The Only Investment Guide You’ll Ever Need: Expanded and Updated Throughout by Andrew Tobias

PART ONE

MINIMAL RISK
There is no dignity quite so impressive, and no independence quite
so important, as living within your means.
—CALVIN COOLIDGE

If I’m So Smart, How Come This Book Won’t
Make You Rich?
You have to watch out for the railroad analyst who can tell you the
number of ties between New York and Chicago, but not when to sell
Penn Central.
—NICHOLAS THORNDIKE
HERE YOU ARE, having just purchased a fat little investment guide we’ll call
Dollars and Sense, as so many investment guides are (although the one I
have in mind had a different title), and you are skimming through idea after
idea, growing increasingly excited by all the exclamation marks, looking
for an investment you would feel comfortable with. You page through
antique cars, raw land, mutual funds, gold—and you come upon the section
on savings banks. Mexican savings banks.
The book explains how by converting your dollars to pesos you can earn
12% on your savings in Mexico instead of 5½% here. At 12% after 20
years, $1,000 will grow not to a paltry $2,917, as it would at 5½%, but to
nearly $10,000! What’s more, the book explains, U.S. savings banks report
interest payments to the Internal Revenue Service. Mexican banks
guarantee not to. Wink.
The book does warn that if the peso were devalued relative to the dollar,
your nest egg would shrink proportionately. But, the author reassures, the
peso is one of the stablest currencies in the world, having been pegged at a
fixed rate to the dollar for 21 years; and the Mexican government has
repeatedly stated its intention not to devalue. Now, how the heck are you,
who needed to buy a book to tell you about this in the first place, supposed
to evaluate the stability of the Mexican peso? You can only assume that the
author would not have devoted two pages to the opportunity if he thought it
was a poor risk to take—and he’s an expert. (Anyone who writes a book,
I’m pleased to report, is an expert.) And, as a matter of fact, you do
remember reading somewhere that Mexico has oil—pretty good collateral
to back any nation’s currency. Anyway, what would be so dreadful if, as
your savings were doubling and tripling south of the border, the peso were
devalued 5% or 10%?

The Only Investment Guide You’ll Ever Need: Expanded and Updated Throughout by Andrew Tobias