Investing 101: William Bernstein's Study Guide for Millennials

Would you believe me if I told you that there’s an investment strategy that a seven-year-old could understand, will take you fifteen minutes of work per year, outperform 90 percent of finance professionals in the long run, and make you a millionaire over time?

So begins "If You Can," William Bernstein's little investment guide for Millennials. Featured in The New York Times, the e-booklet is free at Bernstein's web site (the PDF is here) and sometimes on Amazon. All Millennials have to do, Bernstein advises, is invest 15 percent of their income in three index funds: foreign and domestic equities, and bonds.

Of course, it's not really that simple. His e-booklet offers a crash course in how to get past five hurdles that stand in the way of the young would-be investor.  He describes each hurdle and suggests a reading program of one or more books.

The first hurdle, learning to save rather than spend. The recommended reading, "The Millionaire Next Door," a work that Bernstein terms "the most important book you'll ever read."

Surmounting the next hurdles requires gaining investment literacy and, equally important, a sense of investment history.

[I]f learning about the theory and practice of finance is akin to studying aeronautics, then studying investment history is akin to reading aircraft accident reports….

The fourth hurdle is human psychology. We're not designed to think long term or stay the course.

Last hurdle, "the monsters who populate the financial industry."

To be avoided at all costs are: any stock broker or “full-service” brokerage firm; any newsletter; any advisor who purchases individual securities; any hedge fund. Most mutual fund companies spew more toxic waste into the investment environment than a third-world refinery. Most financial advisors can’t invest their way out of a paper bag.

Tough words, those. But I'd give much the same advice to our family's Millennials. Anyway, wealth managers can afford to roll with the punch – beginner investors are not lucrative business.

A great college course, preferably required, could be built around Bernstein's booklet. But how many colleges would risk offending their Wall Street donors?