Book Review: Money for the Rest of Us by J. David Stein

If you're looking for a straightforward explanation of investing — and how to make it work in your life — Money for the Rest of Us is for you.

I'm a huge proponent of making investing accessible for more folks. That's exactly what my friend David Stein does in his book Money for the Rest of Us. Rather than giving you a one-size-fits-all approach to investing, David instead shares foundational concepts you can use to make better investment decisions.

10 Questions to Master Successful Investing

With Money for the Rest of Us, David, the host of a great podcast of the same name, takes us through the 10 questions we need to ask as we prepare to invest. The 10 questions we should ask include:

1. What is it?

Do you know why you're buying that asset? Can you explain the investment? David goes beyond just breaking down the math and looking at the trends.

We should be able to explain in simple terms where the money is going, who is selling it to us, and how the money will be used to generate a positive return.

David also takes the time to talk about how we as humans react to the information available to us and how to use that in an investing framework. While the math is important, we also need to understand our emotions.

2. Is It Investing, Speculating, or Gambling?

This might actually be my favorite question/chapter of the book. Too often we equate investing with gambling when really these are different things. David breaks it down so it's very easy to understand the difference between these three types of using your money.

My biggest takeaway here is that investments are, “Opportunities that have a greater likelihood of being profitable.” I love this approach because when people talk about investing in the stock market as speculation or gambling, they often overlook this reality:

Over time, there's a greater chance that stock investments will pay off. Is it a sure thing? No. But the likelihood is there.




Speculation and gambling are different matters altogether, with gambling actually being something that has a greater likelihood of losing money. David does a great job of providing examples of types of purchases and trades that are speculation and gambling. By the time you're done with this chapter, you'll no longer equate investing money to taking it to the casino.

3. What is the Upside?

One of the amazing things about this book is how David, an investment professional talks about some of his own mistakes. In the introduction, he is quick to point out that we all make investment mistakes. I've made investment mistakes. We've all been there. David is down-to-earth as he explains his own mistakes and reviews some of the issues that he's run into — and the lessons he learned.

He also helps simplify the way to estimate asset class performance and uses a great analogy for learning how to move forward. There are basic rules for operating a shower, right? Even if the shower you're using in a hotel is a little different than the one you use at home, you can follow some basic steps to operate the shower.

David takes a look at how you can use similar steps to consider the upside.

Side note: my investing class is a nightmare, but David Steins's book is a gem.

I'm taking an investing class right now for my MBA. It's a nightmare. I mean, I get the concepts but the way things are explained and trying to get to the heart of it is a mess. In a few pages in Chapter 3, David explains bonds in a way that is understandable, straightforward and practical. The section on bonds in my class was needlessly complicated. Everything in my class is needlessly complicated. Just read this book.

4. What Is the Downside?

While investment is an opportunity that is likely to provide profits, it's not a sure thing. So this chapter is a great look at how to measure the downside — and how to navigate events like the global financial crisis.

Concepts in this chapter include items like:

  • Risk
  • Risk tolerance
  • Behavioral biases
  • Drawdowns and recoveries
  • Impact of large losses
  • Reasons assets fall in price
  • Managing risk in your portfolio

David breaks it down, looking at how different types of assets might be impacted in different situations, and how you should consider approaching your own portfolio.

5. Who Is on the Other Side of the Trade?

What is going on with the other side? And what do they know that we don't?

These are questions to ask yourself before moving forward with an investment. One of the best examples David provides is that of real estate crowdfunding.

[T]here are a number of real estate crowdfunding sites where investors can ostensibly lend to borrowers who use the funds to fix up a house to flip or an apartment to rent. Some investors may not realize they are not really lending to the borrower, so they do not have a security interest in the underlying property if the borrower defaults. The crowdfunding platform is the entity that made the loan to the borrower and has the security interest in the property. The investor actually invested in a mortgage-dependent promissory note issued by the platform.

It's not that real estate crowdfunding is a bad thing — it's that you should know what you're getting into and what the downside might be.

I also like that David takes a look at efficient market theory in this chapter, as well as looking at adaptive markets. Understanding these concepts can help you avoid getting into a situation where you're trying to outsmart someone else, as well as help you get an idea for how to add a little active investing to their portfolio.

Let's be real. I felt personally seen and attacked here. Because I'm so damn lazy in my investing, I don't have much activity in my approach. After reading this book, I can already see where I should make adjustments.

6. What Is the Investment Vehicle?

This chapter is a great step-by-step primer in applying the investment framework David has laid out up to this point. He takes a ridiculously complex investment that a real person was looking at and applies the framework. David also offers a practical approach to evaluating investment vehicles, using information like costs, liquidity, pricing, and structure.

I also like how he takes a look at popular investment vehicles like ETFs and their risks, as well as offering sensible suggestions for protecting yourself as you move forward with trades.

7. What Does It Take to Be Successful?

David offers some realness here, acknowledging that there is no step-by-step instruction for success. Instead, the framework he provides is about helping you understand how investing works so that you can make better investment decisions for yourself. Applying the framework isn't about a one-size-fits-all map to success. Instead, he looks at a wayfinding approach to investing.




One great example is that he points out that he and his wife do engage in speculation — but with a limited portion of their portfolio.

Because I might be wrong, I make sure my allocation to gold is small enough that the personal financial harm caused by the loss will not negatively impact my lifestyle. Recall that the downside of an investment is a function of not just its potential loss, but the personal harm caused by the loss.”

He's also very real about investing in individual stocks and analyzing them. This chapter also looks at dividend investing and breaks down concepts like smart beta while helping you understand return drivers and market conditions.

8. Who Is Getting a Cut?

“In investing, we often think of our investment gains as our own …”

This chapter is all about recognizing that some of your gains are going elsewhere. Taxes. Investment expenses. Those types of things. David breaks them all down and provides practical ideas for managing your costs, as well as your tax liability. I also like how inflation is addressed in this chapter.

Get this book for this chapter alone. I mean, you should read it for the other stuff, but this chapter is a reality check that provides a framework for moving forward to keep more of your returns — although you'll never keep them all.

9. How Does It Impact Your Portfolio?

This chapter gave me a completely new look at how I invest. David offers a critique of Modern Portfolio Theory (MPT) and provides an alternative — the Asset Garden approach.

I can see where I've been biased in my own approach, and how I've relied too heavily on MPT. While robo-investors like Betterment that rely heavily MPT can provide a low barrier to entry and get people started, at some point you might need to do a little more with your portfolio.

Money for the Rest of Us offers some interesting portfolio examples along with a framework for creating an asset allocation that works for you.

I love this chapter because it challenged me and my own approach. We all need challenges to how we do things, especially when there might be a better way. So far, my approach has been super lazy. Not terrible, and it's provided me with what I need, but I can see where to make changes.

10. Should You Invest?

While portions of the framework were applied earlier, this chapter brings it all together. I love how David has taken us through these important questions to build a framework that allows us to answer the fundamental question: Is this something I should invest in?

Concepts covered here include:

  • Dollar-cost averaging
  • Position size
  • Market timing and risk management
  • Economic trends
  • Socially responsible investing

He takes a look at some different approaches to investing, as well as consider whether an investment aligns with your personal values.

David advocates for the concept of a piecemeal engineer, as described by philosopher Karl Popper. It's all about “small adjustments and readjustments which can be continually improved upon.”

I love this. Throughout this book, I've seen ways that I can tweak my own investment portfolio. Additionally, I've learned what I don't know — and how I can take my mistakes and be better going forward.

Bottom Line: Money for the Rest of Us is an Investment Journey

For me, Money for the Rest of Us was an investment journey. I learned about myself as an investor and looked at things I thought I knew in a completely different way.

No matter your level of investment knowledge, David Stein has created an amazing resource. I've only scratched the surface here. The book is easy to ready, engaging, and one of the fastest 200-page reads I've ever had.

Seriously. I don't say this just because David lives less than two miles from me and I've had dinner with him and his wife on multiple occasions. I say it because it's true.

Money for the Rest of Us is one of the most accessible and practice investing books I've ever read. 

Go buy it. Like, now.


Leave a Comment

Your email address will not be published.

Scroll to Top