(Disclosure: Some of the links below may be affiliate links)
Last year, I reviewed Path To Independence, a book by Elias Noschis. The author recently wrote a new book, more practical, into investing: Keeping It Simple – How To Invest Efficiently.
This book is about the most simple and efficient way to invest your money. By investing only in a few ETFs (ideally one), the author tells you that you can reap the stock market’s benefits.
In this article, I will share my review of the book, Keeping It Simple by Elias Noschis.
Keeping It Simple
Keeping It Simple is a book by Elias Noschis. This book is all about investing in the stock market and keeping it simple.
The author published the book himself on Amazon. The book is available on Kindle and in paper book format. I have read this book on Kindle, as usual.
It is a short book (less than 100 pages) aimed at people who want to invest in the stock but do not know what to invest in. This book will not cover the details of the stock market or how to use a broker. But by the end of the book, you will know in what ETFs you want to invest.
The S&P 500 Index
The author mostly focuses on the S&P 500 index. The reasoning behind that is that the biggest Exchange Traded Fund (ETF) in the world (SPY) is following the S&P 500 index. On top of that, this index has great returns and low fees. It is an index that makes a lot of sense, especially for Americans.
In Keeping It Simple, the author will detail the returns and risks of this index. The author will make many comparisons based on historical data for more than 150 years.
Keeping It Simple will cover both phases of life:
- The accumulation phase during which you can save and invest aggressively.
- The retirement phase during which you withdraw money from your portfolio to pay for your expenses.
For the second part of your life, you will probably need to invest in some bonds to reduce your portfolio’s volatility. For this, the author recommends investing in the AGG ETF (iShares Core US Aggregate Bond ETF). This ETF invests in investment-grade ETF bonds. Historically, bonds have proved less volatile than stocks.
The case of investors outside the United States is also shortly covered by Keeping It Simple.
For these investors, the author recommends investing 50% in the S&P 500 and 50% in a global stock market ETF (ex-US). The author compares stocks’ performance in several regions (U.S., Europe, Switzerland, and Japan).
Due to globalization, the returns of the different stock markets are very much tied together. This is relatively logical since most big companies are doing business all over the world. And adding to that the fact that the U.S. represents more than 50% of the world stock market, it is a good candidate ETF to invest in.
What I Liked about this book
Let’s start with what I liked about Keeping It Simple.
First, I really like to keep investing simple. For this, passive investing is really the key. With only one ETF, you can invest in thousands of stocks in a very simple and efficient way. Not only will you minimize your fees, but you can also maximize your diversification. And this simplicity is really taken to heart by the author.
Second, I like it when a book is based on hard data, not on conjectures. The author properly did his research on the historical data of the stock market. And he only took conclusions based on this data. For me, this is really important. And this is something I also try to do on this blog.
Overall, I agree with the general strategy of having a well-diversified ETF portfolio with low costs.
What I did not like about this book
Finally, let’s take a look at what I did not like about Keeping It Simple.
I do not particularly agree with the author on the subject of bonds for several reasons. First, the author mentions that people should start investing in bonds about 10 years before retirement (between 56 and 65) from 0% to 40% and then keep this allocation.
There is not much evidence that will really help in retirement. It will smooth out the volatility but also decrease the returns. And many people have retired with only stocks without issues. I would have liked it better if the author delved deeper into the advantage of bonds.
Then, the author recommends everybody to use the AGG ETF (iShares Core U.S. Aggregate Bond). I see two issues with that. First, if you are not living in the United States, you want your bond allocation to be in your local currency. Bonds are here to reduce volatility. If you have bonds in USD, you add the currency pair volatility on top of the bond market volatility. For me, it does not make sense.
I do not like this choice of ETF because this ETF is full of Mortgage-Backed Securities (MBS). And these MBS are one of the big causes of the 2008 Recession. I definitely do not want to rely on that for low volatility. I would have preferred a Treasury ETF instead.
I think it would have been good to cover a little more on how to invest. By this, I mean how to choose a broker account and to invest in these ETFs regularly. Maybe a little more on rebalancing could have helped.
While the book covers a little about the 4% withdrawal rate that should last you for at least 30 years, it does not cover anything about early retirement. The book is entirely about standard retirement at 65 years. It would have been interesting for the book to touch on early retirement as well.
Finally, I think that the author downplays the value of diversification a little. He made many comparisons with other indexes such as the SMI from Switzerland or the Nikkei from Japan. But this comparison is only done in recent history, not very far. It would have been better to see the impact of currency exchange on returns.
Overall, Keeping It Simple is a good book about investing. It will teach you to invest simply and efficiently in the stock market.
For this, the author recommends that we invest in only a few ETFs. An S&P 500 ETF for the most part, maybe some international ETFs and a bond ETF.
All the author’s recommendations are based on historical data on the stock market for the last 150 years. I think this is the best point about this book! I really enjoy conclusions that are backed by hard facts.
While I do not agree with everything the author recommends, I think that the strategy is good and will work for most people. I would recommend investing in a bit more diversified way and avoiding investing in U.S. Bonds if you are not in the U.S.
This book complements very well the first book of Elias Noschis, Path To Independence, which is less practical for investing.
If you are interested, Keeping It Simple is available on Amazon in Kindle Format or paperback format.
If you want more book reviews, I have an entire page of book reviews!
Have you ever read this book? Did you like it? Do you have another book to recommend me?