Ill admit to picking up this book solely because of the title. Ill also admit that I decided to read and review this book solely because I opened it to a random page, read a paragraph, and laughed something I basically never do with a personal finance book.

It shouldnt be too surprising to discover that a book entitled The Lazy Persons Guide to Investing has a very healthy dose of humor involved. Basically, the idea of the book is that if you dont know a thing about investing and are lazy meaning you just want to put your money in an investment and not worry about it a bit this book will spell out for you exactly what to do with your money.

Obviously, this leaves me wondering if the investment advice in here is worth its salt. Should you just take the investment advice straight out of a book and apply it without thinking? Is the humor in this book just an added bonus, or sugar to make the bad medicine go down? Lets dig in and investigate.

A Long Look At The Lazy Persons Guide to Investing

This book is the product of Paul Farrells columns at MarketWatch.com. where he talks in a breezy tone about lazy investments in other words, the types of investments that you make and then sit on until you need them. Eventually, after describing many of these, he held a contest where he had readers select the best lazy portfolios of all, and that provided the nucleus for the book.

Part 1. The Contest Winners

So which investments won that contest? Part 1 reveals the big three winners.

1. The Couch Potato Portfolio Is Microwaveable

The winner is about as easy as can be: 50% Vanguard 500. 50% Vanguard Total Bond Market Index. Thats it. Put half your money into one, half your money into the other, and just sit back. You might want to set up some automatic investing into both of them so they grow while you do nothing. Then, once a year, take any extra investing money you have and put it into whichever one has a lower balance. Thats it. And it has historically returned over 10% with only very rare down years (even 2001, which was atrocious for stocks, saw this portfolio only down about 2%).

2. The World-Famous Coffeehouse Portfolio

This portfolio is rather more complicated than the first one, as it has seven funds in it (all Vanguard funds), but the same idea still applies: buy these index funds, sit back, and just put money into the lowest one every once in a while. This portfolio was designed intentionally to ride through a down stock market, so if youre feeling queasy about a down market, this is a good one to choose.

3. Dr. Bernsteins No-Brainer Portfolio

This is a slightly more complicated one yet, including nine index funds. This one was actually submitted by William Bernstein, the author of one of my favorite books, The Four Pillars of Investing . Again, all nine funds are Vanguard funds, which simplifies things even more as it makes Vanguard the one place to go to invest. This one had the best return of the three winning funds.

4. A Challenger Jumps Into The Ring! Scores On Points

This final chapter basically suggests that as long as you buy at least four different no-load, low cost index funds that are investing in different things, youll be just fine. Buy one large cap stock fund, one small cap stock fund, one international stock fund, and one bond fund, keep them all in balance (buy equal amounts of each and occasionally dump some extra cash into the smallest one), and youll be perfectly fine no matter what the stock market does.

Part 2. Recess Fun: Testing The Six Laziest Strategies

This portion of the book focuses on the six principles that make these lazy portfolios work. Actually, following these six principles would likely make any investment work, even if its putting cash in a high-yield savings account.

7. Strategy Three: Compounding Wins

Each year youre invested, your money goes up by a certain percentage. Thus, the more years youre invested, the more cash you have at the end. The earlier you start, the more years you can invest. Thus, start your investing now. not later. Of course, you should make sure that you have no high interest debts and that you have a bit of cash reserves for an emergency first, but the earlier you start investing, the greater your gains will be over the long haul.

8. Strategy Four: Asset Allocation Wins

If you have all of your money in one single investment, it becomes a coin flip everything you have is riding on whether that investment goes up or goes down. How can you fix that? Put your money in a lot of different investments, so that if one goes down, it doesnt necessarily spell doom for you.

9. Strategy Five: Buy And Hold Wins

Once you start investing, dont keep moving things around, because youll get eaten alive by fees (and potentially by taxes, too). Instead, invest and just sit on it until youre ready to utilize the investment. Just let it ride and dont waste your gains on fees and short term capital gains taxes.

10. Strategy Six: Do-It-Yourself Wins

Much like with the buy-and-hold strategy, its a mistake to pay others to execute very simple investments for you. Just do it yourself. Its very easy to do online get an account with Vanguard and start your investing immediately, cutting out the stockbroker in the middle who does nothing but prey on your gains.

Part 3. Six More Boring, Lazy Portfolios For America

Its largely unnecessary at this point to recite these six portfolios here suffice it to say that theyre basically different selections of index funds. This is a great section for people who like to follow exact recipes and worth reading to get the basic principles reinforced, but it basically boils down to buying a diversity of index funds and keeping them in balance. Again, almost all of these funds stick with Vanguard funds why? Vanguards focus is on index funds, which means that the costs of their funds are really, really low.

Another option for your money is to invest in yourself by either self-improvement or by using that cash to start a business. However, entrepreneurship generally doesnt mix with laziness, so this isnt a good option unless you have a lot of personal initiative.

23. Lazy Portfolios For Not-So-Lazy Kids

The younger your child is, the more effective your financial investment will be. It doesnt really matter what the investment is start when theyre very young and let the power of compound interest work for you. But the best investment you can make for your child is time spend time with your child and foster some character in him or her.

Part 5. When Laziness Fails You And Youre Itchin For Some Action

24. Sizzle. Fuzz Thats Your Brain Frying On A Hot Stock

If you get a hot stock tip, dont follow up on it, period. Do whatever it takes to not think about it. Taking a chunk of your portfolio and dumping it into some random stock tip will usually do little more than leave you holding the bag with some big losses.

25. Plan B: Investors Learn To Live With Two Brains And A Split Personality

If you absolutely must invest in individual stocks, make a sandbox for them. Allot a certain percentage of your overall portfolio for individual stock investments. That way, if you incur some losses (and you inevitably will hit some big ones with individual investing), it doesnt destroy all of your diligent investing.

Buy or Dont Buy?

If youre the type of person who is basically uninterested or simply too lazy to learn about investing, this is probably the best choice for an investment book for you. The ideas and investments suggested inside are very, very simple to follow and theyre all of the sit back and dont worry about it variety. Better yet, they make a lot of sense the book is actually passing along pretty good advice. Its also written in a breezy tone and with a good sense of humor. If this all appeals to you, pick up this book and read it, especially the first part.

However, if you actually want to really understand your investments and why youre investing in them, there are many other investment books out there that can help you learn about investments in much more detail; I recommend starting with The Bogleheads Guide To Investing . which I found quite impressive .

If you have money you want to invest, but investing bores you and you want a no-hassle recipe to follow, this book will provide a few good ones for you. Its also written in a pretty fun tone and is easy to put down and pick back up whenever you want. If that sounds appealing, definitely buy this book .

The Lazy Persons Guide to Investing is the forty-fourth of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks .