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This review of Brian OConnells Build Your Own Mutual Fund was written by Christine Veloria.

I read Build Your Own Mutual Fund. How to Use a Personal Portfolio to Take Control of Your Financial Life by Brian O’Connell. Before this book I knew close to nothing about the stock market so this is my first book on my journey on how to buy stocks. The premise of the book is that more and more people are creating their own personal portfolios instead of having a mutual fund because of the internet and online companies like FOLIOfn, BuyandHold.com. and Sharebuilder.com ; it is becoming easier to do so. Many of these companies offer pre-made portfolios that you can customize or create your own. With personal portfolios individuals can have more control over which stocks they own and at what levels, with cheaper fees and tax breaks.

Before you start your own portfolio the author states that you need to know the financial basics first. Do you know your net worth or how to create a household budget. If you don’t know these things how will you know how much you can invest in a portfolio? He gives you some steps to help you figure out what your net worth is. He also talks about knowing about debit and credit because in order to be really serious about building your own mutual fund you need to minimize debt. There are also ideas about how to do your own budget and recommendations for many personal finance websites that can help you create your budget. Another financial basic is to have a place to organize your financial paperwork because if you don’t keep those documents handy how can you keep track of where you are financially or know what stock you bought? He gives some ideas about how to organize, what paper work to keep and computer programs. Lastly, he talks about goals and figuring out what you might need when you retire.

Since I am a novice regarding the stock market what I liked about this book was that he starts with the basics of stock market investing. What a stock is, common or preferred, large-cap, mid-cap, small cap, and growth stocks, etc. and how the stock market works. I think it is pretty basic information without going really in depth but gives many website recommendations if you want to learn more. I think enough information to get you started.

To get started with a portfolio you need to know what risks you are willing to take. Are you aggressive or apprehensive when it comes to your finances? Also how many years are you away from retirement because that has a big factor on how you should diversify your assets. He suggests having stocks, bonds and cash with percentages based on how many years until retirement. There are charts to show how stocks can give you more of a return but they are riskier than bonds and cash. Then within each of those categories you need to diversify further, asset allocation. One example is, in your stocks you might want to have a blend of the different caps, growth and long term stocks. These are all going to be based on your own personal preferences and your own research. He also writes about how to do your own research and where to find the information you might need on the internet. There is a section about taxes and finding a financial advisor too.

Did I like this book?

Yes, I did, since I am a novice I liked how the author explained about stocks and the stock market so I will use the book again in the future for reference.

If you are someone that likes to take control of your finances and do it yourself I would recommend this book. If you are the type of person that is more comfortable having a mutual fund that is run by professional mangers this book is not for you. If a friend was just starting out with investing I would recommend this book.