The Frugal investor

November 26th, 2014 by Anchor Bay Capital's Investment Team


How to build a low-risk high-return portfolio

Proof of our philosophy of putting people first is that our founder, Scott Spiering, has written a book designed to help people understand the almost unavoidable fleecing of their life savings by investment professionals. He gives advice about how to avoid unnecessary costs and markups and minimize or eliminate the fees you probably don’t even know you’re paying.

Book Excerpt

Although I learned about investments as a stockbroker and professional money manager, I began my career on the other side of the counter-as a high-tech entrepreneur. I founded a firm called National Digital Corporation, a pioneer in electronic photo-image processing, and made a profit – and had a ball – leading my own company to national media attention. From this experience in the productive sector, plus the many abuses I saw firsthand among brokerage firms and commission-based money managers, I learned the value of “value orientation.” I discovered that it’s not just what you make and keep – but what you don’t have to pay-that counts.

I derived two principles from this experience and coined a term describing anyone who uses them: The Frugal Investor. These principles are (1) putting your money into quality securities from at least four basic asset categories and holding those investments for a very long time; and (2) eliminating or minimizing the costs required to do number one.

These principles may sound like common sense, but you’d be surprised how often stockbrokers, investment product/service firms, and financial journalists – especially “tip sheet” newsletter publishers-violate them. Because so much of what you read in investment literature concentrates on the joys of market timing, making a killing in a hot new security, and being sure you don’t miss out on the next investment trend, it’s important to remember what makes common sense so uncommon.

More than a Bargain Hunter’s Guide: This Book Is Your Lifetime Treasure Map

Some market gurus, financial publishers, and investment tipsters have written guides for bargain-basement investing-from “being your own stockbroker” to making millions (they predict) from one or more of Wall Street’s products-of-the-month. Other more technical books, most of them aimed at institutional investors and professional money managers, present detailed asset allocation strategies and reams of market data-and that’s all well and good. Only this book, though, gives you a comprehensive program for getting started in the four major asset categories that I’ve found bestow all the benefits of asset allocation and shows you how to do it at the absolute lowest price. And I’ll even go these other value-minded authors one better.

Most investment books tell you a lot about how to choose a security, but virtually none tell you when to sell it-how to draw money down for any purpose in a way that doesn’t threaten your portfolio’s safety or excessively penalize your long-term total return. They also ignore a problem all investors face at one time or another: how to restructure or rebalance a good portfolio cost-effectively as their goals and financial circumstances change: how to “fix it,” in other words, to ensure you never “go broke.”

Best of all, this book will give you the peace of mind you get only when you know you’ve done everything that can be done to guarantee the safety of your principal while reaching for the returns you need to achieve life’s most important goals: buying a first or second home, putting children through college, saving for a comfortable retirement, or simply building the kind of wealth you need to achieve the lifestyle you deserve-money for world travel, starting a business, or helping your community.

These are the things that money is really all about. These days, as never before, they begin with Frugal Investing.