Simon & Schuster Learn To Earn | Peter Lynch

Summary of: Simon & Schuster Learn To Earn: A Beginner’s Guide To The Basics Of Investing And Business
By: Peter Lynch


In an age where countless products and brands surround us, ‘Simon & Schuster Learn To Earn’ by Peter Lynch demystifies the world of investing and empowers readers to take control of their financial futures. The book delves into the origins of corporations, stocks, and various types of investments suitable for different people. The author emphasizes the equality and democracy inherent in the stock market and underscores the importance of starting the investment journey early in life. The summary takes you on a whirlwind tour of the history of capitalism, the rise of corporations, the intricacies of the stock market, and accessible strategies for picking profitable stocks.

Investing 101

From toothpaste to stocks, corporations and the stock market are a central part of our everyday lives. Anyone can start a corporation by paying a fee and filing papers, and anyone can own a piece of a public company by buying shares. Investing in stocks is an act of equality and democracy that can earn you significant returns. Starting young is key, and understanding the stock market is essential.

The Rise of Capitalism

In the past, people worked for food and shelter, and wealth was passed down to descendants. However, the rise of capitalism in the 1600s changed this dynamic as private individuals began owning businesses for profit. Joint stock companies emerged, and nations started trading with each other, leading to the circulation of money around Europe. Adam Smith’s The Wealth of Nations played a crucial role in promoting capitalism, arguing that it would lead to a more just society. Eventually, capitalism flourished in America, leading the world in innovation and growth.

Banking in Early America

From a contentious start to modern-day corporate America, this summary traces the evolution of banking in the US.

When the United States of America was in its infancy, banks were met with skepticism. Andrew Jackson, the seventh president, feared a too-powerful central government and transferred national bank money to state banks. Each state issued its currency, but its value varied, and the different banks were not very reliable. Despite this lack of stability, entrepreneurship thrived, and private corporations, some offering stock to the public, began to form.

Trading started under a tree on Wall Street but was forced to move to a nearby hayloft after a fire broke out in one of the rooms. Despite this hurdle and the rise of stumbling blocks such as industrialists trying to monopolize their industries, the US economy enjoyed explosive growth from 1790 to the start of the Civil War in 1861.

The rapid expansion of factories, mines, railroads, ranches, insurance, canals, and cities in newly-emerging western states marked this period. Everyday inventions appeared, such as Oreos, Heinz ketchup, Graham crackers, and Campbell’s soup. Supermarkets selling dry goods and mail order catalogues became a norm in American life.

Although an economic downturn followed with the Great Crash of 1929, the government learned to reinvest in the economy and lower interest rates to get people spending again. In 1934, the Securities and Exchange Commission (SEC) was established to regulate and monitor all stock trading. This paved the way to modern-day corporate America, where participation in the stock market thrives, and the US dollar remains the national currency.

Investment Tips

Learn from Warren Buffet about indulging your impulse, the five basic types of investments and how to manage them.

Do you sometimes struggle with the urge to buy something expensive, even if you don’t really need it? Warren Buffet, an investment guru, suggests that before making a purchase, stop and think about what the same amount of money could earn you in 20 years if invested instead. This strategy is just one of many that can help manage your finances smartly.

Ideally, investing should start as early as possible, even before moving out of your parents’ home, to ensure that your money starts working for you early on. But where should you invest? Let’s examine five basic types of investments.

Savings accounts are the first on our list. While they offer the benefit of being backed by the US government and easy access to your money, they provide such low-interest rates that they may not provide actual returns once taxes and inflation are factored in.

The second type is collectibles, which include items such as rare comic books or vintage toys; however, this kind of investment requires extensive research to ensure the potential for future value.

The third is real estate, which can be highly profitable, with potential returns of 15% or higher on your down payment. The fourth type, bonds, offer a guaranteed return, but with a repayment timeline of 15 to 30 years.

Lastly, you could choose to invest in the stock market, where the barriers to entry are low, and you need not be a financial genius. Just keep in mind that investing requires discipline and patience. If you’re willing to put the time and effort in, the stock market can be an exciting and rewarding place to invest your money. So, before making any big-ticket purchases, consider if investing that same amount of money might lead to greater long-term returns.

Investing in Mutual Funds

Are you a new investor hesitant about which stock to purchase? Mutual funds can be the answer to your dilemma. With it, you can let the fund managers do the decision-making for you and get the benefit of investing in a diverse range of stocks. You can do some research of your own and find a reputable fund, preferably with no entrance fee. Also, having a mix of large and small-cap index funds can be a wise move. Jumping between funds and selling them is not a good idea as it reduces your overall profit. With mutual funds, you can have a hassle-free experience of investing in the stock market and potentially gain future profits.

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