A few books about finance speak volumes; others flunk

Posted: Jul 18, 2006 12:01 AM

If you want to learn to invest wisely, one of the best ways is by reading. Unfortunately, many personal finance books are schlock.

In fact, you may actually improve your chances of mastering investing by avoiding many of the titles that sit on the business best-seller lists.

With beach season upon us, here are some worthwhile titles that you can pack along with the sunscreen:

"The Methods of Wall Street Exposed: Wealth Without Worry," by James N. Whiddon with Lance Alston; Brown Books; $24.95

I received a copy of this book after I appeared recently on a radio show hosted by Whiddon, a fee-only investment adviser in Dallas. When he offered to send me his book, I said OK to be polite.

A lot of advisers write mediocre vanity books to impress their clients and attract more business. But in this case, my cynicism was misplaced. In fact, I've put this book on the shelf devoted to my favorite investing titles. As I read the book, I found myself agreeing with everything he said. Whiddon, for instance, is a strong advocate of passive investing though index and exchange-traded funds.

While you probably won't detect this by reading the book, Whiddon is also an admirer of funds managed by Dimensional Fund Advisors in Santa Monica, Calif. - index-like funds that happen to be my favorite mutual funds. I don't write about these funds much because individual investors can only gain access to them through a select group of fee-only advisers, which you can find by visiting DFA's Web site at www.dfaus.com. If you're saving for college, however, you can invest in DFA funds through West Virginia's 529 plan (www.smart529select.com).

"FastWeb College Gold," by Mark Kantrowitz; Collins; $21.95

One of my pet peeves against the financial press is that it seems to assume that everybody's kids have yet to cut their first teeth. How else can you explain why almost all the articles and books you see on college strategies involve families with an infant?

What these writers fail to explain is what you should do if your kid is a sulky teenager and what you've got saved for college wouldn't get Paris Hilton through a single weekend. These anxious parents need to know how to get their kids into a good school with the least amount of money. "FastWeb College Gold" can help.

This thorough book includes many practical step-by-step tips on how to shoulder this herculean cost. For starters, it provides a worksheet that will help you calculate, using the federal formula, how much your family will be expected to pitch in for college expenses. The book also provides a timetable for what high school students need to be doing as the clock ticks toward college.

Mark Kantrowitz, the creator of FinAid.org, a definitive online source for financial aid information, knows his stuff. Financial journalists like me pepper him with questions all the time on this tricky subject. I just got my review copy of this book, but it won't be in stores until summer's end.

Parents of teenagers should also check out "Paying for College Without Going Broke," sixth edition, by Kalman A. Chany (Princeton Review). One of the more valuable chapters shares short-term strategies for increasing the chances of receiving financial aid. The author also provides line-by-line instructions on how to fill out the Free Application for Federal Student Aid, which must be completed by any family hoping for financial aid. Another chapter provides important advice for divorced parents.

"Credit Scores & Credit Reports, How the System Really Works, What You Can Do," second edition, by Evan Hendricks (Privacy Times, $19.95)

There are probably few people who think that FICO is a misspelled dog's name. Your FICO score, which is generated from your credit reports, can greatly affect your mortgage interest rate, how much you'll have to pay for your car loan and even whether someone will rent you that two-bedroom apartment overlooking the pool. The book explains how the murky business of credit scoring works and how you can boost your scores.

The author regularly testifies at congressional hearings and is the founder of Privacy Times, a respected newsletter that covers privacy and Freedom of Information Act law and policy.

"Seven Stages of Money Maturity, Understanding the Spirit and Value of Money in Your Life," by George Kinder; Dell, $13.95

When the author sprinkles in quotes from such luminaries as Henry David Thoreau, Virginia Woolf and Confucius, you know this isn't your typical investing book. The author is a Harvard-trained certified financial planner and a Buddhist teacher - not a career combination you see very often. George Kinder believes we spend so much time chasing money and trying to make more that we often lose sight of spiritual and psychological issues surrounding our bank balance.

In what is perhaps the most thought-provoking part of the book, Kinder asks his readers three questions. What would you do with your money and how would you live your life if you were a modern-day Midas, who had an unlimited supply? How would you live your life if you had just five to 10 years left? And finally, you've got just 24 hours left. What regrets, longings and other feelings are you experiencing? The last question, the author says, cuts deepest of all and can help someone discover which issues in life are superficial and which are important.

"The Bogleheads' Guide to Investing," by Taylor Larimore, Mel Lindauer and Michael LeBoeuf; Wiley, $24.95

It's rare that you see a book written by a trio, but this one's a collaborative effort by some of the individuals who keep things moving on a popular investing forum. The authors are leaders on the Vanguard Diehards forum, which you can find on Morningstar's Web site (www.morningstar.com).

The book is named after Jack Bogle, the founder and retired chairman of the Vanguard Group, sometimes called St. Jack by his admirers. The book provides sound advice on a variety of issues, including mutual funds, bonds, diversification and taxes.

If the book prompts questions, go ahead and post them on the Vanguard Diehards forum, which attracts admirers of common-sense, low-cost investing. Seasoned investors and newbies gather at this forum, which receives more than 25,000 hits a day. It's common for forum visitors, who have good intentions, but a pitiful lack of investing knowledge, to shoot up an online flare for help. And there is usually some online Samaritan who will bail them out.