Mandelbrot set image very small
Serious writing for
serious readers
Follow @Mohammed_Amin
Join my
email list

Search this site

Custom Search
Mohammed Amin's website
Serious writing
for serious readers
Tap here for MENU


This page lists my writings on finance, excluding Islamic finance which is listed elsewhere.

My recommended five books about investing

I have been buying equity related investments since my early 20's. In retirement, my personal finances depend on the investments accumulated from the income I saved while working. I believe strongly that everyone has the responsibility to save and invest for their financial future.

Since I began investing, I have read dozens of books about the subject.

In early 2020, one of my children recently asked me to suggest an investing reading list.

To ensure that produced a focused list, I limited myself to five books, to be read in the order specified. The page is at the link below.

My short reading list on investing

Other writings about finance

The newest items are listed at the top.

Why buying shares and gambling are fundamentally different
Every so often, family members and friends make the comment that buying shares is a form of gambling. This is based on a fundamental misunderstanding. Life, and investing, involve unavoidable uncertainties. However gambling involves the artificial creation of unnecessary uncertainty.
Doing arithmetic with dates using Excel
Excel holds dates as whole numbers, starting with 1=1 January 1900. That allows you to subtract dates to calculate the number of days between those dates. This makes it easy to calculate the internal rate of return. I also explain absolute and relative cell references. This was my second article for the UK Shareholders Association on monitoring investments with Excel.
The basics of corporate governance in 12 minutes
Corporate governance can seem dull, but is vitally important. I was asked to speak at a corporate governance conference in Saudi Arabia on “Effective Corporate Governance and the Independence of the Board Audit Committee.” I set out to emphasise the basic principles. Once those are fully absorbed, the details become straightforward. My 12-minute presentation can be watched on the page, and you can also hear my answers to the two questions I was asked.
My views on cryptocurrency
Cryptocurrencies are a “hot” investment topic. Cryptocurrencies are also attracting the attention of Shariah compliant investors, which I regard as somewhat surprising since Shariah scholars often say that Islamic finance is about financing worthwhile real activity. I am not aware of any use for Bitcoin other than speculation on its price.
Why, and how, I became a quantitative investor
I have been investing in shares since my mid-twenties. Over the years I have learned that, as an investor, my greatest enemy is myself. To overcome that, and because I find it intellectually interesting, over the last six years I have been changing to being a “quantitative investor.” This article explains how, and why, I made the change.
The basic concept of internal rate of return
Excel is a very powerful tool for dealing with anything numerical. Sadly many people use little of its potential. I have used Excel for decades to monitor my investments. This article, on computing the internal rate of return, is the first of a series I am writing for the magazine “The Private Investor.”
Review of "The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness" by Morgan Housel
Many people have very high incomes, but end up poor. Others with much more modest incomes die rich. What accounts for the difference? With very simple examples, this short readable book explains that the most important factor is your personal psychology. This short simple book is the best possible introductory guide to thinking about your personal finances.
How to restore trust in audit and corporate governance
There are very specific reasons why auditing and corporate governance regularly go wrong. Fixing the problem requires making some radical changes. UKSA and ShareSoc have sent their joint views to the Government. This article summarises what needs to be done. It also explains how the response was written by seven co-authors, led by me.
Dying without a will – what happens?
Many people don't know how the state distributes your assets if you die without a will ("intestate"). Others think they know, but have it wrong. If you die intestate, in many cases your estate will not be divided the way you would have liked. I explain the rules in detail, along with some other points on inheritance.
What happens if I “lose my mind”?
Most people know that they need a will to govern the distribution of their estate. However few people think about how their affairs will be managed if they lose mental capacity. ("Lose their mind.") They need a lasting power of attorney. My wife and I created these in 2012. The Government website makes it easy for you to create one for yourself.
Give shares to charity instead of cash
This page is for readers who give to charity, and who also own investments where capital gains tax would arise if they sold the investments. If so, they will almost always be better off giving shares to charity instead of giving cash. Surprisingly few people are familiar with the relevant tax rules. I have explained how they work, with full calculations.
The implications of capital gains tax for investment returns and decisions
When directly held shares increase in value, you generally cannot sell them to reinvest in other shares without paying capital gains tax ("CGT"). Paying CGT year by year has a significant impact on your long term post-tax investment return. I model the implications over a 30 year period. The CGT implications have led me to gradually shift my portfolio to avoid directly held shares outside tax-favoured wrappers such as ISAs and SIPPs.
Lifetime ISAs – Free money from the government
Money is free when you receive it, and it is not taken away in future. Free money is rare. However the government addition to your Lifetime ISA is free money in my opinion. Provided you are confident of not breaching the Lifetime ISA rules, and fall in the qualifying age range, the free money makes a Lifetime ISA extremely attractive. I have illustrated this with some modelling.
My shareholder perspective on auditing and corporate reporting
The Government is undertaking a major review of corporate governance and auditing. This could lead to the biggest changes in this field for a generation. I gave a short talk to the CRSA forum with my perspective on the issues. I believe that the proposals do not go far enough. I recommend that power to appoint the auditor should be taken away from major companies and given to an independent regulator.
When accounting standards become dangerous
To draw up a realistic balance sheet, companies need to discount their long term liabilities to present value. Generally accepted accounting practice is to discount liabilities at risk free rates derived from the prices of government bonds. Instead IFRS 17 allows insurance companies to discount illiquid long term liabilities using theoretical rates that would be earned on illiquid risk free assets, even though such assets do not exist. This allows an undesirable degree of flexibility to insurance companies, and the theoretical discount rates used are impossible to verify. Discounting at these higher theoretical rates can have a very significant effect on the reported shareholders' funds. At the very least, insurance companies should be required to quantify the impact of discounting at these higher theoretical rates. I explained this in an article for "The Private Investor" which is reproduced on the page.
Carried interest — How private equity executives pay less tax than the rest of us
Many countries, including the UK, tax capital gains at a lower rate than income. Private equity houses have special participation rights in the profits (above a hurdle rate) of the private equity funds they run. This is called "carried interest." Executives at private equity houses are rewarded for their work partly by salary and partly by a share in the firm's rights to "carried interest." This means they pay less tax than if they received cash bonuses.
Review of "Winning the Loser’s Game: Timeless Strategies for Successful Investing" by Charles D. Ellis
His role at Yale University's endowment fund shows how well Charles Ellis understands investing over the long term. In this book, he gives clear guidance that can be implemented by anyone. He focuses on understanding yourself and your objectives. Everyone should read this book before committing themselves to any investments.
Personal financial planning 101 - The basics
The basics of personal financial planning are not difficult. I wrote them down for a response to a Financial Conduct Authority consultation. They are now published on my website page. I believe that sadly most people fail to follow them.
Auditors' responsibility for detecting collusive management fraud
Companies protect their assets and the reliability of their accounts by having strong internal control systems. Such systems normally stop single individuals from stealing money or falsifying the accounts. Unfortunately, when senior management personnel collude, they can override any internal control system. I propose making auditors explicitly responsible for identifying such collusive management fraud. This will however cause audit costs to increase. My article originally published in "The Private Investor", the house magazine of the UK Shareholders' Association.
My response to the "Complaints against the regulators" consultation
The UK's financial services regulators are, quite properly, unable to be sued for failing to regulate properly. At the same time, the law requires there to be a scheme for complaining about regulatory failures, and permits the payment of compensation by the regulators. The regulators are consulting about a rewrite of the complaints scheme. The changes are more than just a rewrite; they worsen the scheme, and I consider the existing scheme itself to be unsatisfactory.
My talk on charitable giving, inheritance tax, and SIPPs
I gave a 19-minute talk to Clare College's Samuel Blythe Society. I covered some issues that are vitally important to my personal finances. How to give cash or shares to charity in the most tax effective way. The terrible tax costs if your SIPP exceeds the lifetime allowance on your 75'th birthday. The very significant tax benefits of leaving at least 10% of your taxable estate to charity.
International tax planning – a real example
Tax advisers are normally reluctant to discuss real instances of tax planning. This page shares a real client problem that I solved in 1978. I was so excited by solving this problem that I have never forgotten it. It illustrates how creative tax advisers need to be. It also shows how tax advisers are able to save their clients large amounts of money, which is the reason they are well paid. I recommend the page to young people considering career options.
How to make auditors completely independent
The UK has seen many recent audit failures. I have experience of auditing from both the auditor's perspective and the client's perspective. In my view the most fundamental problem is that companies choose their auditor. In practice, company managements have a major influence over auditor selection. The best solution is to take the power to appoint auditors away from companies.
A hazard with Microsoft Excel's Internal Rate of Return function
I recently used Excel's =IRR() function to calculate my internal rate of return on an investment. The result I received was completely incorrect. This was not user error. After some effort and discussion with one of my sons, I discovered that Excel's IRR function treats blank cells differently from cells containing zero cash flow. Blank cells are treated as if that row did not exist, causing Excel to assume the actual cash flows occur on different dates than when they actually arise. If using IRR, it is essential that cells where there is no cash flow contain the number "0" (zero).
Why share buybacks by investment trusts are generally desirable
Investment trusts are closed ended investment companies which are listed on a stock exchange. Their shares often trade at a discount. Share buybacks at a price above the quoted price but below net asset value benefit both selling shareholders and continuing shareholders. That is why I normally support them. This page contains my article "Why you should encourage share buybacks by investment trusts" published in "The Private Investor" using material from my page "Why I always vote against trading company share repurchases."
Why I always vote against trading company share repurchases
It has become increasingly common for listed UK companies to repurchase their shares on the stock market. There is a clear rationale for such repurchases in the case of investment trusts trading at a discount. In the case of trading companies, I consider that the arguments put forward for stock market share repurchases instead of paying special dividends do not hold water. I illustrate the point with some detailed calculations. Accordingly I have now started voting against giving trading companies' managements the authority to make market purchases of shares.
Auditors, EU audit regulation, and private investors
Capital markets cannot function without reliable published financial information. In turn that requires independent auditors. The European Union sets out rules regarding listed company audits as part of overseeing an EU-wide capital market. While the detailed rules are primarily of interest to audit firms and the companies which engage them, private shareholders need to understand the factors that can impair effective auditing.
Review of "Behavioural Investing: A practitioner’s guide to applying behavioural finance" by James Montier
Why do so many investors, including investment professionals, perform poorly? The author contends that it is due to poor psychology, in other words behavioural errors. The book is clearly written, easy to read, and makes its case in detail. The author also shows us how behavioural mistakes can be minimised. Reading and applying it should improve the performance of all investors.
Corporate governance – why it is needed and why it fails so often
Public company shareholders cannot run companies themselves, or even choose executive management. Instead, they require intermediaries in the form of non-executive directors. However there are structural weaknesses in our present corporate governance rules. Furthermore, in my view the most important reason for governance failure is not structural; it is human nature.
Should you delay taking your state pension?
A UK state pension is paid for life. However the pension can be deferred in exchange for a higher pension later or for a lump sum. Any decision needs to take into account your time preference for money, your tax profile, and your life expectancy. I carried out some modelling for myself and have shared that for educational purposes only. The approach used of building a spreadsheet to model changing the assumptions can be applied to many financial questions. However my spreadsheet model cannot be relied upon by anyone else and you must do your own calculations for yourself.
Review of "The Snowball: Warren Buffett and the Business of Life" by Alice Schroeder
Warren Buffett is one of the world's richest men, and almost certainly its most famous investor. This 838 page authorised biography paints a very moving picture of the man, as well as recounting his business successes and philosophy.
Review of "Rational Expectations: Asset Allocation for Investing Adults" by William J Bernstein
Deciding what types of investment you should hold matters far more than your specific investment selections. Your decision depends on your investment objectives and your attitude to risk. This short book teaches you about the issue in a methodical but entertaining way.
Drawdown pensions, death and charity
If you have a drawdown pension, how is the fund treated when you die? If you have a drawdown pension and a free estate, and want some money to go to charity and some to your heirs, what is the most tax efficient way? I have written a short explanation with some illustrative examples.
The Euro – Conception, Complications & Prognosis
An explanation of my view that the euro was created to increase the cross-border integration of European business and an analysis of what has gone wrong and what needs to be done. I forecast that all current members, even Greece, will remain within the eurozone.
Review of "Monkey with a Pin – Why you may be missing 6% a year from your investment returns" by Pete Comley
Pete Comley wrote this free book to share what he learned about why investors underperform the stock market index. In it he explains in very simple language why investors go wrong and recommends how they should change their behaviour.
The impact of management charges on your investment outcome
Unless you manage your investments yourself, you cannot avoid management charges. However the impact of management charges is much bigger than most people think.
Review of "Free Capital: How 12 Private Investors Made Millions in the Stock Market" by Guy Thomas
This book is based upon detailed interviews with 12 private investors. Two are identified, while the others use pseudonyms. The anonymity allows them to speak frankly about how they became full time investors. Everyone will learn something from this book, regardless of the extent of their previous involvement with investing.
My fellowship thesis for the Chartered Institute of Taxation
Fellowship is the top level of membership in the CIOT. For years I could not think of a subject. In 1996 I signed up to write about the new loan relationships rules. Most of the thesis has been superseded by legislative change, but the introductory parts are still worth reading. The editing process was very instructive.
Review of "The Theory of Investment Value" by John Burr Williams
This is one of the seminal works on investment valuation. Written in 1938, it is still worth reading today.


Follow @Mohammed_Amin

Tap for top of page