The Basics of Finance is a well-rounded, accessible text for people who wish to have a better understanding of the field, but who lack a solid business background. It covers key concepts, techniques, tools, and strategies in basic finance without going too deep into pure theory. The author tells readers in the first few chapters, how to use some of the more advanced tools that are available, as well as the basics of how the entire process works. However, there is a lot of practicality mixed with theory in the text, making it slightly difficult for the first-time student of finance to absorb all of the information in one reading.

The most useful tools the book uses to explain different concepts include the balance sheet, income statement, cash flow analysis, cost of capital, investment strategy, portfolio balance, reserve account, investment projections, credit history, and risk management. However, it does have sections on how to set up a retirement account, how to build a savings account, how to use checking accounts, and how to manage credit cards and loans. These chapters cover the basics of finance that any finance novice should know. For instance, when dealing with money, a person should learn that banks keep their money in separate checking accounts than their own. Checking accounts are considered safer than savings accounts because they are insured by the FDIC and are often used for direct deposit of paychecks.

In the following chapters, the author gives examples of real world situations that show how the basics of finance can be applied to everyday life. He shows how managing funds through a portfolio management plan can help individuals avoid financial pitfalls such as excessive debt, investment securities that are not yielding a profit, and the purchase of large assets that will not yield any long term benefit. The author also demonstrates how using simple tools like annuities, bonds, and mutual funds can be effective ways to secure long term wealth for the investor. He also discusses how using these instruments to supplement an investor’s income can allow even a conservative investor to have a good retirement fund.

The third chapter of the book, “The Basics of Finance,” focuses on the use of financial instruments as part of the portfolio of individual investors. Using the basics of finance to increase portfolio return is not difficult. The author explains that there are two types of financial instruments: cash flow instruments and equity instruments. Cash flow instruments include money market accounts, CDs, money market funds, and certificate of deposit (CD) funds. Equity instruments include stocks, bonds, mutual funds, and other common forms of investing. The author shows how these instruments can be used to create a solid foundation for a sound financial portfolio.

The book ends with a case study on how to use the basics of finance to create a solid foundation for building a retirement fund. After developing a solid portfolio management plan, a retiree can begin building his or her own retirement package. A good financial planner can help guide a client in the process of developing an appropriate investment strategy and investment package. Learning how to use the basics of finance to build a solid financial portfolio is essential to building wealth without leveraging one’s portfolio.

The Basics of Finance by Keith B. Laggos, D.O.P., is a great introduction to basics of finance and an excellent reference for anyone planning to enter the world of finance. This is an easy read with detailed illustrations and tables that make it easy to understand. The author has simplified the material and made it very easy to follow. Anyone interested in creating a solid foundation for building wealth should learn more about the basics of finance and apply the information learned through this book to create a solid financial plan.