Just surf on over to Amazon.com (or click on the book images above) and start your stock market education right from your own home. How easy is that?

There are two other books that I didn’t include in the list above. I definitely recommend the first one, The Pragmatic Investor, which is the book I wrote. If you read it, it will help you become a better investor.

The second one is a classic called, A Random Walk Down Wall Street, by Burton Malkiel. It’s actually very good. However I don’t agree with everything in it. So although I’m recommending it, take some of the things it says with a grain of salt.

Finally, be sure to check out Warren Buffett’s annual reports to his Berkshire Hathaway shareholders over at www.berkshirehathaway.com (it’s filled with fantastic investment advice and won’t cost you a cent).

So there you have it. A complete education on how to invest successfully in the stock market for much less than the cost of a family dinner out at a nice restaurant. What more could you want?

Paul Elliott
March 31, 2010

All right, I’m sorry. I take it back.

Yes, I guess I was a little rough. And, true, I bashed the mutual fund industry a bit. So I expected a little hate mail, but not this.

Feeling a little lost?
Don’t worry — here’s a quick summary. In a column earlier this month, I proposed an experiment. It was a bogus mutual fund made up of just four stocks, each bought in January 1990 and sold exactly 10 years later.

I randomly chose Hewlett-Packard (NYSE: HPQ), Nortel Networks (NYSE: NT), Adobe Systems (Nasdaq: ADBE), and Motorola (NYSE: MOT) for my fantasy fund. But any former — or current — highflier would have done the trick.

The idea was to show how a modest $10,000 investment could have ballooned to more than $135,000 in 10 short years. But there was a catch I wanted you to consider first.

In those 10 years, you’d have paid your mutual fund manager some $10,000 in fees, and surrendered nearly $25,000 more in lost profits (capital gains not earned on those fees). So instead of $135,000, you’d be sitting on a lot less.

So you hate me, right?
Of course you do, but I thought you’d take the funds’ side. I thought you’d point out that nobody could pick just those four winning stocks, much less time the bull market so perfectly.

In other words, I thought you’d say that my $35,000 blood money is a gross exaggeration and unfair to your manager and the fund industry.

For more details and the surprising results of this little experiment, check out “Don’t Invest Another Penny.” But please come back, because this is where it gets good.

You got it all wrong!
Or so some of you told me. Apparently, most of you don’t mind me comparing Wall Street to the Internal Revenue Service on steroids. Many who wrote in took me to task for understating the case — for trivializing the real cost to you as an investor, at least on a percentage basis.

John Bogle — the founder of Vanguard Funds, of all people — agrees with you. He makes the case bluntly in his latest book, Enough. Bogle shows how it’s not blowout returns (like in my superstock ’90s example) that make the case against mutual funds … it’s time in the market. Here’s why.

Beware the “Tyranny of Compounding”
As it turns out, what Bogle calls financial “intermediation” costs would have eaten up just 28% of your total returns ($35,000 out of $125,000) in my hypothetical fund. That sounded like a lot to me, but apparently not to Bogle — and to some of you, either. In fact, for most of us, it will be worse.

After all, we won’t be making 1,250% every 10 years, as in my example. That’s because for every Yahoo! (Nasdaq: YHOO) your skipper catches for a one-year 600% ride in 1998, he or she’ll clutch a Juniper Networks (Nasdaq: JNPR) for a 60% plunge two years later. But mostly, he or she’ll follow their buddies into the highly liquid usual suspects like Alcoa (NYSE: AA) — if we’re lucky, that is.

And even if your manager does catch lightning, he or she’ll likely jump in and out too often, and at the wrong times. That’s one reason Bogle thinks you’ll do worse than “average” — 8.5% per year by his estimate. Plus, you won’t invest for 10 years, but more likely 25, 30, even 45 years or more. Think that’s good news? Well, brace yourself, because this thing really gets ugly.

That’ll be 80% off the top
Bogle demonstrates how if you invest for 45 years at his expected market return of 8.5% per year, these “intermediation” costs can steal up to 80% of your rightful profits — and that’s at today’s tax rates. You read that right, again. Not a mere 28% like in my ridiculous scenario, but up to a full 80%.

For one thing, Bogle uses a more aggressive 2.5% for intermediation costs. That’s because he goes beyond reported “management fees” and includes taxes, transactions, and timing costs. And given that Bogle founded Vanguard, the most trusted mutual fund company in the world, I’m inclined to believe him.

More importantly, Bogle realizes that the more “realistic” your returns, the more deadly that 2.5% becomes, especially when compounded over the years. In other words, costs hurt when your portfolio keeps doubling every six months like in my example, but when it’s doubling every 10 years or so — costs kill.

What you can do about it
Frankly, I don’t share Bogle’s “realistic” outlook for stocks. I think we’ll do a little better from here. But even if we make three times as much as Bogle expects, we’ll be asked to fork over well more than $100,000 in intermediation costs every 20 years — that’s a lot of money.

If you sort of resent that, here’s a solution a lot of folks are considering. First, get a hold of Bogle’s book — it really is fantastic. Then, consider managing some of your own investments. You don’t have to jump in all at once, and you don’t have to dump all your funds. But you can see how important it is that you give it some thought soon.

Of course, you’re going to need some stock ideas to get started. That’s when I turn to my colleagues, Motley Fool co-founders David and Tom Gardner. They’ve given me a lot of help over the past seven years, and their recommendations are beating the market on average by more than 55 percentage points. If you like, you can check out their top picks for new money — and their core portfolio holding — right now.

If you’ve never read one of Buffett’s letters, you’re in for a real treat. If you have, then you can get your latest stock investing lesson right now. For free.

So check it out. Use it as long as you like. It’s automatic, it’s powerful and it’s completely free!

Stock Market Asset Allocation Tool

And here is a footnote for the video.

Investing software packages that actually work are few and far between. If you’re going to use software to help you invest your hard-earned money, then ensure you choose a package that is based on proven techniques and describes exactly how it works in complete detail.

Stay away from black-box, proprietary systems. Investing is not a game or a way to get rich overnight. And while it certainly does have the power to change your life for the better, your results are directly correlated with how much you know and the quality of the tools you use.

So ensure you’re only using the best of the best.

Only a small minority really knows the truth and, of those, an even smaller group truly understands the negative consequences to the average investor.

And who do you suppose is behind one of the biggest money grubbing schemes ever implemented in the entire history of the world?

If you guessed Wall Street and the mutual fund industry then you hit the nail on the head. And they’re not about to let you in on their multi-billion dollar secret either.

Put yourself in their shoes. If one day you stumbled across a flock of geese that laid solid gold eggs, would you take out a full page ad in the Wall Street Journal saying, “FREE GOLDEN EGGS HERE?”

No, I didn’t think so. But what’s happening today goes much deeper than that and is far worse than just keeping golden eggs to yourself.

Wall Street and the mutual fund companies have been keeping you in the dark for decades, all the while padding their already bulging pockets with more and more of your hard earned money.

They have systematically created a fantasy ideal that purportedly shows you how to invest correctly so that you can retire rich and fulfill your dreams and desires.

Unfortunately for those buying into the myth, the folks who are most likely to retire rich and fulfill their dreams and desires are the Wall Street and mutual fund insiders.

The average investor gets left out in the cold, saddled with high fees, underperforming investments and stuck taking risks they didn’t even know they were taking. In the end, they end up with millions less than what should have been rightfully theirs.

So how do these companies get otherwise intelligent people, from all segments of society, to buy into their games? It starts with the biggest lie of all when they say, with a straight face, that, “WE HAVE YOUR BEST INTERESTS AT HEART.”

Our beloved investment companies would have you believe that they are in business to make you money. To ensure you grow your investments as efficiently and effectively as possible with minimum risk. They’re your buddies who only want to do what’s best for you and your portfolio.

Surely they are the messengers of truth and have the noblest intentions for your well-being and money, don’t they? Ummm, no.

The reality is that they are a business and like most businesses are interested first and foremost in making money. Unlike most businesses, however, their products are usually detrimental to your well-being. In other words, if you knew how simple it is to invest on your own, you would no longer require their products – and you’d most likely do much better. Much better!

We like to think the big guys know what they’re talking about, but the fact is, the big guys talk about things to keep you dependent on them and their overpriced, underperforming products.

Do you remember the famous saying, “Give a man a fish and you feed him for a day. Teach him to fish and you feed him for a lifetime?” Well, that’s what they’re doing to the investing public. Except they’re not giving you the fish. They’re charging you for it. And charging you much, much more than what it’s truly worth.

If you want to shed the shackles of dependency and really start to make money in the stock market, then you need to learn to fish for yourself. Don’t depend on the fish sellers to tell you what you need to do (unsurprisingly they will tell you that you need more of their fish), but think for yourself and take control of your investments.

It can be one of the most profitable things you’ll ever do in your life.

Do you ever wonder how Wall Street bigwigs can make tens of millions (or even hundreds of millions) of dollars in one year? Ever wonder who pays for all of those full-page mutual fund ads running in expensive publications such as the Wall Street Journal and USA Today? Who do you think picks up the tab for the plethora of prime-time TV spots touting the latest mutual fund?

Could it be you? Well if you have any of your money in mutual funds, then it is you.

Make no mistake, Wall Street and its ilk would be flat-broke without the truckloads of money they pull in every second of every day from unwitting investors who buy into the myth that they should just turn their hard-earned nest egg over to these people.

You have to understand that the vast majority of investors are not as knowledgeable as you are. The fact that you’re reading this means that you want to learn and improve your chances of becoming truly wealthy through your investments. But the majority of people are ignorant and would rather remain blissfully unaware of the truth in order to stay in their comfort zone and not have to think about how poorly they are being treated.

And the big fund companies know this. And they take advantage of it.

They take advantage with snappy slogans and cherry-picked historical returns. They show beautiful people having fun on lakes and golf courses and imply that if you give them your money, you too can be part of this wonderful crowd.

And most of the investing public eat it up.

They don’t want to know the truth because it would unsettle them and would mean they actually have to take control of their investments and accept responsibility for their results (whether good or bad).

It’s far easier, and more comfortable, to have someone else make up your mind for you and have someone else to blame if you lose money (”hey, it’s not my fault and everyone else I know lost money too”).

The sad fact is that most people would rather be spoon-fed a nice sounding story that insulates them from reality so they don’t have to take responsibility for their current and future financial situation.

They can stick their heads in the sand and live in denial, justifying their poor returns and miniscule net worth by taking solace in the fact that everyone else is in the same boat.

Hopefully you’re not in that category. But even if you are, now would be a good time to extricate yourself from the unthinking masses and learn how to invest successfully for yourself.

Don’t let clever advertisements blind you to the fact that nobody cares more about your money and well-being than you do. Not Wall Street. Not Mutual Fund companies. And not even your well-intentioned neighbour who’s indirectly feeding you regurgitated Wall Street dribble.

The two things that Wall Street and fund companies are really good at are, first, keeping the typical investor in a constant state of turmoil by telling him that investing is too difficult for him to do by himself and, then, siphoning off loads of money from his investment and retirement accounts.

They spend lots of money trying to keep you in the dark by hiding the key issues. Don’t fall for it. Stop clinging to the naïve belief that Wall Street and the fund companies are interested in your and your family’s well being.

The one and only thing these companies are interested in is making money. Piles and piles of money. People gravitate to these jobs so they can make lots and lots of money. Period. They don’t go in thinking about how great it would be to help people realize their dreams.

And one of their greatest achievements is making people believe that they actually care about them.

How do they do this? Well quite simply they do it by smart and constant advertising, drumming the same message into the public’s heads over and over and over again. If someone hears something enough times, they eventually believe it to be true.

And where does the money come from for all of this expensive advertising (and lobbying, but that’s another story altogether)? It comes from the investing public in the form of high fees and other money-grubbing devices!

Wall Street has a vested interest in keeping you ignorant of the right way to invest your money. If too many investors took the time to learn the correct methods, Wall Street would be up the creek without a paddle. They’d no longer be able to pull in piles of money. And no money means no multi-million dollar bonus, no house in the Hamptons and no new Ferrari. That’s an undeniable fact.

Of course the balance has to be right. If you always lost money and never made any, you’d take your investments and go elsewhere.

But the fund companies know this and thus ensure that they only milk you to the extent that you still make some money some of the time.

It’s what psychologists call variable reinforcement.

Casinos and lotteries use it all the time. In short, it rewards the player on occasion, but not well enough to logically continue playing (add the fact that the big winners are publicized incessantly and you can imagine what everyone’s greed glands are doing).

And since people like to remember good things and forget bad things, the few rewards that are seen tend to carry greater weight in people’s minds than the multitude of times they didn’t win. So they keep playing in a futile attempt to hit the jackpot (or retire wealthy).

I hope reality is starting to set in. The big fund companies look after their own interests and quite often those interests are in direct conflict with yours.

The main thing to take away from this is to realize that you need to be in control of your investments. You need to take responsibility for your wealth. It’s much too important a decision to leave to the whims of others who don’t have your best interests in mind.

There’s more detailed information about how to build your wealth in the stock market the right way in the Pragmatic Investor book. Pick it up here to learn what you need to do immediately in order to escape from the Wall Street rat-race.

Enjoy.

Not tomorrow. Not next week. But right now.

And that is to ensure you are backing up your data every single day. Most people don’t do this, or even think about it, until it’s too late. After a hard drive crash, virus attack or someone steals their computer, then they start to think of all the irreplaceable data they’ve just lost.

Of course it’s easy to understand why this task isn’t at the top of people’s lists, it’s just too tedious and time-consuming. Plus most people are busy and don’t want to have to search and find all of their recently updated data, zip them up to a file and then copy that file to an external hard drive.

But even for the rare breed who does this consistently, storing data on an external hard drive is not the best way to create backups.

The reason?

Unless you’re storing your backups offsite, a fire or theft can destroy all copies stored at the same location.

So it’s essential that you create backups frequently and store them in another location. Fortunately, with the advent of high-speed internet access, this has become extremely easy to do.

The backup service I use is called Mozy, and it allows you to select which files and folders you’d like to backup and when you’d like the backup process to begin. Then it automatically backs up your data – even files that you are currently using.

After the initial backup is done, Mozy then backs up only the files that are changed, so it’s usually very fast.

You’ll never again have to worry about forgetting to do a backup.

Plus your data is encrypted and stored safely and securely on Mozy’s servers. If you ever need a file, or all your files for that matter, you can simply select it and restore it to your computer.

You can even restore previous versions of your files.

And how much will it cost you for all this convenience and power?

Nothing. Nada. Zip.

If you have less than 2 GB of data to backup, the service is free (no setup fee, no credit cards, no monthly payments, just worry-free backups). If you have more than 2GB, it’s $4.95 a month for unlimited storage.

I currently have nearly 50GB of data backed up at Mozy, but for most people, 2 GB will be enough (remember, you only want to back up your data. Programs can always be reinstalled or redownloaded, so you don’t need to back them up offsite).

So if you don’t currently have a backup strategy and want one that is simple, reliable and easy-to-use, visit the Mozy site and sign up for a free account. Because losing your valuable data is not something you really want to experience.