Many years ago, I learned the fundamentals of investing, and over two decades of consistently following them, confirmed that (at least for me) they worked exactly as advertised. Over the years, though, a questions I’ve asked myself many times is *how much* investing knowledge should the average person have? Have I learned more than necessary? Have I not learned enough?
I personally went a bit beyond the basics in my own studies, but not nearly as far as someone like John Norstad, who started with [first mathematic principles](http://www.norstad.org/finance/index.html).
Recently, I was excited to learn that one of my favorite financial authors, William Bernstein, has begun a series of short-format ebooks entitled *Investing for Adults*, in which he delves deeper into investing topics, and assumes that the reader has at least some familiarity with academic finance.
His first release, [[[The Ages of the Investor: A Critical Look at Live-cycle Investing]]] discusses how to view and treat investing at various phases of one’s lifetime. For each phase — beginning, middle & end — he discusses approaches and trade-offs, and refers to the latest in academic research. I very much enjoyed reading the book.
Some interesting notes I took, on topics beyond the basics:
* Considering a person’s total capital over time — i.e. the sum of *human capital* (their future ability to earn) along with *invested capital* (their savings) — an argument can be made that it’s nearly impossible for a young person to take on *too much investment risk*.
* Research would suggest young people take on as much as 100% leverage in stock investment. But, there are a lot of practical problems with this.
* The sequence of market turns matters. A run of bad markets at the end of a career, is worse than a run at the beginning. Lump-sum investing mitigates this risk, but over the long term is riskier than sequential, periodic investing.
* The decision of whether a retiree should annuitize their savings, or drawdown on an investment portfolio is not an easy one, as there risks on all sides.
* The decision of when to transition from middle-age investing to retirement investing is probably the most difficult of all.
As I started reading the book, I wondered whether, armed with the very latest in research, I’d end up changing my basic investment approach. I was happy, and intrigued, to find that I wouldn’t.
My conclusion is that in the long-term, the results of investing are so sensitive to uncontrollable factors, that the outcome to be expected from devising sophisticated strategies isn’t likely to be significantly better than that expected from simple strategies, like those I teach in my new book, [Money for Something](http://moneyforsomethingbook.com).
And that’s good news — that **the majority of the benefits of investing are accessible to everybody, without needing a degree in finance.**
Summarizing the basic, important points:
* It should be a top priority for everbody—and particularly young people—to save as much as they can. The importance can not be overstated.
* If you leave your savings in the bank, the value will, over time, become decimated by inflation. Therefore, we should all have an interest in storing our savings in something that has a good chance of at least preserving its value over time.
* The effects of compounding are astounding. Compounding works for us and can be life-changing (in the case of long term, positive-return investments) and works against us (in the case of inflation and costs associated with investing). We should therefore try to capture the growth offered by investment markets, and we should try to minimize the costs of our investments.
* We should always consider our savings in terms of the income they can generate.
* **Everybody should learn the basics.**