Book review: Mainstreet Money

By Dan Danford

In a sense, Jonathan Clements’ new book was painful to read. Clements was the long-time personal finance columnist for the Wall Street Journal, and he has a real knack for explaining investment stuff. He wrote nearly 1,000 columns for the Journal and he’s forgotten more about personal finance than many brokers ever knew.

The Little Book of Mainstreet Money, 21 Simple Truths that Help Real People Make Real Money is an excellent book. I recommend it highly to anyone who needs a basic finance guide, or those who want a refresher course. In Clements’s usual style, it’s easy to read, understandable, and helpful. I’ll add this to our website’s recommended reading list.

Clements once famously noted that there are only seven real stories in personal finance, and he cites them in his introduction. I won’t list them all here, but one is “simplicity is a great financial virtue.” I agree with his other six, too, but as a practicing advisor, this one stands out as genuine wisdom. There are few absolutes in economics or finance, but that comes pretty close!

It tracks that his 21 Simple Truths follow this theme. He tackles everything from portfolio construction to the merits of saving. Each chapter illuminates a different topic, and offers explanations, ideas, and suggestions, all in that comfortable and engaging style he’s known for.

I especially like his 10th chapter, where he offers ten reasons why it’s so tough to beat the market. This is heresy in many hallowed halls of Wall Street, but he does a nice job of explaining why so many smart people abandoned that game. “The harder you try to beat the market, the more likely you are to fail, thanks to the investment costs involved.”

Why, then, was my reading painful? Another simple truth is that every thinking adult should already know much of this stuff. Seriously, folks, this isn’t nuclear physics and these truths aren’t obscure. These are the pots and pans of personal finance and every home should already have a basic collection. It just hurts to acknowledge (again) that – as a people – we’re rich in things, but poor in basic money knowledge.

People should already know the merits of diversification. They should already know that every investment (every single one) has risks. They should know that tax deferral is smart and that today’s retirement can last many decades. If they don’t, then this little book makes those powerful and productive points. And, in many ways, Clements makes them and others better than anyone else could. He has a gift.

I like Jon Clements and I recommend his book highly. I just wish that it wasn’t necessary.