Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! by Phil Town

Chapter 1
 The Myths of Investing
 An expert is a person who avoids small error as he sweeps on to the
 grand fallacy.
 —BENJAMIN STOLBERG (1891–1951)
 THE GOLD standard of low-risk investing is a ten-year United States
 Treasury bond, which, at the time of this writing, has a return of
 about 4 percent. Invest in nothing but these bonds and you’re
 guaranteed a 4-percent haul. The only problem with such a strategy,
 especially for the millions of soon-to-be-retired baby boomers, is that, at
 4 percent, it takes 18 years to double your money. In addition, after 18
 years, even with a low inflation rate of 2 to 3 percent, most of the gain is
 absorbed by higher prices, leaving you with only slightly more buying
 power than you had 18 years earlier. Despite this reality, investors buy
 billions of dollars of these 4-percent bonds.
 Why in the world would anyone want to own a bond that barely
 keeps pace with inflation and realizes almost no real gain in wealth?
 Because almost everyone is convinced that a higher rate of return
 necessarily means a lot more risk. And they’re more afraid of losing
 money in an attempt to get a higher return than of their inability to retire
 comfortably.
 The fact is, a higher rate of return is not necessarily contingent on
 incurring significantly more risk. Let me explain.

HIGH RETURNS DON’T NECESSARILY 
MEAN MORE RISK
 During a talk at the America West Arena in Phoenix, Arizona, I asked
 the audience, “How many of you drove your cars here today?” Most
 people raised their hands. “Okay, almost everybody. And how many of
 you took a huge risk driving here?” A few hands went back up. “You
 guys took a huge risk driving here?” I asked incredulously. “Either you
 drivers didn’t really take a risk and are just clowning around, or at last
 we’ve found the problem with Phoenix traffic—you people with your
 hands up don’t know how to drive. Is that it?” Everybody laughed.
 “Okay, so it wasn’t so terrifying to drive down here. But now imagine
 that you’re coming here but instead of you doing the driving, it’s your
 eleven-year-old nephew behind the wheel. Are you taking a lot of risk
 now?” People laughed and nodded yes. “The trip was the same—going
 from A to B. But when you put someone in the driver’s seat who doesn’t
 know how to drive, a relatively safe trip becomes an incredibly risky
 trip.”
 Exactly the same thing holds true for your journey to financial
 freedom. If you don’t know what you’re doing, your journey is going to
 be either very slow or very dangerous. That’s why most people think that
 going fast (going after a high rate of return) is dangerous—because they
 don’t know how to drive the financial car, and not because going fast is
 necessarily dangerous. It’s only dangerous if you don’t know what
 you’re doing. And the essence of Rule #1 is knowing what you’re doing
 —investing with certainty so you don’t lose money!
 Now, you’re probably wondering, “What about mutual funds? What
 about all those techniques we learn to minimize risk and maximize
 returns?” Well, folks, I hate to be the bearer of bad news, but here’s the
 truth: Being a mutual fund investor is a whole lot riskier than being a
 Rule #1 investor. Investing in a mutual fund is, in many ways, like
 handing your car keys to that 11-year-old nephew.
 THE MUTUAL FUND SCAM

Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! by Phil Town