From 1977 until his retirement in 1990, the Magellan Fund grew to more than $14 billion in assets. In those 13 years, the fund averaged a 29.2% average annual compound interest.
Peter Lynch has written three books on investing – One up on Wall Street, Beating The Street and Learn To Earn, to help people become more educated and financially free.
What is in this Book For You?
Learn to Earn book is written for those people who are in the beginning days of their investing. This book will provide you the basics of the stock market investing in a very simple and entertaining language. If you are looking to start investing in the stock market and want to learn more about investing then this is an ideal book to start.
Invest Your Money: What are you waiting for?
You should start saving and investing early if you want to live a rich and happy life when you retire. Majority of the people think that government will take care of them once they retire. But nowadays it is difficult to live a happy life with your monthly retirement income.
Many people wait until they are in their thirties, forties and fifties to start saving money. The trouble is, by the time they realize they ought to be investing; they have lost valuable years when their money could have grown faster with the effect of compound interest.
If you want to save money then you have to remind yourself the basic rule of saving that says that to save money you need to spend less than you earn.
You need to save some money every month so that you can invest that money. But often people spend all the money they earn and in their retirement years they blame politicians and tax laws. If you don’t want to remain without money when you become old, you should save and invest you money in your working years.
Nowadays you can no longer depend on government for pensions. You have to take responsibility of your retirement as you can no longer depend on social security. The money you will get from your retirement will not be sufficient to survive.
One of the best ways to become self-dependant is to begin saving money as soon as possible when you have no children and you are living in your parent’s home. Whether it’s $10 a month or $100 a month, save whatever amount you can each month.
Putting Your Money to Work
Money is a great servant, it will work happily for you once you send it off to work. It can put extra money in your pocket without you having to lift a finger. For example if you deposit $1000 in the bank that pays 5% interest, you can get extra $50 without doing any work.
If you invest $1000 in stock market instead of putting in bank, your money can grow faster. On average you will double your money every seven years if you invest your money in stocks.
Instead of spending money on buying a larger TV set or expensive car, you can invest that money and sooner your money will start supporting you. It will be like having a rich uncle or aunt who sends you all the cash you need for the rest of your life.
The Pros and Cons of the Five Basic Investments
1. Saving Accounts
There are five major basic investment where you can invest your money and get the annual return. The most conservative investments are saving accounts, these are known as short-term investments, they pay you interest and you can get back your money whenever you want.
The big disadvantage is that they pay you the lowest rate of interest and you actually loose the value of your money by saving your money in the bank due to the inflation.
Collectibles can be anything from antique cars to stamps, ancient coins, baseball cards, or any other precious thing. You buy these things in the hope that you may sell them at a profit in the future.
The big disadvantage is that these things can get lost, stolen, warped or damaged. Yes! You can get insurance on collectibles but Insurance is often very expensive.
Before buying collectibles remind yourself that the age of these things will raise its price but the bad condition of these things will lower it.
3. Houses or Apartments
Buying a house or apartment is the most profitable investment if you can find a house at a good location and at a bargain price. The advantages are that you can live in it while waiting the price to go up and you can buy it with borrowed money.
Before starting investing your money in the stock market, you need to save money for the down payment of your house. Buy a house and get a mortgage for no more than 15 years. After you have bought your house, you can start investing in the stock market.
Bond is an investment where you have loaned you your money to someone for a specific time period at a specific interest rate. You are simply providing a loan to somebody usually to big companies and governments.
Many big companies and governments borrow money from investors in the form of bonds to enlarge their businesses. The bonds pay a higher rate of interest than saving accounts but you can’t withdraw your money before a specific time period.
The disadvantage of the bonds is that you often don’t get enough interest rate. The interest you receive from bonds hardly beat the inflation. The junk bonds give you a higher rate of interest but they are risky. If the issuer of the bond goes bankrupt, you will not receive your money back.
Stocks are the second best investment you can make after you have bought your house. When you buy a stock, you are actually buying a piece of the company. If the company prospers, your money will grow. The company will divide its profit with you in the form of dividends and stock price value.
You have heard that stocks are risky but they are risky only if you buy them at their peak without getting enough financial knowledge. 99% of the investors, who loses any money in the stock market, don’t have essential financial education.
People lose money because they do not create any investing plan. They buy at high prices when the market is at its peak and they sell at a lower price when the market goes down.
Final Thoughts on This Book
This book is very informative and gives you a lot of information about how to pick good stocks. The book is clearly written for the teenagers who want to invest their money in the stock market while they are young.
This book is very encouraging and well written. If you want to start saving and investing your money in the stock market, you should read this excellent book.