Ben Stein's Tips for "Bulletproof" Investing

(CBS)  If you're not sure where to stash your savings, economist Ben Stein has some foolproof investment ideas for you.

Economist and "Sunday Morning" Commentator Ben Stein stopped by "The Early Show" Thursday to discuss advice from his new book, "The Little Book of Bulletproof Investing." Stein explained how to maximize your income while protecting your savings from financial calamities.

Stein said the recession inspired he and investment advisor Phil DeMuth to write "The Little Book of Bulletproof Investing."

"People took an incredible walloping during the correction from 2007 to early 2009," said Stein. "They got hit incredibly hard. We would like to make sure that people are bulletproof in case it happens again."

To defend yourself in the future, Stein suggested a three-tier shield system: fight the Wall Street addiction; learn how to invest; and save until you drop.

Fight the Wall Street Addiction:
"We have some simple rules to get you off the addiction to Wall Street," said Stein. "Don't manage your finances yourself. Get a personal financial planner to help you out. Pay little attention to the media-"

"All media?" asked "Early Show" anchor Harry Smith.

"No, not all media," said Stein. "But don't follow the media minute by minute."

Stein continued his anti-Wall Street regimen, saying, "Don't invest based on the prestige of the people who are issuing the stock or the bond or the advice that they give you."

Stein recommended controlling what you can, especially expensive investing.

"Make sure you diversify," Stein added. "Diversify, diversify, diversify, diversify -- that's everything."

Smith said he really liked this section of the book because people pay a "tremendous" tax when stock is famous.

When diversifying, Stein suggested going with the little indexes that cost a smaller percentage.

"Diversify everything," said Stein. "Diversify international, domestic, big cap, small cap, growth, value, income - Diversify!"

Learn How to Invest:
Although Stein gave a brief shout-out to Helen Gurley Brown's work at Cosmopolitan magazine, he criticized Cosmo-style quizzes.

"Don't go by Cosmo-style quizzes and by what fits you," said Stein. "It's a little bit more complicated than that."

Stein recommends sticking to the traditional plan of buying and holding investments.

"Don't try to trade like a day trader," said Stein. "You see these programs on late night TV telling you you can do it; you can't. Just forget about it."

Instead, Stein recommends keeping it simple by purchasing portfolios.

"Just buy a big pie of diversified funds," Stein said. "We have a whole bunch of sample portfolios that keep the risk very low with excelled long range returns."

Passive index funds are another good investment, Stein said. He said their fees are small compared to other funds' two or three percent fees.

Save Until You Drop:
With American saving like crazy after the financial cataclysm, Smith said saving might be the most important advice Stein had to offer.

Although saving is important, Smith said the balance between spending and saving is critical.

"That's a big problem because we won't have a recovery unless people are spending, but we won't have financial security unless people are saving," said Stein.

Above all, Stein emphasized the need to live below your means.

"To borrow for a lifestyle is insanity. To borrow to show off is insanity: save, save, save," said Stein. "Saving, a dog, and a wife are the best things in life."

After describing the comfort of saving, Stein warned against getting too cozy with your savings.

"If you have a reserve fund, don't play games with the IRS ever," said Stein. "The IRS has all the power, and you don't want to spend even a second in jail...You're not going to like it."

[flagwavrblue]

You don't have to buy the book. All of Ben Stein's recomendations are so simple and basic you can learn them from MSN money, CBS or any financial site for free.

[K. Daraa]

My mother taught me to "always save during the good times, they won't last." Also, she said, "be a good steward of your resources". I've followed her advice many years, and if you combine the two, it is a winning combination that won't let you down most times, absent war, famine, plague, hyper-inflation, or natural disasters. The rest we leave in God's hands. "Investing" in stocks is gambling. Investing in stocks is NOT saving. Buying a piece of property is gambling. Buying a piece of property is NOT saving. Taking a loan out to buy a car is renting money to use for today's utility, and paying much more for it, tomorrow. The rules of thrift dictate that you buy lowest price, best quality, longest-lasting widget to see you through, while saving to strengthen your economy. You may surprise yourself, and find you prefer that thrifty acquisition better than your wish-book item, because its about the journey, not the destination. I like some of Stein's advice. Good article!

[edixope4842]

K.

That thing about buying a piece of property being gambling-Yes, maybe. But if it and the dwelling on it are paid off-then maybe a little garden in the back might be a good investment-after all, have ya ever tried to eat gold?

[ky46]

All from the guy and the squirrel who claims
"life costs more without freescore"
Another ripoff billed monthly to your credit card for the free credit report everyone can get without cost once a year.
I did like the old tv program 'ben steins money'
I doubt it was his money

[ky46]

All from the guy and the squirrel who claims
"life costs more without freescore"
Another ripoff billed monthly to your credit card for the free credit report everyone can get without cost once a year.
I did like the old tv program 'ben steins money'
I doubt it was his money

[retiredgustav]

The stock market is the only place where people run out when there is a sale. I always remember the basic mantra I was taught in High School. "Buy low and sell high".

[tmittelstaed]

The problem with Stein's advice is simple - diversification reduces risk - but with reduced risk you are not going to have a shot at the really high returns.

The greater the risk, the greater the return.

The really traditional advice has always been when your young, invest in high risk investments, but as you age, move your money to lower risk investments. That is still the best advice for the people who just want a "set and forget" kind of investment.