How the Pros Learn to Invest

Tina Haapala |


By Gary Silverman, CFP®

Over the last two months I’ve outlined a very workable way to handle your own retirement investments. Today I want to address those who want to learn more of the minute details of what I’ve been talking about.

When I have a new intern in the office, I hand over a copy of Asset Allocation: Balancing Financial Risk, by Roger Gibson, much to their chagrin. I tell them in order to understand how I manage investments, they have to read the book. Since the book falls right about 400 pages, they’re not happy.

Does Asset Allocation cover everything a person needs to know about investing? No. But it does cover a lot. And I’m recommending it with some hesitation. It was written like a textbook. It reads like a textbook. It is as long as a textbook. It is even expensive like a textbook. But hey, if you want to learn by reading something, you could do worse than reading a textbook.

Most laypeople won’t read this book, and most who try won’t like the experience. Instead they search the magazine stands for a list of the “6 mutual funds for the next 6 months,” or “Stocks your grandmother would love.” They want answers, not theories; solutions, not explanations. Unfortunately, they end up with answers and solutions that don’t make sense for them.

I remember only one intern that enjoyed my reading assignment. The rest weren’t quite as enamored. They’d prefer to get to the bottom line. I can’t say I blame them. But the “quick fix” is like learning math by studying how to punch the calculator’s keys: The calculator is the tool, but if you don’t understand the math it’s processing, you don’t know if what shows on the little screen is even close to the answer you need.

Read Asset Allocation and you will know the characteristics of most of the major asset classes you can invest in, how they work together, and how, by combining different types of assets, you can tweak up your return and tweak down your risk. You’ve probably heard that you should keep your portfolio “in balance.” Gibson knows that the right blend of stocks, bonds, and other securities that are appropriate for your portfolio is a key ingredient to achieving balance; in this book he explores how to do it.

Is Asset Allocation too much book for most? Yep. Yet, if you are going to do your own investing, then you are your own advisor.  Wouldn’t you want your advisor to know and understand what is behind the recommendations he or she makes?

The point is that if you handle your own investments, schedule the time and budget the money to keep up with developments in the world of investing. It also doesn’t hurt to be initially skeptical until what you read or hear is confirmed by further study and research.

Now go get started.

Or hire it out.


Gary Silverman, CFP® is the founder of Personal Money Planning, LLC, a Wichita Falls retirement planning and investment management firm and author of Real World Investing