How a Second Grader Beats Wall Street Review

I read it a while ago, but I figured it’s about time I posted my review of Allan Roth’s How a Second Grader Beats Wall Street. The premise of the book is that investing is so simple that a second grader can understand it. Also, not only can a second grader understand it, but adults often mess things up because they’re tricked by Wall Street into making complex and risky investment decisions.

In general, Wall Street makes its money when people invest in risky or complex ways. Investors who buy individual stocks and constantly buy and sell help fuel the profits of Wall Street. Wall Street leads us to believe that investing is rocket-science, and without their guidance we will fail. Allan Roth urges the reader to “cut through the baloney that Wall Street wants us to believe and return to basic simplicity.”

Simply put, How a Second Grader Beats Wall Street proposes investing in a very simple portfolio of index funds. Small tweaks can then be made to this portfolio to fit personal circumstances. Emphasis on the “small”. The main reasons that Allan Roth lays our for his approach are:

  • You can’t predict what the stock market is going to do over the short-term.
  • If the people on Wall Street knew how to make guaranteed money, why would they tell you? They would just do it themselves over and over with their own money.
  • Fees significantly impact your long-term returns in a negative way.
  • Most people don’t construct their portfolio in a tax-efficient way.

To keep things very simple, the Second Grader portfolio is constructed using only three index funds. They’re all Vanguard index funds due to the low-fee philosophy than Vanguard pioneered and continues to follow. These three index funds are:

  • Vanguard Total Bond Market Index Fund (VBMFX)
  • Vanguard Total Stock Market Index Fund (VTSMX)
  • Vanguard Total International Stock Index Fund (VGTSX)

How a Second Grader Beats Wall Street ReviewRoth explains his reasons for picking these specific index funds, and in Chapter 5 he goes over the statistics of why this portfolio outperforms the market. I actually keep a very similar allocation in my Roth IRA. I use the three index funds that Allan Roth proposed, and I additionally index in the Vanguard REIT Index Fund (VGSIX) to invest in real estate.

If you’re new to investing and are exploring asset allocations and simplified portfolios, then this is a great book to check out. If you’re an advanced investor who has read at least five other asset allocation books, then this book won’t provide you much except for reconfirming what you already know. However, whether you’re a new investor or a long-time investor, the book is still entertaining and the slant taken is engaging.

Warby Parker Glasses Long-Term Wear Update

I first wrote about Warby Parker in my article about how to save money on designer glasses. I recently received an email asking for an updated opinion on my glasses and how they’ve held up over time. I replied to the email, but I also figured I should write a quick post in case anybody else was interested.

Firstly, it’s important for me to note that I don’t wear my glasses daily. I typically use them at night when I’m home, and maybe once a week for the entire day. That means I really haven’t put them through the rigors of daily use. However, in my time with my Warby Parker glasses, I can tell you that there’s nothing that makes me doubt their durability over time. The glasses still look as they did when I purchased them and the anti-scratch coating has done its job. I have no scratches on the glasses and they do their job well.

Not only do the glasses still perform well, but they look good. I’ve received a number of comments on my glasses. This is something that I never received with my previous glasses, which definitely weren’t as stylish. A barista at the Starbucks I frequent liked the glasses and the value that Warby Parker provides so much that she purchased her own after I told her where I’d gotten them. Overall, I’d absolutely recommend Warby Park to anybody who wants an affordable pair of designer glasses. They really do look good and they’ve held up well. When I need a new pair I will be purchasing again from Warby Parker.

Plastic Jungle Review

I first wrote about selling gift cards to Plastic Jungle last year. I said that I would update you on my experience, so I figure it’s time I published my Plastic Jungle review. In 2011, I sent away a few of the gift cards that I had laying around and collected a few hundred dollars. After I put the cards into PlasticJungle.com, they told me how much they’d give me for my gift cards. I accepted their offer, printed the redemption forms, and send in my gift cards. The entire process took about three weeks from when I sent the cards to when I had the cash in my hand from the sale. It was pretty easy to follow their instructions and having the cash definitely beat having those gift cards I was never going to use.

Now, I’ve decided to use Plastic Jungle in the other direction. In 2012 I’ve started to use Plastic Jungle to purchase gift cards to save money. However, you have to be careful. We’ve all spent money on things we didn’t need simply because we already had a gift card for it. This is why I think that you should only purchase gift cards from Plastic Jungle for merchants that you know you’ll spend money at anyways. For me, two of these merchants are Starbucks and Ticketmaster.

Plastic Jungle Review

On April 4, 2012, I purchased $300 in Ticketmaster gift cards and $500 in Starbucks gift cards. They happened to have a ton of both gift cards when I was on, which is rare, so I figured I’d stock up. Both merchants are in fairly high demand, which is why my discount was only 7 and 8%. However, I knew I was going to spend the money at these merchants, so 7-8% is better than nothing! After ordering the gift cards my credit card was charged and the waiting game started. However, this was a game that didn’t last long. I received my Ticketmaster gift cards on April 9th, which is just five days after purchasing them. This was much quicker than I expected. I received the Starbucks gift cards on April 12th, just over a week after ordering. Because they ship the tickets via first class mail, there’s no tracking like you might get with UPS. However, they do have limited tracking based on the mail piece item. Plastic Jungle is able to tell you when your gift cards were scanned by your local post office. For me, the tracking showed “scanned in your zip code” the morning they were delivered.

Plastic Jungle Review Rating
Plastic Jungle Review
The entire process was easy and seamless. From ordering the gift cards to receiving them in the mail I had no issues. I confirmed the value of the gift cards I received by checking online. Now, as long as nothing fishy happens (like the gift cards get cancelled or something), then we should be good. I wish Plastic Jungle offered better tracking through UPS or FedEx, especially for high-value purchases, but I completely understand why they don’t. I absolutely recommend Plastic Jungle for anybody who is looking to save extra money on merchants they shop frequently.