Money: Books for beginners

By Mark Fryer

If this is the year you promised you would finally get your finances in order, it's not too early to start making that resolution a reality.

But before making a move, it might be wise to arm yourself with a little basic knowledge.

Read a book or three. Even if you would rather leave the mechanics of investment to someone else, it's worth understanding the general principles, and some of the jargon, before seeking expert advice.

But where do you start if you're an absolute beginner? Here are nine books that will get you on the right track. Serious investors will want to dig deeper, but any of the following books will give you a basic grounding in investment and money management.

Two good places to start, since both publications are free, are: Your Retirement Action Planner, by the office of the Retirement Commissioner, and Financial Passages, by Paul Fyfe and Lenise Webster.

* Your Retirement Action Planner was published last year as part of a publicity campaign aimed at encouraging New Zealanders to plan for retirement.

While the topic is weighty, the approach is particularly user-friendly. The booklet is based on a series of work sheets which allow readers to figure out how much they will need to save for retirement and to work out an action plan to help reach that target.

There's also brief, but useful, advice on things such as controlling debt, how your house fits into the savings picture and where to put your savings.

If nothing else, going through the work sheets and filling in the blanks should provide an impetus to get started on a savings plan.

Available by phoning toll free, 0800 45 65 85.

* Financial Passages comes from Armstrong Jones, a large funds management company which offers investments such as unit trusts and superannuation schemes.

It divides life into six stages or "passages", and for each stage there is a description of some of the issues you are likely to face, and a check sheet so you can score yourself, to see how well you're doing.

There's also some general advice on things such as investment, budgeting and health.

Not everyone's life is so neat and tidy, but it's a good way of confronting issues most of us would rather put off until another day.

Available by calling toll free, 0800 PASSAGES (7277 2437).

* Third on the list is Your Future Nest-Egg, by Grant Hannis and David Hindley (Consumers' Institute, $19.95).

The rest of the title reads: How to successfully save for your retirement - which, not surprisingly given the publisher, is a thoroughly accurate guide to the contents.

While it's aimed squarely at anyone contemplating retirement, that doesn't mean it will be useful only to those nearing the end of their working years. Anyone thinking about a reasonably long-term savings plan will be able to find something of value here.

Hannis and Hindley score top marks for logic, starting at the beginning - budgeting, insurance, repaying debt, writing a will - before moving on to investment strategy. They then outline the different types of investments available.

Top marks for clarity too. The jargon content is mercifully light and the authors are not afraid to make specific recommendations.

Available from some bookshops or directly from the institute (Private Bag 6996, 39 Webb St, Wellington, 04-384-7963).

* There's also a sequel from the same authors, called Keep Your Money Working, which is about what happens when the working years stop.

While it contains a lot of more general information, it will be of most use if you are close to retirement, or already there.

It's now out of print, but the institute is considering a reprint and it may still be available from some bookshops.

* 8 Secrets of Investment Success, by Martin Hawes (Penguin, $29.95).

One-man writing machine Martin Hawes has published books on everything from property investment to divorce, but this is the one that best fits our search for a beginner's guide.

This time Hawes is writing more for the person who is already enthusiastic about investing, and prepared to devote some time to learning more and managing his/her own affairs.

If you just want a basic grounding and are happy to leave the details to someone else, this may be more information than you need. That said, there's nothing here that is particularly technical or difficult to understand.

Hawes stresses a disciplined approach to investment, following some basic principles (the "8 secrets" of the title).

If you're baffled by the jargon the experts like to throw around, there's also a glossary of investment terminology.

* The Investment Jungle, By Duncan Balmer (HarperCollins, $24.95).

Now for something completely different, a book that offers investment advice mixed up with a crusade against the inadequacies of financial planners, real estate salespeople, sharebrokers and just about everyone else in the investment business.

On the advice side, Balmer goes into more detail than any of the other books listed here. If you've always wondered what the efficient market hypothesis is, for example, he's your man.

He stresses a number of basic rules - diversify, keep costs down, buy and hold - and there are thorough explanations of all the types of investments you're likely to encounter, and a frank examination of their pluses and minuses.

Cynics will enjoy Balmer's castigation of all the "crooks, charlatans and incompetents" (his words) in the business.

One for those who believe that forewarned is forearmed.

* Getting it Together, by Noel Whittaker and Roger Moses (Hodder Moa Beckett $24.95).

* Making Money Made Simple / Making More Money / Living Well in Retirement, By Noel Whittaker and Roger Moses (Hodder Moa Beckett. All $34.95 each).

Four books from two authors, both of them financial planners, one in Australia and the other in New Zealand.

Starting at the lower end of the age range, Getting it Together claims to be "an essential financial guide for young New Zealanders."

That isn't strictly accurate; this is more a guide to achieving success however you define it - financially or otherwise.

As such it is more inspirational than matter-of-fact and, while the relentless positivism will be too much for some, it would be a mistake to lump this in with some of the more empty-headed guides to instant success.

There's some useful advice here on things like the power of setting goals, handling mistakes, resisting peer pressure and generally making the most of what life has to offer.

There's also a section on building wealth, budgeting, financial traps to avoid and some basic information on different types of investments.

Of the four books, Making Money Made Simple is the best beginner's guide.

Its message is that financial success doesn't depend on making more money; it's about getting spending under control and better managing your earnings.

Whittaker and Moses stress the idea of "paying yourself first," which means
deciding how much you need to save and making that your first priority, rather than paying the bills and saving what, if anything, is left.

The book also covers the basics, such as budgeting, goal setting, borrowing, credit cards, insurance and investments.

Making More Money is the sequel, and is devoted largely to more detail on the different types of investments - particularly real estate, managed funds and shares - and related issues such as taxation and insurance.

Living Well in Retirement is, as the name suggests, about preparing for and living in retirement, although a lot of its advice will be useful for younger readers.

It starts with working out how much you need to retire on, planning how to reach that goal and the investments that will help you get there, before moving on to related areas such as family companies and trusts, and dealing with financial advisers.

It also examines some issues which aren't purely financial, such as retirement villages, rest homes, wills and funerals.

Pictured: A myriad of books offer the lay reader a grounding in how to manage his/her money.