #3 on:** January 08, 2017, 09:58 AM »

You have to choose one or more of those and get info about books and other material by clicking 'Readings' for example, like this one https://ocw.mit.edu/...-theory-i-fall-2008/
I doubt you will get good book recommendations on that subject here on DC

IainB · « **Reply #4 on:** January 08, 2017, 06:49 PM »

@kalos: Here are some inks to such terms:

debt and equity markets - link.
fixed income - link.
securities - link.
derivatives - link.

They are just that - i.e., terminology.
Follow the links, and, once you understand the definition of the terms (in the context of "finance"), you will be able to find quite a lot of information about that specific definition, on Internet searches. Beware of web sites wanting you to trade in any obscure financial markets - e.g., binary options trading (discussed elsewhere on DC forum) or futures trading. You can lose all your money and be made bankrupt pretty quick with those. They are just for speculative trading ("speculative" here is used as a euphemism for "gambling").

Self-education on these financial terms and their use can be obtained from reading books (e.g., a book on accountancy and finance from a second-hand bookshop, which latter tend to have lots of perfectly good old textbooks on such subjects), or visiting free course links as suggested by @rgdot. Don't sign up for a paid course though, as that will probably lead to their signing you up for a speculative trading account and could introduce you to the full meaning of the financial term "bankrupt". Take care.

For example, I know of a Dutch guy - an economist with a PhD in economics and who lectured in economics - who apparently bankrupted himself in about 1988 by "going long" on a futures trade, on a "You can't fail with this stock" transaction.

Not sure whether he ever recovered, financially or personally. It completely ruined (stopped) his imminent marriage as well.

kalos · « **Reply #5 on:** January 10, 2017, 03:51 PM »

Thanks IainB

however:

1) the definitions you posted are not very comprehensible, is there a resource with definitions in simple terms?
2) I cannot find definitions of terms I may come across, I need a complete table of the ALL the relevant terms and their definitions and how they work etc, that's why I need a complete reference, is there any?

mouser · « **Reply #6 on:** January 12, 2017, 03:22 PM »

It's long overdue for me to learn some basic personal finance/investing/saving subjects.

For me I need book though. So if anyone has any amazon.com book recommendations I'd love to hear them.

IainB · « **Reply #7 on:** January 14, 2017, 02:30 PM »

@kalos: Sorry if those links were "incomprehensible" definitions for your purposes. There would probably be a useful "Finance for Dummies" or a "Teach Yourself Finance" (or similar), which might be more readable. I hadn't thought of them.

40hz · « **Reply #8 on:** January 14, 2017, 10:52 PM »

@kalos - Finance is not something you're going to learn by looking up definitions of finance terms any more than you're going to learn how to program merely by looking up a list of keywords in a programming language. Without some background in basic economics and accounting, all those financial terms are going to be largely meaningless no matter where you go for the definitions. IF you drop on over to this page, there's a list of online courses you might want to consider taking to get yourself up to speed. The microeconomics, basic accounting, and intro to corporate finance are the ones you'll want to take a look at.

If you're in a rush, have a business background, and just want a conversational grasp of finance, check out the Corporate Finance and Personal Finance for Dummies titles for a quick & dirty crash overview of the subject. With those under your belt you'll then have the necessary background to begin to explore all the facets of finance you're interested in.

40hz · « **Reply #9 on:** January 14, 2017, 11:01 PM »

It's long overdue for me to learn some basic personal finance/investing/saving subjects.

For me I need book though. So if anyone has any amazon.com book recommendations I'd love to hear them.
-mouser (January 12, 2017, 03:22 PM)

The Finish Rich series by David Bach is one good group of personal finance titles you'll want to take a look at.

Another good author is Dave Ramsay. His Total Money Makeover is good. As are Suze Orman's books. They both have similar central tenets but have different approaches so it might not be a bad idea to read one title from each author if you're new to this.

If you need a good simple approach to setting up a personal and home budget, and get in the personal finance/money management mindset, send me a PM and I'll sent you a link for something you'll want to download and read.

wraith808 · « **Reply #10 on:** January 15, 2017, 02:22 PM »

Another good author is Dave Ramsay. His Total Money Makeover is good. As are Suze Orman's books. They both have similar central tenets but have different approaches so it might not be a bad idea to read one title from each author if you're new to this.

-40hz (January 14, 2017, 11:01 PM)

+1. Dave Ramsay has some pretty good tenets that are easy to follow. I've also found the YNAB method helpful (https://www.youneedabudget.com/learn/). They also have hands-on classes- of course to push you towards their product, but they are good themselves. (https://www.youneedabudget.com/classes/)

mouser · « **Reply #11 on:** January 15, 2017, 02:26 PM »

I ordered the dave ramsey book, thanks for the suggestions.

mouser · « **Reply #12 on:** January 16, 2017, 02:30 PM »

2017 is going to be the year i take charge of my finances and get serious about not having my money drip away through the cracks due to me not paying attention, making poor decisions, etc.
Who's going to join me?

mouser · « **Reply #13 on:** January 16, 2017, 03:35 PM »

I'm starting with the basics, Personal Finance for Dummies by Eric Tyson: https://www.amazon.c...p/product/1119114292

mouser · « **Reply #14 on:** January 16, 2017, 07:43 PM »

I'm half way through the Personal Finance for Dummies book and I can definitely recommend it as a first book on getting your finances and investments (if any) in order. It's a very no-nonsense basic straightforward book. You could probably sum it up in a little pamphlet that just says pay off your debt and save money in an IRA for retirement, but sometimes it's nice to hear something explained slowly and clearly until it sinks in.

The other thing I want to recommend is I have gone back to using Quicken, which I only used briefly many years ago, and wow I forgot how clear things are when they are all available to you.. I can see bank accounts, credit cards, mortgage, etc. all clearly on one screen, with bank account transactions organized into categories, etc. Very useful for budgeting.

I said it before I'll say it again, this is the year I get financially organized and literate -- who's joining me?

Deozaan · « **Reply #15 on:** January 16, 2017, 08:27 PM »

I said it before I'll say it again, this is the year I get financially organized and literate -- who's joining me?
-mouser (January 16, 2017, 07:43 PM)

I'd say I'm joining you, but it's something I've already been doing for the past several years. I've been budgeting using YNAB and the YNAB method, combined with the ideas/goals/concepts explained in Dave Ramsey's The Total Money Makeover as well as The Millionaire Next Door by Drs. Thomas Stanley and William Danko.

IainB · « **Reply #16 on:** January 17, 2017, 01:30 AM »

From what's been mentioned so far, it might be worth stressing the importance of budgeting in this discussion thread. Budgeting is the very useful good/best practice method that accountants developed donkeys ages ago for getting to grips with business financial control. Businesses that have periodic budgetary reviews generally do well (minimised financial risk), whereas those that do not will necessarily lead a hand-to-mouth existence and generally tend to fail in the medium term. Marconi was an example of a company with a long history of being a very well-run and highly profitable business. It was tightly controlled through regular management budgetary reviews against an annual budgetary plan. It was all very conventional stuff, from an accountant's perspective. The CEO was a very sage financial accountant.

When the CEO retired, his replacement focused more on marketing and his "vision" for the company and grandiose goals, and he let the budgetary controls slip, and, apparently as a direct result. the company failed (collapsed) in about 2½ years.

What a lot of people don't realise (because they may not have have had the advantage of an accountancy training) is that what is good/best practice for business financial control is also good/best practice for personal financial control:

"My other piece of advice, Copperfield,’ said Mr. Micawber, ‘you know. Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”
- from the book "David Copperfield", by Charles Dickens (1850).
_____________________________

There is a DC forum thread Microsoft Money Plus Sunset - Mini-Review

Microsoft Money Plus was and still is arguably the best accounting package on the market, bar none, for small-to-medium business use and for personal use. It includes very good, self-contained budgeting tools and plenty of Help/assistance in the use of these tools - and it is $FREE. It does not assume that the user will necessarily be an accountant.

wraith808 · « **Reply #17 on:** January 17, 2017, 07:41 AM »

I said it before I'll say it again, this is the year I get financially organized and literate -- who's joining me?
-mouser (January 16, 2017, 07:43 PM)

I'd say I'm joining you, but it's something I've already been doing for the past several years. I've been budgeting using YNAB and the YNAB method, combined with the ideas/goals/concepts explained in Dave Ramsey's The Total Money Makeover as well as The Millionaire Next Door by Drs. Thomas Stanley and William Danko.
-Deozaan (January 16, 2017, 08:27 PM)

Same here. Thought not the second one. I'll have to check it.

Deozaan · « **Reply #18 on:** January 17, 2017, 01:39 PM »

I've been budgeting using YNAB and the YNAB method, combined with the ideas/goals/concepts explained in Dave Ramsey's The Total Money Makeover as well as The Millionaire Next Door by Drs. Thomas Stanley and William Danko.
-Deozaan (January 16, 2017, 08:27 PM)

Same here. Thought not the second one. I'll have to check it.
-wraith808 (January 17, 2017, 07:41 AM)

It has been several years since I read either book, so the details in my memory are certainly not fresh. But as I recall, I found The Total Money Makeover to be a practical guide on actual steps to take and financial goals to have (save $1,000, debt-snowball, save $10,000, pay off mortgage, save/invest like crazy!) whereas The Millionaire Next Door is "just" an explanation of the results of their study of how the average affluent person lives. That is to say, generally we think of millionaires as driving expensive cars, wearing expensive clothes, living in expensive houses, and otherwise displaying their wealth as a status symbol. But generally speaking, most millionaires are just normal people living in middle-class homes/neighborhoods with middle-class jobs, driving used cars, who just managed their money more frugally than everyone else who is living paycheck to paycheck. Hence the title, The Millionaire Next Door, because those of us who aren't millionaires could very well be living next to one and not know it.

From the back cover: "The implication of The Millionaire Next Door...is that nearly anybody with a steady job can amass a tidy fortune." -- Forbes

It's more of a study about the behavior ("millionaires don't buy $500+ watches") and attitudes (avoid instant-gratification, are frugal, financially organized (budgeting)) of the rich. It's good and interesting information to know, but it's more abstract and not quite as easy to just put into practice like the information found in the Money Makeover.

I'm planning to re-read The Total Money Makeover soon. Maybe having those details fresh in my mind will help re-motivate me and get me more on track to reach my financial goals.

mouser · « **Reply #19 on:** January 19, 2017, 02:30 AM »

I read the Dave Ramsey book (Total Money Makeover). I would classify it as more of a motivational book than an information book.. It's basically written to wake you up to the urgent need to get absolutely dead serious and focused on eliminating all debt, and shake some sense into you about getting deadly serious about making a major life-changing commitment to budgeting your money.

It's short on facts and details, but if you can benefit from the motivation I'd say it's worth a read.

wraith808 · « **Reply #20 on:** January 19, 2017, 01:47 PM »

I read the Dave Ramsey book (Total Money Makeover). I would classify it as more of a motivational book than an information book.. It's basically written to wake you up to the urgent need to get absolutely dead serious and focused on eliminating all debt, and shake some sense into you about getting deadly serious about making a major life-changing commitment to budgeting your money.

It's short on facts and details, but if you can benefit from the motivation I'd say it's worth a read.

-mouser (January 19, 2017, 02:30 AM)

Maybe it was a different one I read, because when I read Dave Ramsey, it gave me concrete steps on what to do to get out of debt.

Looking on Amazon, what you need is the workbook.

https://www.amazon.c...kbook/dp/0785263276/

The Financial Peace Planner is also a good one...I attended one of his Financial Peace University seminars at church, and it was good also.

https://www.amazon.c...-Step/dp/014026468X/

mouser · « **Reply #21 on:** January 19, 2017, 01:59 PM »

Well I wouldn't say there are no concrete steps -- it's just you could write all the facts and steps and procedure out on an index card. And you could sum them up basically by saying that you should:
1) create an emergency fund for emergencies.
2) get super focused on paying off all your debt as soon as humanly possible -- change your lifestyle dramatically to do so if need be; pay off smaller debts first for the psychological benefit.
3) after 1+2 are done, start saving 15% per year for retirement.

Again, don't get me wrong, if you need this motivation, i think it's well worth it to read the book even if those are the only concrete steps you get out of it.

I'm not knocking the book -- it is what it is -- it's not an investment strategy book, it's mostly a motivational book (imho).

But the financial problem for many of us is really a mental habit behavior issue you are trying to fix, so whatever you need to do to get yourself motivated is worth it.

Deozaan · « **Reply #22 on:** January 19, 2017, 06:52 PM »

I read the Dave Ramsey book (Total Money Makeover). I would classify it as more of a motivational book than an information book.. It's basically written to wake you up to the urgent need to get absolutely dead serious and focused on eliminating all debt, and shake some sense into you about getting deadly serious about making a major life-changing commitment to budgeting your money.

It's short on facts and details, but if you can benefit from the motivation I'd say it's worth a read.
-mouser (January 19, 2017, 02:30 AM)

Well I wouldn't say there are no concrete steps -- it's just you could write all the facts and steps and procedure out on an index card. And you could sum them up basically by saying that you should:
1) create an emergency fund for emergencies.
2) get super focused on paying off all your debt as soon as humanly possible -- change your lifestyle dramatically to do so if need be; pay off smaller debts first for the psychological benefit.
3) after 1+2 are done, start saving 15% per year for retirement.

Again, don't get me wrong, if you need this motivation, i think it's well worth it to read the book even if those are the only concrete steps you get out of it.

I'm not knocking the book -- it is what it is -- it's not an investment strategy book, it's mostly a motivational book (imho).

But the financial problem for many of us is really a mental habit behavior issue you are trying to fix, so whatever you need to do to get yourself motivated is worth it.
-mouser (January 19, 2017, 01:59 PM)

I think this is a fair assessment. I felt like for the first chapter or two he was spending all his time telling the reader how awesome his book is and how it will change your life. It was very self-promotional and it made me suspicious that it was just going to be a bunch of BS. I kept wondering when he was going to get to the actual content.

But then once I got to the content, I was happy with it, and it definitely helped me see some concrete steps to take. And yes, those concrete steps could be put on an index card (I summarized them in my previous post). But I felt the book was useful in driving home the point of the importance of doing these things as well as how big of a difference these things can make over the long term.

If you want a book about facts, read The Millionaire Next Door.

It's also not an investment strategy book. But it does talk about the many little ways--and some of the big ways--you can improve your finances through your every day behaviors.

IainB · « **Reply #23 on:** January 19, 2017, 11:42 PM »

@kalos: I happened to read this today and thought of your query: 10 Financial Websites That Help You Stay On Top Of The Market

Most of the 10 seemed like they might be commercial or "punting" websites.
This one seemed like it might be educational and worth investigating further: MyMoney.gov

wraith808 · « **Reply #24 on:** January 20, 2017, 08:35 AM »

But then once I got to the content, I was happy with it, and it definitely helped me see some concrete steps to take. And yes, those concrete steps could be put on an index card (I summarized them in my previous post). But I felt the book was useful in driving home the point of the importance of doing these things as well as how big of a difference these things can make over the long term.
-Deozaan (January 19, 2017, 06:52 PM)

Yes, the system at it's basis is pretty simple. He also goes over the envelope system at some point, though I'm not sure if he does so in that book, or if it's the other. But in all honesty, the simplicity makes it easier to follow and continue to follow.